Monday, July 18, 2011

Beat the Competition By Outperforming, NOT Underpricing - Part 1

Photography is a funny industry. If you talk to someone who's been around, they may sound a bit bitter regarding the state of the profession, saying something like "digital is the worst thing that ever happened to photography. Nowadays, everyone thinks they are a photographer just because the can see an image on the back of their camera and hand over a disk of files for a few dollars. And they call themselves professional."

On the other hand, you may also run into someone who looks at life with more positive view. "Digital is the best thing to ever happen to photography! I can finally create the image I had envisioned because of the incredible tools we now have at our disposal. Better yet, I can charge more for my product because it's something that nobody else can duplicate!"

Of course, there is also the group of new photographers who are excited to create, eager to learn, thrilled to have the opportunity to make a living doing something they love . . . and desperately need someone with experience and knowledge to point them in the right direction.

When I think about it, I'm really not that different than any of today's new photographers. You see, when I began in this business back in 1976 I was a 17 year old kid with a new camera, a fistful of business cards and a dream to make my hobby my profession. I had the desire, I had raw talent (which needed serious refinement) and I had the energy and blind courage to succeed as an entrepreneur.

However, I just needed something more to get me over the hump.

While desire, energy and passion are great, those qualities alone will not be enough to make you a successful photographer or run a profitable business. You must set yourself apart from the competition. Many photographers realize this, but few actually understand what it means.

When I began photographing "professionally" (ie: when I began charging for my photos) I was working with a friend I'd met in high school. We became business partners and put ourselves through college shooting weddings. Things were going well (so we thought) and we soon rented retail space for a studio location. It was at this point that some of the worst decisions ever were made. Rather than explain them in every sordid detail, I'm going to make a list of the biggest errors (and tell you why they didn't work.)

1.      "People will choose us because our pricing will be less expensive than other studios."
In theory, this sounds great. Everyone likes to save a dollar and as is the case today, we were also in the throes of a recession at that time.

- Why it didn't work: Because we were new and inexperienced, price was not the deciding issue for many clients. While some clients were fine with "good enough", many opted to use competing studios who charged more because of the quality of their final product. Average photography at any price is still just average photography. Since we were operating on a low price-point, there wasn't enough profit to use top-shelf materials and still make money, nor was there enough funds to attain the education we desperately needed in order to do it right.

2.      "If we charge less, we can book more clients and make up the difference in volume."
This is great for stores such as Target or Wal-Mart, where they can lure you in with a low price on one item, knowing that while you're there you will most likely "stock up" on other items you regularly purchase. Clothing, food and other products all carry a significant markup that allows a retailer to sell certain specific items as a "loss leader".

- Why it didn't work: The strategy was wrong in many ways. Yes, more weddings and portrait sessions were booked because of lower prices. They turned out, however, to be clients who came in only for the low-priced items. Additional sales on these were virtually non-existent because the low price on the initial investment was what caused them to book in the first place. There was no love of our work or photography in general. Coupon-clippers (Groupon users) are not going to spend extra money and add-on sales are what was needed to make this strategy work.

3.      "Since I'm just starting out, I can't charge as much as everyone else."
This is perhaps one of the biggest mistakes made in the industry today. When you begin, the bulk of your client base comes from friends and family, all of whom expect "a deal". Others will feel that because you are a new photographer, they can pay less because you "need the business."

- Why it didn't work: By pricing yourself low from the beginning, you are essentially training your clients to believe that you will always be cheap. Rather than start with unrealistically low pricing, set your numbers where you want them (higher!) While you are "building your portfolio" you can then offer a discount from your "regular" prices, but only during the time you need that specific type of subject for sample images! For instance, during the month of October you'd like to increase volume for outdoor family portraits. Run a special offering a reduced rate on family sessions. Want more kids? Do an Easter or Spring portrait session special.

The bottom line is this: once you've photographed enough sessions of that particular subject at the discounted rate an d have the sample images you need, end the sale and go back to your regular (higher) pricing!

4.      "I can't raise my prices. All of my clients will complain or leave!"
Once you get established and realize that you actually want to start keeping more of the money, you will find that you have two choices; raise your prices or photograph more sessions. Since there are only 24 hours in a day, increasing the amount of work you take in can only be done to a certain level. You can't add hours to the day.

- Why you just need to bite the bullet and do it: Ultimately you will be forced to raise prices, either due to increased product costs and fixed expenses, the need to purchase new and updated equipment, the desire to take home more money and a long list of other necessities.

There's an old saying that goes something like "If your clients aren't complaining about your prices, you're probably too cheap." The fact is, people often determine value based on a price. If you're too low in your prices, there may be an entire group of people who never give you a second look. Many people equate "low price" with "poor quality". My former partner would say things such as "I'd never pay that much for photographs." If he didn't think his work was worth it, how would he ever be successful at the sales table?

The truth is, when we increased pricing we lost some of the low-end clients. What also happened is that we gained clients in an entirely new group. To these folks, we were now "affordable" in a higher price-point category.

Be fearless and move forward. Continue to make this industry an awesome place to make a living!

David Grupa, CPP, M.Photog.Cr., AFS-MNPPA owns David Grupa Portrait in Maplewood, MN. A true believer in the power of professional associations, he is a Past-President of both the TCPPA and MNPPA and serves PPA members in Minnesota as a Councilor. In his desire to "pay it forward" in the photographic industry, he founded Camp David Photographic Education.

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