Lessons

Lesson Info

How to Calculate your Rate

So when it comes to pricing your work don't be a (audience laughs), you never wanna be a turkey. You wanna be educated and you don't wanna be taken advantage of, you need to understand the tactics that happen in negotiation and remember never to take it personally. And you also need to remember about the blind spot. And how many times have we talked about the blind spot? And then when we just did our shoot there was a blind spot there, there was some time of a communication breakdown that happened when the food came fully plated and it was not something that I anticipated. And we might have been overbudgeted then, because we got all these props on the table that we weren't going to use, because if the client had put their foot down, if we were in a real situation, and said, no, no, no, we're using our plates. Yet we had put into our budget for propping and we spent all this money we may not be able to recover that money if we didn't actually communicate all of that with the client appr...

opriately and ahead of time. Here's the question you all have been waiting for, what's your rate? And this is an organic thing, it's a living thing, your rate. So let's talk about day rates. Editorial day rate for something like the New York Times, they call you up and they say, we want you to go shoot something in Central Park, there's something happening there, go take some pictures. Okay, great. You're gonna get paid 200 bucks, that's their rate. You're not getting anything else. Maybe transportation for your cab. That is like, what? But here's what the New York Times knows, you wanna work for them and you will work for $200 dollars if you want a byline that says New York Times. That's their standard day rate for freelancers to come in and do something like journalistic work. Now obviously the things I do for them have to do with production, so I am not going to work for $200 dollars a day to produce fully, full-blown photo shoots. So then over time I have built a price structure that works for them, within their rates that they are comfortable with for production, within their rates that are comfortable for expenses, and I keep them consistent and I don't throw lots of surprises on them. And that has worked as a relationship for a very, very long time. Now, with that being said, I've worked for the New York Times for 15 years and all of those rates really have never changed. So I have a measurable of consistency in my relationship with them, but there is no progression, there is no year three I'm charging them more, year four I'm charging them more. What I'm working on there is volume, because where they used to hire me twice a month, then they hired me three, now they hire me eight or nine, and I continue that price. I am now built into my whole situation a rate that I'm comfortable with, but because it's predictable and now I have an anchor client, and that's what I call something like the New York Times for me would be an anchor client, because they anchor my finances. Meaning I have predictable amount range of money that I can count on from that client and because I have made my rate something that they can live with and something I can live with we have a long-standing relationship. And this is the goal in setting rates for long-term clients is that you find that butter zone that works. And that comes through negotiation and discussion and all the things that we've talk about as far as pricing yourself and your production. How many people does it take? How much food is involved? How much time is involved? All of those things calculate in. Now here's what happens in a long-term relationship with an anchor client. Sometimes that production takes nine hours and sometimes that production takes two and I get paid the same, but it all balances out at the end. So I get that really easy recipe that I can knock out in half a day and then I get that one that we agonize over all day and it takes more people and more time. But I can't itemize that for them, I can't do I that way. I have to, because they're my regular, steady client I can't charge them more for the one that takes me more time, because I can't charge them less for the one that takes less time. So everybody makes out in that arrangement. And the same thing goes for my food cost and my expenses. I have a window that I work in in all of those things, so when I bill out expenses for the times on a job it's broken down into propping, food cost, and transportation costs, and those are the only ones I can bill. And I break them off into those and I stay within these existing windows that I know they're comfortable with. And sometimes it costs me more in a month, but I only bill them for what I think is appropriate, what I think fits into the window. Sometimes it's less. I save my receipts, I send in my receipts, and it all works out. Because I also maintain a studio, which some of you will be maintaining somewhat of a studio. So in that studio you need to keep salt and pepper and olive oil and all of the basics. You can't charge your client, a regular anchor client, you can't charge them for every grain of salt. You can't go out and buy a box of salt for every one. But the expectation is clearly you don't wanna pay for all that stuff, you don't wanna pay for everything on every job. So by having a consistent clientele you can have a stockpile of the things that are the necessities of photo shoots and by having a consistent price structure, the work with an anchor client, then everybody wins. At the end of the day they save money and you are consistently paid something that's predictable. And as freelancers or small businesses you need predictable income. And so that's the goal of having an anchor editorial client. Now when you talking about a rate for an advertising job now we're talking about something completely and utterly different. 