When it comes to your photography business, do you know your numbers? When you start a business you can’t throw your hands up and say you don’t have a head for numbers anymore. You MUST know them or fail. CODB for photographers is where you want to begin. It stands for Cost of Doing Business and I’m going to help you nail this right now (and way more).
I’ve put together a free workbook for you to use along with the video (or blog post if you’re more of a reader) below. You can access your workbook right here.
The vast majority of photographers I connect with don’t have a grasp of the figures when it comes to their photography business. Some realise that they don’t. They’re aware of it. Some think that they know, but after a few questions it becomes clear that they don’t.
And it’s no surprise really.
A photography business can be up and running in a day these days. It’s not like you have to submit a business plan to the bank or anything. Most photographers… just start.
Chasing your tail and learning on the job. It’s no surprise that the numbers don’t get crunched until it’s time to deal with the taxman. And even then, it’s not the clear picture that you need.
Ask any seasoned business person and they’ll tell you that understanding the numbers is fundamental to success. Often you run the numbers and the results are scary as hell. You might realise you’ve effectively been working for nothing. It might transpire that your business isn’t actually viable. But take it from someone who’s been horrified by her numbers before.
It’s only when you understand your cost of doing business that you can confidently price your photography and stand by it. Those doubts about whether you should reduce your prices or not suddenly disappear. Because you KNOW. You know that to charge anything less would mean you’d go out of business.
That unshakeable knowledge? It gives you the courage that you need to move forwards.
It gives you control.
There’s nothing like that moment when you see the evidence in black and white right in front of you. The evidence that you must either increase your prices or shut down your business. It’s not going to be fun but you’re going to look back at it and be very, very grateful that you experienced it.
So without further ado let me help you with your cost of doing business exercise.
It’s actually way more than just CODB. You’ll end this exercise knowing exactly what you need to charge if you want a viable business. I’ve even provided you with a free workbook to download.
And you are going to do it, aren’t you?
Because NOT to do it? To choose NOT to work the numbers and get that clarity? That’s a pretty significant sign right there that you should NOT be self-employed for a moment longer.
Make sure you have your workbook in front of you and something to write with.
Remember to be realistic and give yourself time to have a life and spend time with loved ones.
Now consider your holiday days and your sick days across the year. Considering how many hours you typically work in a day, how many hours would your holiday and sick days average out at per month? Subtract these hours. That’s important.
So this is how many hours a month you have available to work with clients, right?
That would leave you with zero time to work ‘on’ your business. Not all the work you do is ‘client’ work! You need a large proportion of those monthly hours for marketing and growing your business. Or what’s the point??
So we have to subtract yet more hours from your monthly total.
How many hours you allow yourself to work ‘on’ your business is up to you but if you’re serious about being successful and profitable with a great work-life balance then you need to make time for growth tasks.
If you’re a full time photographer I’d recommend that you work ‘on’ your business for at least 20 hours per month.
That’s just an hour a day.
So decide how many hours you need for non-client work and take this away from your monthly hours.
This number is how many hours you have each month for client work.
It’s easier to work this out across the year first. And again, you must include everything. Even costs that don’t exist yet.
So maybe you haven’t booked any training courses yet but you plan to. Include them. Maybe you haven’t upgraded your camera body yet but you plan to and you need to. Include it. Maybe you haven’t organised childcare for your toddler yet but it’s in the plan. Include it.
All the headings are in your free workbook to help you. Add everything together and divide that total by 12. This is your monthly cost of doing business. But remember it doesn’t include the cost of goods sold to your clients (COGS). Bear that in mind.
But let’s not stop there.
Let’s do a little bit more work so that you can find out just how much you need to be making per hour of client work if you want your business to be profitable enough to give you the salary you want and need to earn.
Not the money you want to have in your hand each month. The full amount including tax. That’s important.
Before you do this take a moment. Look at the number of hours you’re working. Your salary MUST be enough to justify this or your time in business will be short and bitter.
