Creating Photography Packages That Work Monday, September 27, 2010

In order to set your prices to provide value to the client and profit for your business you have to know what the collection will cost you to produce. I know most photographers do not enjoy doing the accounting work that comes with pricing so I will make this as simple as possible for you. I am asking you to answer two questions when choosing the price for your collection.

What's your package cost you?

To answer this question you will need to know the cost of the products. This includes anything that you outsource or purchase to complete the clients order. This is everything from the prints that you order all the way through the process to the packaging used to deliver the prints. If you leave anything out of this figure, the end result is lost profits.

In addition to knowing the monetary cost to produce the products in your collection you also need to know your time investment. Your time is more valuable than your money. You can make more money, but you'll never get more time. Unfortunate many small business owners do not pay as close attention to their time as they do their money. Your time investment is a critical factor to making your collection work. Each product you include comes with a time cost. You can estimate this cost but be warned, most task take longer than expected. Estimations are okay if you are careful and realistic. A better strategy is to time the actually process you go through for each product.

With an accurate idea of your time and money investment you are ready to tackle the next step.

How much profit do you need?

How much is too much? There is a multitude of ways to answer this question. You must figure what your cost should be for the collections you produce. If left up to chance or a wild guess, your clients will get less value and you lose profit.

Okay, let's get to it. Here is a formula you can use to figure the price the client should pay for the collection.

• Your Collection Price = (Cost x 3) + Minutes

Let's walk through this formula. At this point you know how much your collection will cost you in dollars and time. We are going to use these two numbers to ensure that you are allowing for enough profit to keep your business in the black. Staying profitable is one thing that will always serve you well.

The formula is actually very simple. We are taking your production cost and multiplying this by 3 then adding a dollar per minute you are working. This will allow for enough profit to cover your cost, your paycheck, and your overhead. This number may be much higher or much lower than you originally intended, and it's okay if this number is a bit of a shock. It's okay, because it's probably not our final collection price.

Adjust the collection to add value

Now we need to add value to your collection. If you feel that your final price is much to high, then don't worry. We can lower the cost and provide additional value for your clients. High priced products are fine as long as they provide even higher value to the client. We are going to adjust the price by removing products that are too costly in time or money and adding products that are high in value.

Let's imagine that you are including the following framed 3 image panel that is intended to hang in the clients home.

The framed piece cost you $99 and 30 minutes of time to produce. This means that your package price raises $327 because of this one piece. If this price is too high, then you have three choices.

1. 
   Remove the product - If we remove the product we will likely need to add an additional product to add value to the collection. This is the least desirable choice because the product was included because clients want the product.


2. 
   Add low cost products - We can offset high cost products by adding other products that are seen as extremely valuable even though they have a low cost. An example of a high value, low cost product is digital images. The cost is basically nonexistent, while the value is extremely high.


3. 
   Change the product - Our final option is to change the product to lower the cost. By choosing a slightly thinner frame and printing the mat & photographs as one print (instead of three prints and a mat) we are able to drop our time investment to 10 minutes and reduce the cost to $30. This keeps the perceived value high while lowering the price of the product from $327 to $100. With this drop in price, the product adds value to the package rather than taking it away from the package.

But do I even need packages?

Yes and no. Yes, you need packages. They will increase your sales and profit if they are properly created. However, if you are not putting your packages together in a strategic manner, they will cost you profit and keep your clients from being thrilled with the value they receive. A portrait package that's just thrown together is often worse that having no packages at all. Follow these steps and you can make your next package profitable.

What's next?

Next you need to take a long hard look at your products, cost and time investment. A realistic look at those numbers will be your starting point for successful packages that create happy clients and profitable photographers.

Jason H. Crowe is a MBA graduate from William Woods University, a small business owner, and the CEO of Photography Marketing Guide.

Visit http://www.photographymarketingguide.com for more photography business articles and tips.