'Cause you notice I didn't say anything about usage with editorial work, because there is no such thing. They're buying what they're buying and it's gotta be a rate that you're comfortable with. So like magazine work, if you're out on assignment you may be looking at about a $500 dollar a day day rate and then if it's like you're in a restaurant shooting and you have transportation costs and whatever, but it's not a studio shoot that's pretty much what you're gonna make. Maybe 1,000, but somewhere in that ballpark. But then if it becomes production now we're talking about adding layers of money to that, because now the production is gonna cost more money. And then you as a producer can maybe charge a little bit more as the photographer producer, because you have to collect all the people to do the work. So you're shooting in a restaurant or whatever. Or if you have now like what I have with magazines like EatingWell, a long-standing relationship with them, where I have created a structure, a per recipe structure for pricing. So I have calculated that my pricing for them, that includes my stylist, in-house stylist, my props, my studio, and my day rate, I came up with a whole number that I can say to them if you wanna do three recipes we just go right down the line. We just keep adding every time, for argument's sake, let's say $1,000 dollars a recipe, that covers all expenses. That covers everything, so if it's a five recipe shoot it's five grand, if it's a six recipe shoot it's six grand, if it's a seven recipe shoot it's seven grand, and on and on and on. And if it ends up being something like a 12 recipe shoot then maybe I dial that back a little bit, because I know now I'm getting to the upper edge of where we would be on an editorial food shoot and I know that might be pushing it a little bit. So maybe I pull that back a little bit to 900 a dish or 750 a dish. So that sliding scale is including all the things that I wanna work on in that job. I hire one stylist, because that's what we can afford in that budget, by studio, not a rental on the outside, my propping, which means I don't have to rent a whole lot of stuff. So now that seems palatable to me, I'm using all the resources that I have to price my jobs appropriately for me, but then if they come to me and say, okay, wait, we need to do like a 12 recipe shoot, we wanna do it in this studio, and we need to do it over two days. And now it becomes much more complicated, those prices might change, but I at least have a baseline to work from. Because now I'm saying, okay, well if I was doing this in my studio it would cost this much. So I'm only charging them X amount for my studio space. For argument's sake let's say I'm charging them 500 for the day, which is a cut rate on what a studio in New York would cost with a kitchen, which starts at about 750. So I'd say, okay, well now we're looking at a two day shoot in a studio, so we're already at a baseline of 1,500 bucks before we even start. And they need to hire two stylists, not one. So now we're talking about adding that expense on. But as long as you've created some kind of a structure to work from your rates are adjustable for an appropriate kind of a job. So now when we're talking about advertising where you are in your career matters. When I first started and before I ever had any advertising jobs a producer friend of mine said, you need to charge a day rate of $5,000 dollars a day plus usage. And if you ever get to the point in your life where you are the top food photographer in the industry you could probably charge about 15,000 a day to just go there and open your bag. So that's the range. Now by comparison when you talk about top flight, what do you call it, makeup photographers or fashion photographer who, that industry has a different structure, you're talking about photographers who make $50, $75, $80, $90, $100,000 dollars a day just to show up. And that has nothing to do with usage, so you talk about million dollar accounts. So food isn't that, we're not in that world. So we need to know where our boundaries are. So that's the structure you say. But the other thing is is if you come in as an advertising photographer and you throw a number out there that's too low, let's say you say, my day rate's 2,000 a day, because you want the job, you're not getting the job, not getting the job. You know why? Because they don't think you're serious enough. So there's this game you have to play too when you're talking about advertising is that the client isn't gonna hire somebody who only charges 2,000 a day, because they're looking and they're saying, that person isn't experienced enough to know that they should be charging more. And that's a warning sign. So when my friend told me, the first thing you do is throw out that $5,000 dollar number, because what it's saying to the advertising company is I'm new, but I'm serious. And that's, and we're talking about mass market, global, recognizable brands, that kind of thing. And then we start talking about usage. And usage is inordinately complicated and it's getting more and more complicated as the internet has become more and more a part of how we do our pricing. So, for example, standard usage, not buyout usage. Buyout usage is something else. So you start looking, let me talking about buyout usage for a second. So a mass marketed corporation comes to you for advertising and they wanna do a buyout package, basically they wanna own the images. Essentially it's work for hire. And they, so you don't have any other, and you wouldn't be reselling advertising work anyway outside of the market, you would be reselling it back to your client. So you give them a three year license on the photos that you just did and after three years if they wanna keep using them they just relicense them. But they're saying, okay, we don't wanna do that, we don't want that complication, we just wanna buyout, we wanna own the pictures. So you basically, you're gonna start at about 10,000 an image and work back from there and negotiate back from there on a complete buyout package for like a global usage kind of you own them you do what you want with them kind of thing. And you can live with that. There may be a time where that backfires a little bit and it ends up becoming like you end up setting the creative