How to make and manage your money as a photographer.
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As a creative professional, it can sometimes be a challenge to treat your work as a business. Taking photographs is a form of self-expression and a personal passion, and that can muddy the primary goal of making a living. In this article, we’ve set out a financial management roadmap, to help set you and your photography business up for success.
First: How to price yourself properly.
Pricing yourself as a photographer is challenging, whether you’ve been in the business for one year or twenty. Taking the time to ensure you're pricing your work appropriately and budgeting carefully is absolutely essential to your success.
But never fear! There are some simple considerations that can make your life a whole lot easier when it comes to pricing your services, or when to adjust your pricing. They are:
Costs of running your photography business
Costs of goods or services
Costs of your time and labor
Your desired profit
Taxes
It may sound intimidating, but let's dive into each of these a little deeper.
Costs associated with running your photography business: These are the nuts and bolts of your business.
Equipment costs - your owned gear, rented gear (remember to include wear and tear and repair/replacement into your estimate!).
Office/studio costs - if you work from home, estimate the square footage of your work space and include that, or your office/studio rent (as well as utilities).
Marketing costs - the cost of your SmugMug subscription, paid advertisement, business cards, etc.
Costs of goods and/or services: These are the services you outsource. Think photo storage, printing, order delivery (all included in a SmugMug subscription, of course), as well as bookkeeping and other organizational tools. If you are in the business of selling your prints, creating photo bundles and packages is an important part of your pricing.
Costs of your time and labor: Here’s where the rubber meets the road. When considering how you price your time and labor, do your homework!
Place yourself in the competitive market. This takes some research but is a good starting place for making this important decision. Research working photographers in your area, ideally within your niche, and find out what they are charging. Try to aim somewhere in the middle – don’t price yourself at the low end of the market, but also don’t price yourself at the top. It can also be smart to choose a range of pricing to allow for some flexibility in terms of client budgets.
Estimate your personal value, based on experience. This is tough because it’s subjective, but try to be as objective as you can. Take into account how long you’ve been at it and what your strengths and weaknesses are. Take into account the quality of the gear you work with, and how quickly you turn around images. If you are in the commercial sector, take into account the caliber of clients, and brand equity of your clients. And never work for free.
Remember to never undervalue your own time. If you undervalue your time, clients and customers are likely to do the same. When estimating your time on a project, include the time not spent behind the camera: pre-production, traveling, client meetings, set up and take down, that’s all time you should be incorporating into your fees.
Your desired profit: This is where you decide on your own personal profit margin, which should come on top of your time and labor costs.
How much money would you like to make off a single project? Are you charging hourly, or a flat rate? It will vary project to project and shoot to shoot, so make sure to think it through on a case by case basis, and don’t hesitate to consult your network for insights.
How will your photos be used? Should you charge extra for that? To help you get started, use these helpful calculators created by The Association of Photographers and Getty.
Taxes: everyone’s favorite financial topic!
We’re no tax experts, but you know who are? Accountants. If you’re serious about running a photography business, you owe it to yourself to hire an expert. And if you’re not at the stage where you’re ready to take that plunge, at least check out this handy guide from our friends at F-Stoppers. At the bare minimum, remember: set aside money from each paycheck to make sure you have enough money to pay your taxes!
Next: A little thing called P&L.
A good place to go next when managing your business finances is your profit and loss statement, also known as an income statement, or P&L. You’ve done all the hard work above, so a P&L is just a helpful document to make sure you’re on track. Put simply, your P&L is your business’s revenue (often referred to as the top line), followed by your costs, or operating expenses (studio rent, payroll, travel expenses, gear rentals, insurance, etc). The difference between your total revenue and your total expenses (also known as the bottom line) is your net income, or profit.
The more you are able to update your P&L statement, the easier it will be. At the very least, we recommend doing this quarterly, especially if you are filing your taxes as a sole proprietor (because you’ll be filing every quarter). Without tracking your revenue and expenses, you won’t know if you’re making a profit, so it’s a crucial step in running a successful photography business.
Lastly, and ongoing: Stay organized!
In order to sustainably and accurately manage your finances, it is important to stay organized. There are endless ways to do this, but for simplicity’s sake, we picked our top three.
Separate your money. In order to properly keep track of your business P&L, you need to separate your business finances from your personal finances. Open a business checking account, where you will deposit all revenue from your photography business, as well as pay any employees from (and manage business expenses, if you choose not to use a credit card). If you want to build credit, a Business Credit Card can be where you track all business expenses – not to mention a great way to accrue points! Pull at least 20% of your earnings into a Business Savings account to make sure you have enough money to pay your taxes when the time comes.
Define your payment policies (and methods), have them clearly stated on both your website and invoice template, and most importantly, stick to them. Decide which payment methods you accept, what your terms of payment are, set a security deposit percentage, and if you handle refunds or not. Don’t leave any room for confusion or misinterpretation.
Invest in management software. Using accounting software (like Quickbooks) and customer relationship management (CRM) software (like Paypal) to auto-populate your books and invoices will free up your precious and limited time for more important things, like getting more clients!
Managing the finances of your photography business is no easy task, and like the market itself, your finances are not fixed, they are in constant flux and so your pricing is something that will need to be adjusted and reevaluated periodically to reflect that. We are confident, though, that taking the above steps will get you started on your way to growing a successful photography business!
