Sometimes discounting isn’t the answer!

New Year resolution – get on Facebook

No price on quality

The story so far…

January 20th, 2009 in Marketing by Ian Baugh

Tags: Budgeting, Calculator, Competitors, Economy, Income Streams, Increase Profits, Password, Reputation, Time

Follow the links for “the story so far” in our series on the recession…

Yes, times will be tough for a while but you shouldn’t assume the sky is falling. It makes no sense to sacrifice your business and market reputation to survive the short term challenge.

Instead you may need to pull your horns in and find ways to prosper while others decline. A good place to start is by analysing your budget and business model, and we have a spreadsheet to help with that.

Most people react to the threat of declining sales by saying, “I’ve gotta cut my costs”. Everyone needs to work out their own figures, but your own personal income is probably your biggest “cost” by far. Do you want to cut that? Go figure.

Your actual job costs (eg albums and printing) are likely to be less than a quarter of sales. Cutting them may really mean short-changing your clients, a dangerous strategy. And your asset replacement and overhead costs are probably just as significant. Take a lesson from farmers, who know that bad years are a reality. They put their cheque books away until the good times return, but meantime they take care of the farm!

If you are your own biggest cost, it follows that your time is your biggest asset. What could you do with it? Maybe get out from behind your computers, look for stuff you’re doing for little or no return and become a marketer instead.

The good news is that most reactions are knee-jerk. Most of your competitors won’t be thinking about adding value – they’ll focus instead on slashing their prices and/or their costs.

So, how can you add value (for your clients) and profit (for yourself)?

A good place to start is with the realities of the wedding and portrait market.

One thing the recession hasn’t changed is that professional photography is totally open, with inexhaustible supplies of new competitors. The Weekend Warriors and the Art School Graduates, all with fancy cameras, many with the ability to use them.

What’s worse, these enthusiasts may be offering prices a tenth of yours. And as fast as they go out of business, a new lot take their place, coming over the horizon like the enemy in an old John Wayne movie.

It’s got a bit tougher, but the challenge is the same: how do you make a decent living in a totally free market like this?

Here’s a clue. In thirty years I’ve personally come across only one up-market wedding photographer, with a long-term career, who didn’t depend on albums to showcase his wedding photography.

The other thing I’ve noticed is that many studios use albums because everyone else does, but they don’t understand why.

So how does it work? How can albums increase your profits?

Please email Nigel for the password, then click here to read on.

Cheers, Ian

PS Queensberry’s logical album-based marketing strategies have been used successfully by our clients for many years. Whether you’re new to professional photography or just want a reality check, we’d love to hear from you.

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New Year resolution – get on Facebook

Time is money

January 16th, 2009 in Marketing by Ian Baugh

Tags: Budgeting, Economy, Out Sourcing, Recession, Time

We’re all sailing in rough waters, we’re all getting tossed about. The question is, who’s going to make it to port, you or your competitors? I absolutely agree with Nigel. When things are quiet it’s a great time to be working on your marketing. But are you too busy?!

I hope we agree by now that by far the most important cost in your business is you,and therefore…

The most valuable ASSET in your business is YOUR TIME.

That fact should be at the forefront of your mind, and yet most people ignore it. Even if you’re quiet it’s too important to ignore. You’ll never earn $100 an hour by spending your time on $20 tasks.

Consider this. For many photographers each wedding occupies a week of their time – often a long week. Think of the benefits if you could get it down to four days! Some photographers can do a wedding in three: think a day each for pre-shoot (to secure the booking), shoot and post-shoot.

How’s that possible? Here are two scenarios (based on my spreadsheet – email me if you’d like a copy)…

masc

The only difference between them is that in the second, instead of doing it themselves, the studio is paying Queensberry to design the album, colour-correct and retouch the images and assemble the finished book. Obviously the cost will vary depending on how much retouching is requested.

Assuming no associated cost reductions or extra bookings, my income could drop under the second option, so what’s the appeal?

Well, the 500-plus hours I’ve saved. That’s a quarter of a year! And look at the impact on my earnings per hour.

What could I do with that freed-up time?