However, you also have to be realistic. We’d all love to earn 50 grand a month but unless that’s within reach for you right now, it’s not going to be helpful to write that down.
So what’s a desirable but realistic monthly salary for you given the hours you’re working and the clients you work with (or want to work with)? Write it down.
Have you included tax?
Take that desired monthly salary and divide it by the number of hours you work in a typical month. The number you wrote in that very first box.
What would you be making per hour with this salary?
Unlike an employment contract, being self-employed is risky and unpredictable. For this reason you should be paying yourself WAY ABOVE minimum wage. There will be quiet times and unforeseen circumstances. Are you leaving yourself able to cope with these? If not, make some adjustments to your figures so that you are.
Now it’s the moment of truth.
For your business to function well and pay you the salary you want and need, this is how much it needs to turn over in a month.
But we’re not done.
Remember that number?
That is the minimum you need to earn per hour of client work based on your CODB and the salary you want and need.
So that’s a pretty handy figure to know, isn’t it?
When you know what you need to make per hour of client work, you can price any job as long as you can work out how many hours you’ll need to spend on it.
But we’re still not done!
From the first enquiry to delivery of products. Include every single part of the process and don’t do yourself a disservice.
I’ve put tables into your workbook to help you complete this part. This should make it really easy.
Now a portrait job takes considerably less time than a wedding so, if you do portraits and weddings, filling out a table for each of them in your workbook makes sense. Completing these tables will help you to price your services confidently and profitably.
Work out the time spent based on your level of service and your ideal client. How much time do you spend on these tasks per client? An average will do fine.
Photographers tend to grossly underestimate the time they spend on tasks. Time is money so if you’re not sure, spend a week timing yourself.
Once you know the average number of hours you spend on your clients you can multiply this by the minimum amount you need to earn per hour of client work.
This will give you the minimum average spend you need your clients to be making. For portraits, for weddings, for headshots, even for mini sessions.
Once you’ve done that, all that’s left is to think about what all of this means in terms of the number of clients you can serve each month. If you specialise in one genre this is going to be very simple. All you need to do is divide the number of hours you have available for client work (box 6) by the number of hours you spend on each client.
However, if you offer different services you might want to spend some time thinking about and working out how this might look for you and your business. For example, if you do both weddings and portraits, how many of each can you do well per month?
That’s all the work you have to do in your workbook. It’s a lot. It might take you a few hours. But photographers who don’t do it - don’t stay in business.
Don’t be that photographer!
Before you go and get to work on your workbook, bear with me for a few more points...
Remember all of this does not include the cost of goods sold (COGS).
That being the cost of the prints, frames or albums your clients might order from you. I’ve left this out until now. And for good reason. Depending where you’re at with your business right now you may have no idea what this figure might be. Maybe you’re just starting out. Perhaps you’re in the middle of changing your product offerings. Maybe you want to move from selling digitals to selling wall art.
However, if you do know what the average cost of goods will be (or you can work it out with reasonable confidence) then add this on to that figure. If not, just remember that it’s not there and factor it in as you go.
So now you know the minimum average spend you need from your clients. Because of course you want to give them the opportunity to spend more than that.
The minimum average spend that you need might scare you. It might be a lot more than you thought. It might be a lot more than your clients are spending right now. It might be a lot more than it’s even possible to spend with you right now.
What are you going to do with this knowledge?
At the very least, you’ll make it so that it’s almost impossible for a client to spend less than this amount.
These are the moments that define you as a business person. The moments when you actually start to feel like a business person.
You now know how many clients you can serve excellently and what they need to spend with you. Now it’s time to make your business so fantastic that they’ll be more than happy to do so. None of this is going to happen overnight.
Remember it’s a journey to profitability.
We can absolutely help you on that journey. The Togs in Business membership is just $39 per month and it’s a learning hub for photographers who’re willing and able to do the work required to build a fabulous photography business.
If that’s you. Check us out.
In the meantime don’t forget to download your CODB workbook below. And let us know how you get on with it!