Making the entrepreneurial transition into your freelancing career can be exciting and overwhelming at the same time. While being your own boss is often very rewarding, it can also feel intimidating since it requires you to make crucial business decisions. One of the most challenging choices to make is how to set your rates as a photographer.
To determine how to calculate your fees, follow the steps below to help you create a pricing system for your freelance photography business.
Research Local Market Rates
Before you start setting your prices, take the time to examine what other freelancers are charging in your area. If you have a good relationship with any of your fellow photographers, you might even reach out to them and ask some questions. Taking these first steps can be an excellent way to see what the most popular services are and what is typically charged for each one. For example, are most local customers looking for wedding photography, family portraits, editorial photoshoots, tilt-shift landscapes, or something different? Asking questions will help you decide what you should offer to potential clients while allowing you to figure out what you should charge.
Investigating ahead of time can also prevent you from underestimating rates or overcharging your customers. As someone new to the freelancing field, you may be unfamiliar with the standard price of specific services. Looking around at current rates will additionally give you better insights into what you can potentially make over the course of a year for your business.
Create a Pricing Plan
As tempting as it might be to rush ahead and set your rates after researching other freelancers, you still need to take the time to figure out a pricing strategy. Creating your own system for setting fees will ensure that you are charging enough to cover your business expenses without over-pricing your services. If you were to copy a competitor’s prices, you could run the risk of underestimating your services and hurting your business in the long run.
Instead, take the opportunity to figure out how much it costs to run your business for a one year period. You can create an estimate by adding up all of your monthly expenses, including fixed and variable costs, and multiplying it by twelve. That total should roughly tell you what the cost to operate your business will be for a year. After this, you will be able to calculate your income required to make a profit. From there, you can decide how many hours a week you want to work and then divide that annual total from your target profit. This formula will give you an approximate idea of what you should charge per hour.
Decide How You Will Charge
With your hourly rate roughly determined, you will have to decide if you should stick with that specific pricing model or charge customers based on a project fee. Both options have their advantages and disadvantages. It will take a proper analysis of what services your photography business will offer to choose the best fit.
Using an hourly rate for your business is a great choice when most of your customers are other companies or marketing agencies. Having a set rate for every hour of work will make billing your clients less complicated than if you used a project fee. You also won’t have to worry about a job taking longer than estimated since you can just bill for more time when needed.
Even though it is simpler to use an hourly rate, it can make it easier to undercharge for your services. Finishing a job earlier than expected can create problems for your business’s profits as it will affect the amount of time you can charge for a job. Additionally, to keep up with the market and inflation, you will need to regularly update your prices to ensure you are appropriately charging your clients.
Unlike an hourly rate, a project fee is a charge you use for a specific client job. To figure out the price, you will have to estimate how long it will take, the scope of your work, and the complexity of the task. This pricing method allows you to charge more based on the value of your work instead of the job itself. You also don’t have to worry about billing for less time if you get the project done early. Clients appreciate a project fee as well since it gives them a better idea of what the final cost will be.
On the other hand, charging project fees can be harmful to your business’s bottom line if you struggle with estimating the complexity of a client’s job. This method could lead to you not charging enough and even possibly putting your company out of business. Pricing per project also requires contracts to protect your earnings in case a customer changes the scope of the job. If you don’t use a contract, a client could refuse to pay you more for an assignment, even if they changed what was required of you
Choose a Preferred Payment Method
Now that you have your pricing model decided, you will finally be ready to choose which payment method you’d like clients to use. There are many ways to collect money from customers, but some forms may work better for your business than others.
Using digital payments has grown in popularity lately, with more customers preferring to pay their bills without mailing a check or stopping by your office. There are several ways to set up virtual transactions, but the simplest method is to create a payment account with an online banking service. This option functions as a standard bank account and allows you to securely send routing information to customers. From there, they can just wire the money directly to your business without paying additional fees. Digital payment systems also make money available sooner than other methods since you don’t have to worry about a grace period between transfers.
Cash or Check
While this type of payment method is less popular nowadays, some of your customers will appreciate the option to pay with cash or check. Small business clients may require this payment type since it is easier to track for their company’s bookkeeping. Cash can be troublesome as it will require you to have a cash drawer, as well as making frequent bank deposits to ensure you don’t keep a large amount of money inside your office to avoid the risks associated with that.
Accepting credit cards has become a universal requirement for many businesses. That’s because most people typically have one in their wallet, and prefer to use it throughout their day-to-day lives. While credit cards are more accessible for your clients to use, it may require some effort on your part. You’ll have to find a way to charge a credit card through either a service or device. Unfortunately, both options typically require a fee per transaction, which can cut into your profits.
No matter what or how you decide to charge your customers, make sure you take the opportunity to research all available options. Carefully consider what is important to your clients and how to offer the best customer service. By calculating your profit goals ahead of time and figuring out the appropriate rates, you will give your business a better chance of becoming a success!