The last 2 articles that I wrote on SproutingPhotographer.com were about wedding albums and specifically about how to sell them to every client and how to use sample albums as a sales tool in your studio. Today is the third part of this series on wedding albums, where I’ll show you exactly how to price your wedding albums for your clients.
Quick side-note: as I’ve mentioned previously, although I use the term “wedding album” throughout this article, the principles are transferable to any market or any product for that matter. All you need to do is replace the word “wedding album” with “newborn album” or “family book” and the principles still apply. Take my specificity to the wedding market as an example, and read more into the principles behind the example than the details of the example itself if wedding photography isn't your market.
How to price your wedding albums as a photographer
You know that I love the topic of “pricing” and I’ve written a number of times about it. It’s a topic that is often brought up and discussed on the podcast and I’ve been interviewed countless times on other podcasts and web shows about it as well.
For reference and further reading on the topic of pricing, if you're interested in going deeper, I’d love to point your attention to the following articles that I’ve written:
- How to not compete on price in your photography studio on SproutingPhotographer.com
- How to set your prices as a photographer on SproutingPhotographer.com
- Increasing prices on SproutingPhotographer.com
- How to price a newborn session on NewbornPhotography.com
- Photography finances and calculating studio profits on PhotographySpark.com
- Photography pricing and influencing factors on Skip Cohen University
Lastly (and a shameless plug), I’ve also co-written a book on the topic of pricing called Pricing for Profit with Sprouting Photographer content creator Robert Nowell that you may want to check out where we dive deep into the mechanics of pricing.
Why calculating based off of your costs is best
I don’t necessarily think that I need to re-state my entire philosophy on why setting a foundation for your prices based on your costs is the best approach, and nor would you want me to dive too deep into that right now because it would make this article significantly longer! Instead, let me summarize in a few sentences.
The only real measurable, repeatable and sustainable approach to pricing yourself is to do so based on your costs. It’s a universally accepted and adopted model for businesses of every size and in every industry. It’s the only known, repeatable, quantifiable and objective factor that affects your pricing. That being said, once you do have a baseline using your costs as a guide, you may find it beneficial (or required) to adjust your prices using the other influencing factors of confidence, quality, perceived value and competition.
There, that’s it! Got that off my chest … and it’s really just a few sentences that summarizes what I have spent upwards of an hour in workshops and seminars explaining. I think this gives you enough context for the purposes of this article, though.
If we can agree that the best place to start pricing your albums is by looking at your cost-of-goods, then let’s talk about that process now.
In the cost-based pricing model that I have been teaching and applying for years, there are essentially four steps:
- Determine the “soft inputs”
- Add up the “hard costs”
- Calculate the total cost
- Factor in your mark-up
Step #1: Determine the “soft inputs”
I like to think of the soft inputs for a product (an album in this case) as everything non-material that goes into it until the moment it gets to your client. This is mostly measured as your time. In the context of an album, let’s use an example to look at the time it may take a photographer to produce a finished album. This example will assume the following:
- The album has an average of 8 images per spread
- The album has 20 spreads
- It takes the photographer 1 minute to retouch an image
- It takes the photographer 5 minutes to design each spread
Assuming all this, we can conclude that it takes this photographer 160 minutes to retouch every image in the album, and 100 minutes to design the entire album. If we add in other time inputs such as correspondence and revisions with the client (60 minutes), ordering time (15 minutes), packaging time (15 minutes) and delivery time (30 minutes), we can conclude the following total soft inputs:
- Design: 100 minutes
- Correspondence: 60 minutes
- Retouching: 160 minutes
- Ordering: 15 minutes
- Packaging: 15 minutes
- Delivery: 30 minutes
This means that the photographer’s total soft input (time) is 380 minutes.
Note: As you follow along, don’t worry about figuring out your numbers of calculating anything for yourself just yet. At the end of this article, I’ll share a free calculator that we’ve created for you where you can plug all of your details in to a simple form and it will tell you how to price your album.
Step #2: Add up the “hard costs”
The hard costs are the actual fees that we pay to have the album produced, which include the actual cost for the album from our lab as well as any other fees, supplies and/or material.
In our example here, let’s say that the album costs $350 from the lab, with an additional $20 shipping charge and that the packaging costs $15. That means that the total hard costs for the album is $385.
