Topic: Pricing & Sales, Marketing
Time Investment: 5 Minutes
Suggested Product: BizRevamp®
The pricing game is becoming increasingly harder to fight as barriers to entry in the photography industry decrease. We’ve talked before about things you can offer to client to avoid this pricing game, but what about what you can do internally? There are a variety of ways to avoid the price game but they all boil down to a budget.
So how do I even start controlling my costs and set a budget?
Super easy! Sort of. It takes a bit of grunt work on the front end and commitment to follow through but it will make it all worth it in the end when you’re able to price where you want, make the profit margin desired, and come out in the black instead of the red at end-of-the-year. We can do all this by identifying your costs, tying your budget to your business plan, and staying/getting out of debt!
#1 Identify Your Costs
The biggest aspect of being able to identify pricing and a budget is by identifying your business costs. These costs are everything it takes to run your business from internet, to packaging, to the ink in your printer. Without identifying and controlling these costs, a few things can happen:
- less profit margin
- out-price your business
- spend more than you make
As a bonus, identifying costs will also make it easier at tax time to find all your deductions!
#2 Business Plan + Budget
Take a piece of paper out. Let’s do 3 steps to figuring up your biz plan and budget.
For step #1 Write out every month for the year.
Write goals. Write costs for those goals and marketing tactics. Add to the costs in #1. Bam! Now you can see your budget. Seriously – it CAN be that simple. The tricky part is making adjustments to the budget. Simply get it all on paper. Then prioritize.
So for step #2 – Take your list of costs and think of these questions while reviewing:
- What do I have to pay for (insurance, taxes, etc)?
- What are areas I can reduce or cut (excessive prop purchases, changing internet hosts, etc)?
- Am I wanting to upgrade equipment? When do I want to do this by?
Items that should be at the top of the priority list to keep are business formation costs, insurance, taxes, legal supports, savings, and continuing education investment.
For step #3 examine the items that give you the highest return on investment.
An example would be in marketing. Are you getting more bang for your buck (i.e. clients and/or exposure) by doing action X over action Y. Then keep X and figure out if you can improve, decrease or eliminate action Y. Just a hint…this step is an on-going process. As you grow as a business-owner and photographer, priorities will change. Same with your market; as market demands flux your pricing will change – which can directly impact your costs. The lower your costs are the more profit margin you have to play with.
#3 Stay Out of Debt
I know this one is way easier said than done when the industry is pumping out new stuff all the time. This is where your budget comes in.
Prioritize, save, and only spend when you absolutely need to. Not just want to.
Sounds simple right? By going through the steps above and committing your business to the budget you will be more likely to stay within the boundaries and avoid debt. If you’re in debt, now is the time to go back to setting your budget and add in “pay off debt” as a line item.