Determining how to price your hourly fee is a crucial step and one that a lot of photographers tend to mess up.
Here’s why: A photographer knows they are going up against some competition. So in order to attract customers, that photographer decides to set a very low hourly rate.
Here’s the thing: It’s a lot harder to raise your prices than it is to lower them. Customers will already be used to your prices, so if you raise them, they’ll definitely be unhappy about it. But think about the reverse; if you lower your prices, you’ll have some very pleased customers.
So how do you figure out how to set your hourly fee so you don’t get stuck in that trap of earning less than you deserve?
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Your hourly fee should cover your expenses (equipment, travel, utilities, etc.) while still providing you enough overhead to make a profit. Plus, if there’s a goal salary amount you’re aiming for, it’s important to factor that into your calculations so you know what you’re working toward.
While each photographer’s specialties may influence how much the hourly fee will be, here’s a basic formula for determining how to ballpark your hourly fee:
X 35% profit margin
= How Much You Need to Make Each Month
Once you’ve calculated how much you need to make each month, divide it by the number of days you want to work, and then divide further by the number of hours you’ll work each day (for the sake of argument, say 8 hours, aka the typical work day).
There’s your hourly rate!
You should return to this formula on an annual basis, as you may find that your expenses have changed over time. In fact, we recommend examining it every three to six months when you’re starting out in your business, as you’ll probably need to adjust your pricing as you go.
That’s definitely a lot to throw at you, so let’s break it down so you’re getting a more realistic idea of what you should charge.
Get a good idea of how much you’re spending on photography equipment every month (or every year), whether it’s replacing existing equipment, spending money on lenses, or even just purchasing new equipment to help bolster your business.
Don’t forget to include the monthly or annual costs of any photo-editing software that you use.
From studio rent and utilities to website fees, list all of your business expenses every month and add up how much you’re spending. You should also include any marketing costs you’ve incurred (we’ll talk more about that in the next section).
Don’t forget to keep track of receipts/invoices, as most of these expenses are income tax deductible.
If you’re not setting up your own photography studio, you’re probably doing a lot of traveling to client sites and vendor destinations. Be sure to include travel costs in your hourly fee, as this is the money you’ll spend for wear-and-tear on your car. For 2019, the IRS calculates the standard mileage rate at 58 cents but don’t forget to include costs associated with hotels and meals, especially if you’re traveling out of town for a client’s wedding shoot.
Include your profit margin.
Once you’ve added your expenses to determine how much you need to make to cover them on an annual basis, multiply that number by 35%, which is the average profit margin photographers typically use in this formula. This profit margin is essential because this is where you’ll make money that you can spend on yourself, as well as investing in the business.
So don’t forget to include it!
Divide by twelve months.
Once you’ve finally added your expenses and included your profit margin, you’ll want to divide that final number by 12 months. The end result will be how much money you’ll need to make each month in order to make your ideal photographer salary. From there, you can calculate your daily rate or even your hourly fee.
Not to worry — you can figure out what your hourly fee should be by shooting for a target annual salary. It’s a bit more basic than the above formula, but it can still give you a better idea of how much you need to make in order to achieve the lifestyle you want.
For example, let’s say you want to net $90,000 a year, which is enough to moderately grow your photography business while paying your bills.
Using some quick math, you’ll discover that you’ll need to net about $7,500 a month ($90K/12 months). You’re planning on working about five days a week (20 days total) at about 8 hours a day. That means in order to achieve your $7,500 monthly figure, you’ll need to earn $375 a day, with an hourly fee of about $47.
If you’re pricing a larger project — like working at a wedding — you can use your hourly fee or your monthly figure to set your project price.
Let’s go back to that $7,500 figure to achieve that $90,000 annual salary. If you’re a wedding photographer and you want to work a certain number of weddings per month, your math would look like this:
This basic math can help you get a good idea of what you should be charging for larger projects, based on your target annual income.
If you’re just starting out and still feel uncertain about calculating your hourly fee or project rate, there’s no harm in getting a better idea of what your competition is charging and modeling it after them.
To that end, do a little online research and gather a pricing list for photographers who work in your niche and in your location. Most photographers have prices on their websites, or at least are willing to email price packages if you reach out to them. It can feel a little sneaky, but this technique can really cut the learning curve in half if you’re worried about setting the wrong project fee.
Play around with your pricing as you grow your photography business, but remember to overestimate how much you should charge. Underpricing your photography services might leave you struggling to pay your business’s bills.
Plus, what’s to say that another photographer won’t offer even lower prices and take a chunk out of your clientele base?
As you grow in experience and demand, don’t feel bad about raising your prices accordingly. While you’re doing what you love, you still have bills to pay — plus, you should reward yourself if you become a top photographer in your area!
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