If you want to join the ranks of the millionaire photographers, try working in Zimbabwe. With inflation running at 2,200,000 percent, the country has just issued a banknote worth Z$100bn. It buys about two loaves of bread. By comparison, working in an environment in which prices are rising by about 3-4 percent – the level now common in much of Europe and the US – looks relatively painless. It does present challenges however.
When your business and personal expenses increase, how can you put up your prices without losing your customers?
In practice, price rises hit two kinds of buyers. Charging new leads a higher rate is always going to be easier than asking established clients to stump up more cash. The reference point for new customers – the price they’ll compare your fees to — will be the rates charged by your competitors, not the amount they used to pay to you in the past. They won’t feel the increase; they’ll only see the final fee. Closing the deal then will mean ensuring that those leads are comparing your services to images offered by other suppliers at your new price point.
Your Photos are Worth More than Ten Bucks
For photographers, who charge a wide range of different prices, that’s going to take some careful marketing. JC Penney, for example, supplies photographic portraits for less than ten bucks. If you’re charging $120 for a portrait, you’ll need to make sure that your marketing material indicates that your photos are of a much higher quality than those and worth the extra money.
That shouldn’t be too hard, and it’s something that you’re likely to be doing anyway. When you increase your prices, however, you might find that you need to emphasize even more strongly the additional value that your images bring. A portrait photographer who wanted to raise his prices from $120 to $150, for example, would need to make sure that his marketing matched that of other $150 photographers and not the $120 photographers he was competing against in the past.
Charging established clients more money is always much harder: fail to close a lead and your business won’t be able to grow; lose current customers and your business might shrink. That could be even more painful than absorbing the rising cost of expenses.
It’s that fear, of course, that prevents small businesses from putting up their prices. According to the National Federation of Independent Business, only around a third of small firms had raised their fees in June this year, despite the recent increase in costs.
Often though, when suppliers do raise their fees, they’re pleasantly surprised. While some customers are sensitive to price, those that have been loyal to you for some time are likely to remain so, provided of course that the new rate is still reasonable.
Not Raising your Prices Might Not be Sustainable
It helps though to explain why you’re putting up your prices. Your buyers understand that you need to stay in business and will want you to do so. They won’t want to look for another image supplier unless they really have to, so being up front is often the best policy.
Point out that rising petrol prices means that the cost of traveling to and from location shoots is now higher than before, for example, and they’ll sympathize. More importantly, they’ll also assume that other photographers are feeling the same pressure. If those photographers are not raising their prices too, their businesses won’t be sustainable and they won’t be reliable suppliers.
Simply announce an across-the-board 25 percent price rise however, and buyers are likely to look at what other photographers are doing, and check that your prices are still competitive.
Of course, if some of your customers are price-sensitive, there is a risk that your announcement will highlight the extra costs and drive them away.
The alternative then is to raise prices subtly. You can do this by reassessing or eliminating your discounts and by upselling high-value, low cost items such as framed prints and larger size images. Or you can charge different prices to different markets. Airlines are experts at this. The person sitting next to you on a flight might well have paid a different price for the same type of seat. The difference is charged because they might have needed to buy it at shorter notice or with the possibility of changing the dates. Similarly, it makes little difference to a photographer whether he’s shooting an executive portrait or a headshot for a dating site but the executive is likely to be willing to pay more so trying to sell more of those types of commissions should raise your income without noticeably raising your prices.
However you do it, charging extra is always a little scary. Bear in mind though that a small increase in rates can have a large effect on your profits. And that having set their new price, many suppliers wonder why they didn’t do it earlier.