for a brand for the next 20 years and you don't get paid for it, but that's not likely, it's just not likely. So that number is reasonable when you think about what they're getting, using it everywhere, they can put it anywhere, and they can get a lot of mileage out of that, then it becomes worth it for them. But short of that, so think about that, okay, fine, you get to own the images for 10 grand an image, in our business, not other businesses. You start to say, okay, now from backwards from there for advertising what's appropriate for a two year license? A three year license? Which is about where you need to be normally when you're licensing images in advertising, a two to three year license. And you start to negotiate into that world where you start saying, okay, here's my day rate, and you want a two year license on the imagery. Now okay, that license now you have to negotiate where those pictures can be used. Can they be used everywhere, globally, web, print, packaging, anywhere? That's one number that you have to negotiate. Or it's more narrow than that, so then you can negotiate those pricings. So you have to understand that the more usage they want the closer you get to that 10,000 an image number. The less usage they want the more you can back off towards something like 1, or 2,000 an image. And there's your range. And then it becomes where you wanna negotiate. There's no way to say what you're gonna get, because you never know what that negotiation is gonna look like. What you need to know is how to negotiate that, how do you wanna use my pictures. And it's sort of like, global unlimited usage in perpetuity, blah, blah, blah, blah, blah. You know what that means? They just wanna own them when you start hearing all that. It just means they wanna own the images and they don't wanna deal with you anymore after this. So you make it palatable for them. So if you're looking at a three day shoot with like eight images and think about the highest number that you're gonna command for as your day rate and a buyout package you're talking about $100,000 dollar job. And then you start saying to yourself, what could I live with here? I could live with an awful lot less than that and be happy. And then you make it palatable for your client. And this is what your agent will do as well. But the fact is if you're negotiating that kind of a deal without an agent you're at a real disadvantage already, so you really need to be mindful of what you're going to be talking about. So when you get a contract or you get an offer and they say, I want this, this, this, and this, and you don't understand what those things mean then you need to reach out to somebody who does or research it on the internet and you start to say, okay, now I get it. Like I said, if you're negotiate, and I have, I had to negotiate those things with advertising companies without an agent for a very long time, so I learned a lot about it, but you have to reach out to the people you trust in your life that are familiar with those things. So if you met any producers or art buyers or other photographers who work in your industry you reach out to them and you ask them, what does this mean? Do you think this is a good price? And you get advice. Because you can't find all the answers in one place. This is a process, a learning process, just like any other learning process that we go through to build a career or learn something. These are not the things they're teaching in school for photography 101. You gotta go pretty far along in photography to start getting to this type of discussion and all these kinds of things. So you're getting a lot in a short period of time when we're talking about here. If somebody just kind of calls you up and says, what's your rate? Which is more likely and you're not dealing with an advertising company or an agency. They clearly don't know what you do, they don't get it. So that's where all of this ammunition that you have now comes into play and you start saying to them, okay, what do you want? Go through the 10 questions. Now you got answers to all the 10 questions. And once you get to that usage question then you can really start to build a price around it. So like you already know what a day rate for editorial just to come in and shoot the picture is without any production, and then you start saying, okay, well, my production is gonna cost this and this is where I can layer on the pricing, so I can actually make more money. We're gonna shoot it in my space, we're gonna use my props, and then you get to keep those budgets, and that becomes part of your package rate. 'Cause that's where you can start understanding and coming up with flat rate pricing for private clients, like restaurants or cookbook clients, where you can come up with a package deal that anticipates all those needs and is still palatable for you. So Laia and I were talking the other day about one of her clients that she recently did and we went over this, we went over all the pricing she gave them and the reasoning she gave the pricing to that client and I said to her, great, okay, good, but do you feel like you could live with that price long-term? And she said, no. I said, okay, well what do we need to improve upon? And we talk about well, okay, it needs to be in this area you need to push it up a little higher, in this area you need to push it up a little higher, and you gotta leave the other things okay, because they're fine. So the way to get the money to where you need it is to be more realistic with the market, whether it be in your prop budget or the fact that you're not charging for your studio space or whatever it might be. But as long as you tick off all the boxes and there's a line item for those things you will increase the rate and it's still justifiable to your client. You tick off the boxes. Because if one of the boxes isn't ticked off you're leaving money at the table and that's not where you wanna be. Now sometimes you make the sacrifice at the beginning of a relationship with a client with the understanding that later on it's gonna cost more money, but you