A few weeks ago, I was in a strategy meeting for a project I’m working on, and the question was asked, “which of these two buildings are we building?”
The difference is pretty clear. On the left – the leaning tower of Pisa. It’s famous for one reason: it’s falling over! Sure, structural engineers are slowing down the inevitable, but because of its poor foundation, the tower is falling after just a few hundred years.
On the right – the Pyramid of Giza. For most of modern history, this was the tallest man-made structure on earth. It has lasted thousands of years and has withstood earthquakes. We don’t know know exactly who built it but it stands firm. Its foundation is solid, even as it rests in desert sand.
The Pyramid of Giza isn’t as sexy as the Leaning Tower of Pisa. Italian architecture is more appealing, and “artistic” than the pyramids, which were built to serve as tombs. The tower was built to be a work of art. It is made of marble and took over 177 years. Yes, the Leaning Tower of Pisa took 177 years to build! It was painstakingly intense, yet all that labor is in jeopardy because its foundation is too shallow and too soft.
The pyramid, in comparison, was built in 20 years. Its foundation delves deep into the desert floor. Its base is wide and its purpose is clear – to stand the test of time.
As photographers, our businesses are often built too much like the Leaning Tower of Pisa. We focus on our artistic achievements, yet our foundation is too shallow to support what we’re truly trying to build: a sustainable business.
By solely focusing on artistic appeal, we fail to consider critical internal structures and systems that build something lasting. The question is – what are you really trying to build?
If your answer is simply, “great photographs because I love photography,” that’s okay. Being passionate about photography is good! Being passionate about your art is good! But if that’s all you’re building, then you’d be better off pursuing photography as a hobby.
On the other hand, if this is your business – your livelihood – then it’s worth laying a firm foundation. It’s worth building deep and wide. It’s worth understanding your business as thoroughly as you understand your camera. It’s worth hiring a CPA, and an attorney who understand the needs of your business. It’s worth learning how to analyze your numbers, manage your expenses and earn a profit.
It’s worth mastering consistent branding and effective marketing. It’s worth developing proven processes and efficient workflows. It’s worth practicing effective sales skills to create incredible customer experiences. None of these things are photography. None of them are “art,” but all of them can creatively help you build a strong foundation. All of them enable you to build a business – a satisfying career – around photography.
I suggest focusing on three things to build a strong foundation:
1. Expenses: Understanding the two types of expenses is essential to building a strong foundation for your business.
The first category of expenses are Fixed Expenses. This shows how much it costs you to do business, whether or not you ever sell anything. This category includes your lease, your capital expenses like camera gear and computers, your insurance, your business licenses, your employee costs, your advertising, your accounting and your legal services. It also includes utilities, telephone, website, and everything you spend money on just to keep the businesses running.
For many photographers, this number is staggering! The wear and tear on your vehicle is an expense of being in business. There are additional utility costs, even if you’re a home-based business, associated with the work you do. According to PPA, these expenses should be no more than 30-40% of your revenue, depending on whether you’re a home-based, or retail-based studio.
The second category of expenses are Cost of Sales Expenses. These are the things that factor directly into the production and procurement of your products. For example, materials, prints, labor, equipment use, consumables, and more! These items all add up to the expense of selling your product.
If you want to understand the health of your business, doesn’t it make sense that you’d want to know how much it costs every time you sell an 8×10 photographic print? How can you even know where to begin to price that 8×10 print if you have no clue what it costs you?
2. Systems: Most of us operate with very little margin in our business or our life. I like to think of margin as the difference between all the things we’re doing (our responsibility), and all the things we’re capable of doing (our capacity). For many of us, we have little or no margin and end up feeling completely overwhelmed.
The fact is, many of us spend too much time on things that don’t necessarily help us grow our business! What if we created systems that helped free up some of that margin, so we could spend time on things that actually help us build our business?
What do I mean by “systems?” Every task or process you do regularly should have a system. A system is a repeatable process to complete common tasks. In my business, I have systems for accounting, workflow, client relationship management, sales and ordering. Each of these systems is designed to be efficient and time-saving.
For example, I block two hours weekly to enter information in Quickbooks. I block time off daily to respond to email. My editing workflow takes about four hours on Monday, and my album pre-design takes about 1.5 hours on Wednesday. I’m not saying you must follow my schedule, but by having repeatable systems in place, you will save time for the things that are critical for building your business.
3. Profitability: If your business is built to be sustainable, then it must be profitable. In order to be profitable, you must price your products and services in a way that allows you to cover your expenses, pay yourself and still have money left over.
Photographers come up with all kinds of ways to pick prices. They try to figure out what photographers in their area may charge. They try to determine what “the market will bear,” or they even base pricing on what they themselves would pay. Unfortunately, none of these are based on any kind of rational thinking.
Consider the wisdom of basing your pricing on what another photographer charges. Do you know anything about that photographer’s business? Do you know what kind of expenses they have, or how much they make? Do you know how their business operates, what products they sell, how they manage workflow, or what overhead they have? If not, then why would you model your pricing on theirs?
What you charge should be based on your expenses + a profit. It’s that simple. Your pricing is based on the products and services you provide, plus a profit margin. Add up everything that goes into providing a product, or a service, and you have your expenses.
For example, for a product like an 8×10 print, add up everything involved in selling that print (your cost of sales).
- Wholesale print cost: $2.20
- Mounting: $1.50
- Production time – importing, editing, processing, retouching, preparing, sales session, and sending to the lab. (75 minutes @ $30/hr) $37.50
Total cost of sales = $41.20
Then, account for your fixed expenses (things like overhead, administrative costs, marketing, capital expenses and non-sales labor) as well as your profit. The PPA Benchmark survey suggests that your Cost of Sales be no more than 35% of your income. If you want to make the math simple, a good “rule” is to take your Cost of Sales on a product and multiple it by at least 3x to get your retail price. For the 8×10 print in the example above, your retail price would therefore be $123.60.
I’m not suggesting you shouldn’t continue practicing and perfecting your photography. You definitely should! You should understand how your camera captures light. You should know composition, exposure, and lighting ratios. You should be able to photograph in any situation, and consistently create incredible images. That’s all super important.
I’m simply suggesting that sometimes it’s helpful to evaluate what we’re building. It’s helpful to ask ourselves basic questions: is this an artistic pursuit of a hobby? Or, is it a business? Is my foundation deep and wide, or is it shallow and soft?