Here Lies Photo Fred, Lost His Business, Now He’s Dead

“Here Lies Photo Fred.  Lost his business,  Now he’s dead.”

A bit extreme?  Perhaps… but strangely appropriate in the last few years’ economic climate for many businesses,  not just photography.    I have been asked many times over the years what it takes to run a successful photo business and how photographers charge for their services and the use of their images.  What determines the value of your images and how do you go about licensing them and charging for that?  While much has changed throughout recent years,  some basic tenants remain the same.  I find that by following certain rules and pricing accordingly,  I can keep my destiny from going in the direction that ol’ Fred had.

Licensing is not Selling

I am in the business of licensing the reproduction rights of the photographic images that I create.  I am not in the business of selling pictures.   Taking pictures and giving away the reproduction rights without charging for usage and/or potential reuse is not profitable for a photographer unless he is an employee of the company which is hiring him to shoot.    As an employee he would have a regular salary, the job security, all the benefits,  full insurance,  paid vacations, no business expenses, no investment and no overhead at all.

I am not an employee of the client company.    I am an independent contractor, running my own company and therefore must charge for the usage of my images in order to remain a successful and profitable business.    I follow the business model of licensing my work the same way other creative industries do when they rent, lease or charge on usage instead of transferring the property of their creative work.

Why are some uses more expensive than others?    Pricing for usage varies according to where the photograph is going to be used.      A photograph used in a brochure with a print run of 10,000 is obviously going to cost less to license than if the same photograph was used in multiple consumer publications over several months.     It all boils down to how many people are going to see the photograph.     More people seeing the image in the ad translates into more sales you will have of whatever product you are advertising.    Hence the image is worth more money.    (More on this below…)

 

Why do photographers charge for usage instead of a set day rate?

Most creative industries base their pricing on usage and/ or production costs. A musician or a writer gets a percentage of the sales of his CD or book, an architect charges a percentage of the construction costs, a non-employee software writer charges per license or user, an advertising agency charges a percentage on the media buy, a good actor asks for a fee based on his talent and popularity and might also receive a percentage on ticket and video sales. In the same vein, a photographer charges according to the usage of his picture(s) and the money spent on advertising space to display them.

Creative people do not usually charge fees based on the time they spend to create. It makes no sense to base the price of a painting on the time the painter spent on creating it or the amount of paint he used. Famous actors get millions of dollars per movie plus royalties and it is never based on the number of days spent on the movie set. A photographer does not charge according to the time spent on producing the photograph only. An experienced commercial photographer will spend less time creating a photograph than a student. Does it mean that he should charge less?

Another example is the software industry. A software company will profit more from licensing its product instead of selling it and allowing the buyer to do whatever he wants with it. This is why, in most cases, a software is licensed and not sold, even if a fixed price is paid and a physical copy is given to the client. The licensing fees vary according to the usage (number of computers running the software) or the nature of the final client (a student will pay less than a multi-billion corporation). The music or movie industry work the same way. A customer pays for the physical copy of the song of the movie in the form of a CD or a video but in fact, is granted a license that prevents him from using it in a commercial way and profit from it.  If someone wanted to use this music commercially they would have to pay the artist for that particular usage.

Licensing Fees are based on usage and content

My fees are based on the reproduction rights I license to my clients. The more rights they need, the higher fees they pay. This is why it is always more reasonable to license for the exact usage needed. If more usage is needed later, more licensing can be acquired.

Another pricing element is the content of the image. If the photograph is rare, its value increases. If the photograph is technically difficult or dangerous to produce, its value augments.   Many times the concept of the image may be very simple.  This does not necessarily mean the image is simple to create.   Even the simplest of photographs can require creativity, experience or technical skills, and sometimes specialized equipment.   The most common licensing arrangement is one time, non-exclusive use, limited in time or/and in print.

Why does it cost what it does?

Professional photography is a very expensive business to be in. It requires an important financial investment once studying, graduating and training is over. When starting up, it involves spending a lot of money on photo equipment, lighting equipment, computer equipment, office rent, office furniture, office supplies, portfolio materials, consultants, assistants, accounting, marketing, advertising, liability insurance, equipment insurance, worker’s comp insurance, business taxes, licenses, communication expenses, utilities, etc… and a lot of unpaid time spent on building, maintaining and expanding the business. It is commonly accepted that a sum between $50,000.00 to $200,000.00 minimum is needed to start a serious assignment photography business and this does not include living or housing expenses. Even in the best-case scenario, a good, talented and experienced photographer with the proper portfolio should not expect to make a profit before one to two years. All this investment in time and money would make no business sense if fees were based on day or hours of work only.

It is also commonly accepted that a very busy and successful photographer spends only an average of 75 – 100 days or even less actually taking pictures while the rest is divided between marketing, pre-production, contacting and meeting new and existing clients, preparing new marketing campaigns, testing new cameras, trying new styles, training to new techniques, some week-ends, some sick days and rarely vacation.

In my case, I have over 16 years in the business of advertising photography.    I have worked with some of the largest companies, advertising agencies and magazines, traveled and worked around the world.  I work with several different camera formats, own a huge amount of lighting and grip equipment, have spent countless hours taking pictures and working productions of all sizes and complexity.    I pride myself on my ability to solve almost any problem or situation encountered on a shoot.