have to basically express that to them. Listen, I really wanna do the job for you, I wanna show you that I can do the work, but I'm gonna give you this introductory rate on this just so we can get off the bat, but this is a one-time deal. And right there you've already set the expectation, I'm gonna do this work for you, I'm trying out for you. I'm gonna do the tryout. But once you like my work it's not gonna be this cheap anymore. And sometimes it doesn't work, because then those people shop around for the next person who does that deal. And that happens all the time. But if they're real and they really want to form a relationship with you as a client they'll take that, they'll understand that the next time it has to cost a little bit more, and you move on. You heard the voice of Kate, and that's exactly the way we approached it, both as a team, was that we're gonna show this publishing company that we can do some stellar work, and the next time we're around they're gonna pay us. And that's exactly where we're sitting right now. And now we're in the catbird seat where we can call our shots, because they need us as much as we need them. So it's part of that whole situation. And I wanna go back to the idea of getting boxed into a number and then when somebody's, once you've already come up with a price, they change the scope of the job. That's a very difficult negotiation to be part of, because it is, you're being taken advantage of. And how you respond to that matters. And it's really about just killing them with data. When you come out and you say, well, we really wanna add three shots, but we don't have any more in the budget. And you have to say, well, I don't know that that's possible, but here's what we can do. And you make concessions in other places and you say, okay, well we can't do three more, but I'll give you one, but I'm only gonna give you one variation on it, because on the back end I need to take time to process those. And if you're adding more on the front end you're adding more on the back end. And when you explain that to a client, that you're now buying much more of my time they understand that oh, we don't want you to work for free, we just need to fit into this budget. So you make those concessions. You don't give as much coverage, you don't process as many images, you ask for more lead time. All of those things, so that you can actually do other work while you're processing those, you can parse it out a little further. So there's all those little nuanced things that you can do without losing the client and blowing up and saying, you know, that's not what we talked about, that's not what was happening here. And I get emails and calls like that all the time from younger photographers who got boxed into a number and then everything changed on them. So you have to have a bit of tact to get through those situations. And then after you get through with the job if you're not happy with that client you fire the client. It works that way too. You get to fire clients. Because you get to realize that this is not worth my time and it's not worth my money and I feel like I'm being taken advantage of and I can do better than this. And you have to have the confidence in yourself and in your business that you can survive walking away from clients. If major advertising companies can walk away from billion dollar clients because they're bad clients, well, you can walk away from one too, because there's a lot less at stake. And it just happened. If you read Adweek, which is another one of those resources we're gonna talk about, if you read Adweek and you follow the industry and you understand the kind of things, and there's other trade papers in advertising, but you read what's happening, you see that clients are getting fire more and more and advertising agencies, they're shifting around a lot more, because the fact is it's becoming increasingly unrealistic as to what amount of content you can provide for the prices that they wanna pay. And we're stuck in the middle of that too. So you have to be, the more knowledgeable, the more information and data you can throw at them, and the more personal you can be, and the more attentive you can be, and the ease of use of your experience with them, the user experience, the UX. She's laughing, 'cause she knows I'm now talking her language. We have a UX as well, we have a user experience. In between a commercial and editorial, would restaurant jobs be somewhere in the middle of that? Yeah, I think so, I think that would qualify somewhat as like a private client or like low level advertising. Especially if it's local and not national brand. You can build pricing around the idea that it's probably just gonna be slightly more than an editorial rate plus production plus expenses and all that. So you probably can pad that a little bit more with post-production costs and things like that and figure out line items to make more money on that arrangement, but it's not gonna command much more than that. Every time I've tried to negotiate with a restaurant it never ends up being what I want. And I 80% to 90% of the time walk away during the negotiation, because they can't pay me what I'm worth, to be quite honest, they just can't. And I understand it, they're not those kinds of businesses. Even national chains sometimes that are not like brand names, but there's restaurants in five cities, even them, they just don't have the funding to do a full-blown advertising campaign. So you have to, if you really want the work you gotta negotiate with them and be sensitive to that. So you talked a little bit about anticipating costs and being up front with your clients, so if something ends up in the end costing less than what you said it was going to be are you still gonna, like let's say a studio costs 1, and then actually it costs like 700, are you going to be like up front with your client about that or is that just completely billed? Well, if you establish a baseline of what you think a studio, basically you should have a baseline for what you know that the studio you're gonna work in costs, and if it