I could work on my marketing to book more weddings.
Or I could develop a whole new income stream. Portraits maybe?
Or I could hone my golf/surfing/gardening skills, or go home early.

Let’s be clear, you could end up polishing your images less under my second scenario. But you need to look around at your competitors. Right now, are you getting paid for all the work you do? Or doing it for nothing? Another approach might be your next marketing challenge: to find a way to get paid for what you now do for free.

Cheers, Ian

PS I suggested your income would drop under my second scenario, but maybe not if you’ve been hiring someone to do your “production work”, or you use your new free time to drum up some new business.

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Taking care of business

January 8th, 2009 in Marketing by Ian Baugh

Tags: Budgeting, Economy, Overheads, Recession, Spending

NZ Dairy Farm

In my last post I suggested thinking twice before you cut back on your job costs (albums and printing) to survive the recession. Why? Because, among other reasons, your job costs are very unlikely to be more than 15-25% of your total expenses. Even slashing them in half won’t save the world. So what could you do?

Farmers know more about good times and bad than most of us. New Zealand dairy farmers, for example, know they must expect droughts and floods, not just good weather, and commodity prices that fall as well as rise. When everything conspires to make for a great year they know they can’t bank on it happening again any time soon.

So how do our farmers cope with bad years and diminished incomes? Amongst other things “they put their check books away” (cheque books outside North America). They had a great year in 2007-8, but this year prices are dropping and they face an uncertain world economy.

So, no new tractor, no new car, no house renovations. Those can wait for the good times. But they do look after the farm.

In your case putting your cheque book away might mean no new camera, no new computer, no new car, no house renovations. No new toys.

Here’s an interesting thing. According to my spreadsheet I’m spending about as much on “asset replacement” (new toys) as I am on albums and printing (more if my bookings drop). Also interesting: if you don’t buy that new camera your clients won’t even notice.

Heather and I were having drinks at the beach with two photographers last Tuesday night, and discussing this very issue. Rod’s retired but his mate said that, in his opinion, photographers need to upgrade their cameras every couple of years. “Look at Rod’s,” he said. “It’s aimed at the amateur market and it’s better than mine!”

Then he looked down the beach, put his feet up on the rail and said, “No, I can do without for now. I’d rather be surfing.”

Doing without mightn’t seem like fun, but take a lesson from farmers. Don’t overload the business that supports you and the life you love. It might take some people a while to pay down their debts but racking up new ones will make it worse. The media is getting close to saying it’s our patriotic duty to spend, spend, spend. No it’s not. We know most of us need to tighten our belts, and now’s the time.

More to follow.

Cheers, Ian

PS While you’re at it, take a hard look at your overheads. In my spreadsheet I’m spending more on my overheads than than I am on asset replacement or job costs.

PPS Don’t forget, my figures mean nothing in your case. If you’d like a copy so you can analyse your own business, please email me. It’ll take a couple of days for me to respond, sorry.

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No price on quality

“I’ve gotta cut my costs!”

January 7th, 2009 in Marketing by Ian Baugh

Tags: Album Costs, Annual Income, Budgeting, Economy, Pricing, Recession

These articles are about strategies to combat the recession. I ended my last post by posing the question on everyone’s lips: what happens if my bookings drop?

You’ll need to have read my previous post to make sense of what follows, but to recap, based on the numbers in the graphic below, if I get 30 wedding bookings and average $5000 per job my income is $71k. If I could get 40 bookings I’d make $114k, even if my average dropped to $4600.

All good, but what happens if I can only get 20 bookings?

The answer is my income drops to $28k! I could still achieve my $100k income goal with just 20 weddings but only by charging almost 75% more than what I personally believe other people of my standing are – almost $8600 per job.

If those really were your figures, how would you feel?

Well, if they were mine I’d start to sweat, my stomach would feel queasy and my first thought would be, I’ve gotta cut my costs!

I’m going to suggest some positive strategies in future posts, but first I need to focus on what won’t work. (Heather reminds me to add, “in my opinion…”)

I know that you know I’m biased, but hear me out…

Most people’s knee-jerk reaction will be to cut their job costs – their album and printing costs.