Step #3: Calculate the total cost
We need to add up the soft cost (time) to the hard costs in order to calculate the total cost of the album.
In this example, we know that the total soft cost (time) was 380 minutes. In order to turn this into a dollar value, we need to determine the per-minute wage. Let’s say that the photographer in this example wants to be paid $60,000 per year. This means that his hourly wage is $30/hour (calculated as $60,000/year divided by 50 weeks divided by 40 hours per week), and therefore his per-minute wage is $0.50/minute (calculated as $30/hour divided by 60 minutes).
This now shows us that the total soft cost (time) is $190 (calculated as 380 minutes x $0.50/minute), and if we add in the hard costs of $385, we can calculate that the total album cost is $575.
Step #4: Factor in your mark-up
It’s common sense to not make the retail price of a product be equal to its cost, as we need to consider overhead, ongoing expenses, utilities, rent, equipment, software, insurance, association fees, and so on. We also need to factor in a reasonably modest amount of business profit.
In order to account for our these ongoing fixed expenses and to factor for some business profit, we need to multiply our cost by a mark-up factor, which is recommended to be 2.85 for a home-based studio. We talk more about the PPA benchmark survey, why to use 2.85 and the mechanics of mark-up in our book, but for the purposes of this article, you'll have to just “trust me” on it.
In our ongoing example here, when we multiply our total cost of $575 by our mark-up of 2.85, we arrive at a recommended retail price of $1638.75, which is actually a fairly reasonable retail price for a 20-spread album.
That's it! This is exactly how to calculate the price for your wedding album for guaranteed sustainability and profitability!
The dangers of not following this process
The mechanics of pricing your albums is fairly straightforward, and it’s built upon a system that is the foundation to all successful businesses. Hopefully this article (and process) was enlightening for you and gave you a step-by-step guide for calculating your prices moving forward.
If you are not following the process outlined above, it's ok – it's never too late to make a change. Start implementing this system right away in your business to turn things around and start on the path of success. If you don't apply this process over the long-run, however, it'll mean one of a three things is happening in your business:
- You are not paying yourself at all.
- You are working long hours for little pay and will burn out eventually.
- You are not making enough money to pay for your expenses.
None of these three options above are a good place to be in as a business, and all of them will undoubtedly lead you to have to close up shop eventually. That’s not what I want for you, and I don’t think it’s what you want. That’s why I wrote this article (and others like it) to help guide you through the process, show you the why and, more importantly, show you the how. Follow the steps above and I promise that you’ll have a successful and sustainable photography business.
To calculate the suggested retail price on your wedding albums without going through all the math yourself, please check out our FREE album pricing calculator.
I said earlier that the calculations in the example were based on a specific design and retouching efficiency assumption. Here are two quick post-script notes about those assumptions, and how you may not fall into them:
- If you are taking longer to design an album, then that has a direct influence on your price and will exponentially increase it. You need to become efficient with album design (using software like Fundy Album Designer) or outsource it if it isn’t the best use of your time.
- If you are taking longer to retouch each image in the album, then it also has a direct influence on your price. You may want to consider using actions or look at your workflow for places to become more efficient. You may find that retouching isn’t the best use of your time, and so in that case you may want to outsource it (using a post-production solution like ShootDotEdit).
Up next: the “face” of your prices
Once you know (and understand) the basic mechanics of how to price your albums, you need to put a “face” to them. Put another way, you wouldn’t walk through this mechanical, cost-based calculation with your client when discussing their album – they’d be confused, overwhelmed and thrown off. You need to have a clear, precise and pre-determined way of presenting your album prices to your clients, and that's what I call the “face” of your prices.
There are three ways to “face” your album prices to your clients:
- Base album up front, up-sell afterwards
- Pre-packaged albums with different page-count and sizes
- Unlimited album
I've tried all three and have seen the ups and downs of each. In my article next week, in the last part of this series all about wedding albums, I’ll be diving more into these three methods, the pros and cons of them, and how to figure out which one works best for you. Stick around!
The “Business of Wedding Albums” Series
Part #1 of the “Business of Wedding Albums” series – How to sell a wedding album to every bride
Part #2 of the “Business of Wedding Albums” series – 6 Principles to turn sample albums into a sales tool
Part #3 of the “Business of Wedding Albums” series – How to price your wedding albums as a photographer
Part #4 of the “Business of Wedding Albums” series – Wedding album pricing strategies for photographers