just so happens that you make some money on that end of the line item I don't think it's like an ethical issue, because once a budget has been approved the budget is the budget. And if you come in under budget and you wanna share that with your client, because you know that it's something that is gonna make it easier for them, I think it's fine to say, yeah, we came a little bit under budget. And when you put your final bill in to say, yeah, we saved about 250 on this and we saved 250 on that and you look like a hero and you look really honest, but I don't know that if there's small line items that end up costing a little bit more, a little bit less, I think that's all part of business and it's okay, but I think it's perfectly fine to be up front about it if you want. Okay, from over here on the internet. Can you talk to us a little bit about, do you have a schedule for ramping up your rates? Sounds like a bulletin board card again, Jim. Sounds like pinning that thing over the computer. I don't know what a schedule means. Tell me what a schedule means. So there are some photographers that say, you know what, at the end of 2017 no matter what, I'm gonna raise my rate by a certain percentage. And each year I'm gonna just, yeah. It just doesn't work that way. No, it can't. You can't just give yourself a raise when you feel like it. Everything has to do with the quality of work you're providing, the level of your resume. You're not gonna walk in and try to get a VP job at Microsoft after you've basically been working at Hardee's for a couple weeks. You don't make those kinds of jumps. And in photography, it's just like everything else, you build your resume and you're able to charge better rates when you have better clients and you move up the ladder, but I don't know that there's any particular schedule that says it's 2017, I have to charge more money now. So how do you know when? When the people who hire you. What are the components? Yeah, it's all about the clientbase. When you make the jump it's noticeable, when you make the jump from a local newspaper to a national newspaper, when you make the jump from local restaurants to a restaurant chain, when you make the jump from a small magazine to a magazine with a circulation of several million, you start to see your progression when your clients become recognizable even to you, where it's brand names, it's household names, it's things that you recognize and people would recognize, that's when you know you can charge more money. Great, so then the next part of that equation is I'm here and then I get this call and they're like, we wanna hire you. Okay, thanks, I'll get back to you on my price. What's the process for that for these folks checking market rates, in other words? How are they gonna, where's the best place to kind of find? Basically what you're describing is something that's sort of out of the norm, or that large leap where all of a sudden you have a client that's outside of what you've normally experienced, is that what you mean? Yeah, let's say you've got that, someone sees your work, and they want you to quote them a price, and you don't wanna go too low, and you don't wanna scare them away with too high. Well, clearly you don't give a price until you've gone through the 10 questions and you kind of, because those are the same questions no matter who the client is, right? So do you check, can you check market rates? Is there a way to know what other photographers in this realm are? If they're willing to share it with you. I don't know that necessarily that's always the case, because I think it's a very personal thing, because of what we've talked about, 'cause it's not just about rate. It's about all the other components of that and what the market will bear. Now you can throw numbers out there and if somebody grabs onto it, and I've seen it happen. You just throw a wild number out there and they're like, yeah, okay. 'Cause they don't know any better. You deal with a client who's got deep pockets and likes your work and you throw a crazy number at them and they're like, oh, okay, great. And you're like, what, okay, great. (audience laughs) It's such a fluid market that it's not, it's not like car prices or stock prices, everything has these movable parts. And if you make the jump from a smaller editorial magazine to a larger editorial magazine they're gonna tell you what the rate is. It's not like you can dictate rate in editorial. They're gonna tell you what they pay. That's one thing. It's about negotiating with people who don't have a standard rate structure. Magazines will tell you what they pay, they're not shy about it. You say, oh. And then you say, what's your budget on the project, including my day rate, or including my creative fee, or whatever you wanna call it on that level. But when you're talking about cookbooks and you're talking about advertising at every level that's where all this negotiation kind of works in terms of building out pricing. Because you go and do a job for Saveur magazine, they're gonna say, yeah, we're gonna pay you this and send us your expenses. That's it. Great, cool, thank you. Good answer. Seems like a basic question, but if you have an expense, like a studio fee, or a creative person you're hiring, do you have a markup rate that you pass onto the client? Or do you charge them what your cost is? That's a great question, because I am not operating like a traditional production company, so I'm not charging a markup on my own property, so to speak. If I was renting a studio or an overall production, in photography we really don't work in markups like the way they do in film. In film, a production company will bill out the entire job and they will add a 20% markup fee and then that's part of the cost of doing business with a production company, 'cause otherwise how do they make money? But as the photographer, especially one with their own studio, you charge them the rate for the studio, and that's that. There is no markup on it. And then if it's a studio fee outside of your own studio you charge them what it costs. That's pretty much it.