Without taking the value of my photography in consideration or its creativity, I can safely assume that with all these skills, experience and the fact that I am based in one of the more expensive areas in the country, I would not consider a full time job offer for less than $100,000.00 a year. Now, if I divide that by 100 days, it gives me a day rate of $1,000.00. Would I be happy with that as a day rate? Maybe. But who is going to assure me that I will be hired 100 days per year at that rate for the next 30 years and pay my benefits, sick days, vacation, disability etc…on top of giving me the necessary photo equipment to work with and continue to test new techniques and styles,  not to mention money to advertise my services? No one of course, and this is why no serious commercial photographer with an experience like mine can work on the basis of a flat daily fee at $1,000.00 or even more. Licensing and controlling usage is the only viable and profitable option.

Because we cannot create every single day, we cannot charge daily or hourly fees. Photographers usually choose the usage factor as the main element of their pricing strategy because it is fair for them and for their clients. The more a picture is used, the more it attracts interest that might lead to sales, the more money is invested in publishing this picture and the more money the photographer is entitled to earn.  All photographers should work hard on enhancing their skills and developing their creativity so they can profit even more from their art.

Comparing the way creative people charge with the way mechanics, builders or other businesses charge per hour is not appropriate and does not take in consideration a very important element: creativity. Creativity cannot be taught in schools but just developed.

It is true that some photographers will give all rights for a onetime fee. It is also true that many of these same photographers, who are usually at a stage between amateur and semi-professional, go out of business within a period of time that ranges from one to five years.  If they do not go out of business many find that they are in an endless struggle to make a profit year after year and never actually achieve a truly successful and profitable business.  This is why I cannot compare the way I do business to theirs.

These same photographers are usually on a very tight budget that does not allow them to own or use the proper equipment or to carry the proper insurance. I am always amazed to see how some corporate or agency executives are ready to contract a photographer without checking his license or credentials. These same people would never allow an electrician to change a bulb in their office if he did not have the proper license or did not carry the proper liability insurance.

I am a member of the American Society Of Media Photographers (ASMP), which is a photographers trade association that accepts only full time professional photographers as general members.  I am also a member of the Advertising Photographers Of America association (APA), another highly respected trade association promoting fair and ethical business practices in the field of advertising photography.

Buyout” or Transfer or rights

Although the term “buyout” has no legal value, it is sometimes used by some clients to try to describe a transfer of rights. Because of the liability issue involved in a copyright transfer, I never accept to transfer my copyright at any price. If my client needs extended usage, we can discuss about unlimited usage or/ and unlimited duration but the costs are often considered so prohibitive that I always prefer to limit the usage to what my client really needs.  Why spend money on usages you do not need?   For example:  It might be useless to spend money on usage in billboard space in Africa (or other countries)  to advertise a product you can only get in the United States.   Better to define what uses you actually need and come up with a fair market value for those uses.

 

Assignment Photography

Photographs can be created on demand. If my client needs a photograph that does not exist or cannot be found as a stock image, I might be able to produce it. My client will pay for the production of this image as well as for the rights to use it.

The advantages are very clear: I create a photograph that meets exactly my client’s needs and that is completely original. On top of that, my client has the exclusive usage of this picture for the usage and the duration he/she has paid for. They also have the assurance that his direct (non-editorial) competition will never have access to it and that the image will never be used in conflict with its original usage (these uses must be stipulated in writing prior to licensing).   My photographs never go into the Royalty-Free market and I completely control their usage. The total cost is generally much less than licensing an image with such unique characteristics from a stock agency, if such image was to exist, of course.

 

Costs of assignment photography

Assignment photography is made up of the following billable items:

– Creative fees are what I charge when I produce photographs on assignment. They are separate from the production costs. They are usually based on different factors based on the job description. Factors include the total time (Including pre and post-production) spent on producing the picture(s), deadline, usage, film nature and format, complexity of the shoot, technical difficulty of the picture(s) and its originality. Another important factor is my own value on the market. I work very hard to be better skilled and more creative every day. My ability to deliver better than some other photographers or to produce better photography raises my market value. Therefore, I adjust my fees accordingly. Creative fees usually include the first rights licensed. Creative fees appear only at the creation stage of the photograph and include the licensing fees at that stage only. If more usage is needed at a later date, a “licensing fees” item will appear on my estimates and invoices.

Important: Although the time factor has a role in pricing my assignments, it is not the main one, and this is why I do not consider hourly rates or “half-day” assignments.

– Pre-production fees are billed only when more than the normal pre-production work is involved or required like scouting, casting, etc…

– Traveling Fees. Because no usage is involved, I charge a flat fee of $1,500.00 per traveling day to compensate for the lost working days as well as for my time doing whatever needs to be done on these days (aside from shooting).

– Postponements or cancellation Fees. . Once a shoot has been confirmed,  if a Client postpones or cancels any photography “shoot date” or other Service, in whole or in part, without first obtaining my written consent, Client shall pay 50% of the quoted fees. If Client postpones or cancels with less than two business days’ prior written notice, Client shall pay 100% of the quoted fees. Client shall in any event pay all expenses and charges incurred in connection with any postponed or canceled shoot date or other Service.

– Production fees or charges cover all the production costs that are necessary to produce the photograph(s) on demand.

– Estimated expenses are subject to normal trade variances (normally accepted within 10%).  If at any time during the production the client makes changes or other circumstances arise where expenses rise beyond this 10% we always make the client aware of this and present them with a job change order to cover these expenses.

For more information on copyright go to:  http://www.whatiscopyright.org/ or http://lcweb.loc.gov/copyright/

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