So, what if I cut my album and printing costs in half? Well that would be great if I could still get thirty jobs and still command the same price. I don’t need a recession for that to make sense. My income would obviously go up.

But it doesn’t seem likely that giving my clients something less impressive is going to make it easier to book 30 jobs at the same price. After all, I’ve just abandoned perhaps the most important evidence that I’m a standout high-end studio…

When I key in the variables this is what I find…

If I hold my prices with the cheaper albums but still only book 20 jobs I’ll be slightly better off than if I’d spent more money on albums (obviously) but I’d still still have only $35k to feed the family and pay the bills.

If I drop my prices by a quarter in order to book 30 jobs I’ll do slightly better – $43k. A lot less than my pre-recession $71k, but my best option so far.

But if I drop my prices by a quarter and still book only 20 jobs I’ll be lucky to clear $10k!

What’s to be learnt from this?

When you start to play with your prices and with what you offer your customers, the outcomes are a lottery. Maybe you’ll be better off in the short term, maybe it’ll be disastrous. But two things are absolutely certain:

You’ve just taken your business down-market to survive. (Do you think “down-market” will be less crowded in a recession?)

You will still be down-market when the recession ends. (The down-market clients you’ve booked will be recommending you to their down-market friends.)

A wise friend of mine says, if you want to stay in business you should avoid decisions that have the potential to kill you. You’re master of your own destiny, but in my opinion there are other ways to deal with the recession. With the negative stuff out of the way, we’ll deal with some of those next.

Comments welcome!

Cheers, Ian

PS These numbers come from my spreadsheet. If you’d like a copy so you can analyse your own business, please email me. It’ll take a 2-3 days for me to respond, sorry.

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No price on quality

How to navigate a cactus patch

January 3rd, 2009 in Marketing by Ian Baugh

Tags: Budgeting, Calculator, Changes Strategies, Economy

It’s strange but true. When things are going well we love to check out our financials. When times are tough we can’t bear to look.

But let’s get 2009 off to a roaring start and look anyway. Navigating a cactus patch with your eyes shut isn’t a plan.

What I’m offering is a tool that lets you see where you’re at now, and some change strategies to consider if necessary…

As a starting point, in my post about Marfa (How to prosper while others decline) I suggested it’s very tough to survive as a budget operator in the photography business…

1. The hours in your workweek are strictly limited.
2. You (you!) are by far the biggest cost in your business (I hope).
3. And there’s a gazillion part-timers who can undercut you at will.

But what does that mean (especially point 2) and is it true?

Below you’ll see a screen shot of data from a spreadsheet I’ve developed (if you’d like a copy, please email me). The idea is, given your business model, to help you calculate how much you need to charge to achieve your personal income goals.

What does that mean, given my business model? Well, the first thing I do is ask you to put a number on how much you want to earn from your photography, and how. In the screen shot below I’ve said $100,000, all of it from shooting 30 weddings.

Next I ask you to calculate as best you can your cost of being in business: specifically, the annual cost of your capital expenditure (cameras, lenses, computers, projectors etc), and your promotional expenditure, overheads and any staff wages.

Then, and only then, I suggest that you calculate what it costs you to shoot a job (eg a wedding) in cash and time.

Broad brush strokes will do to start, or you might never get to the point!

Armed with the data you can work out how much you need to charge on average to hit your income goals.

Minimum Average Sale Calculator

Meantime, let’s see what we can learn from my sample data, above. I’m not suggesting my numbers will mean much in your case: the value comes from working them out for yourself!

First, I need to earn just under $6000 on average from my 30 weddings. If I don’t, my income suffers. But let’s say that my local market research suggests $5000 is more realistic for someone of my standing. If I can’t do better than that, my income drops by almost $30,000 (30%)! I might be quite happy with that for now, it’s just that my goal is $100k.

Keying in new numbers confirms that I’d be in clover if I could shoot another ten weddings. Even if I only averaged $4600 per wedding my personal income would be close to $115,000. Very nice. And yes, I could cope with the work.

But this is the recession. What happens if I only get 20 weddings? In a nutshell, that’s what people are worrying about right now.

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