Friday, February 25, 2005

Consider the Cadillac theory

You call a Cadillac dealership to get a quote on the newest, top-of-the-line model. The salesman says he can sell you one for $250 if you buy now. Do you?

I doubt it.

Why? The salesman might be a liar trying to trick you into coming down to the showroom to pressure you into another deal. He may have the newest, top-of-the-line model fresh from a train wreck. He may be trying to sell you a stolen car. Or any number of other problems.

Why do we think there are immediately problems? Because the price is too low for the merchandise and its reputation. The same holds true for PJs.

PJs aren't selling a product (a car). We sell our reputation. The high-quality reputation of the Cadillac brand makes buyers expect to pay a premium. The PJ's clients are the same.

Let's look at a typical freelance gig – a wedding. I chose a wedding as an example rather than an editorial gig because it's easier to see the dollar signs. However, this theory applies to all PJ endeavors.

Since most folks planning a wedding are not editors or art directors, they must go on reputation and price. They have already spent $15,000 on wedding preparations and their budget is tight now. They plan on this being their one and only wedding. The wedding PJ must capture the magic of the day.

They call two PJs because they heard PJs are the best at weddings. The first PJ understands their financial crunch and is willing to work out a payment plan, but the cost is still the standard $5,000. The second PJ says s/he'll do it for $250.

Who would this couple hire?

The couple probably hires the expensive PJ because there must be something wrong with the cheap one. They don't want to throw money down a hole and leave it up to a cheap photographer. Cheap doesn't mean "good" to most people.

Expanding a tad more, the cheap PJ may be busy every weekend, but it takes 20 weeks (five months) to catch up to the one week of the expensive PJ. So let's look at the odds. Is it likely the expensive PJ could get 1 in 20 jobs? Sure. Is it also likely the cheaper PJ might miss a high-dollar gig because s/he is already booked? Absolutely. Will the expensive PJ be able to manage more than one gig in five months? Very likely. Will the cheap PJ ever catch up to the high-dollar PJ? Never.

As if it didn't hurt enough for some folks, let's consider one other factor. People getting married are often surrounded by other people who are going to get married in the near future. If the PJ does a good job on the wedding, it's likely other people who participated in the wedding will want to hire the same PJ. It's also likely those people are in the same socio-economic strata as the couple who could afford the premium-priced PJ.

Meanwhile, the cheap PJ is never able to court the expensive weddings because all his contacts know the PJ as cheap and promote this aspect to their friends (no matter how good the images are). The expensive PJ gets referrals because the PJ is "expensive but does an excellent job."

Here's one more secret: people love to say how much they paid for high quality work. If someone paid too little, they would never say how much they paid or who the PJ was. If the price was fair but unattainable to most, the client gladly quotes the price and PJ's name because they want others to know how elite they are to hire this particular PJ.

If some PJs charge too little for their work (and drive down the overall market), they are creating their reputation as "cheap" rather than "good." We'll go into this theory in more detail later, but I wanted folks to consider how their prices relate to their reputations.

Enough for now,
 

6 comments:

Brian G. said...

very interesting ...
I read your site once a week. keep up the good work.
Oddly i am a young PJ for a tiny local capemay, nj paper. I have been working for about 18 months. I didn't go to school for PJ but it is a hobby that has evolved into my career goal. (They gave me a Canon D10) Lately, i have been getting people asking for me to do their wedding. I have never done a wedding before and i am afraid about asking too much and not delievering the goods due to my lack of expereince. I think it is an expections thing. I also have questions about the pictures themselves. Burn them to a disc and say have fun? Order all the prints. I am looking for a convient yet proffesional balance. any ideas?

Mark M. Hancock said...

Brian,
You question is simple, but too broad to answer in the comments section. I’ll address most of what you’re really asking in posts to come. At the moment, I’d suggest researching your local wedding competition. Let them know who you are and why you want to know their prices, etc. It’s important they understand you are trying to avoid undercutting them so badly that the local market collapses.
Once you have a ballpark range, you can accept a gig or two at a slightly reduced rate to get some starter portfolio images and build confidence. Explain this to the couple so they don’t promote your price to their friends. Then, bump up the price as quick as possible.
In general, I’d suggest avoiding the release of (useable size) digital files to anyone. There are many ways to avoid it. See how Huy does it (link on sidebar). Remember, if you give up the dit images, you lose all control (you’re as good as the worst shot) and part of the total price (I’ll do a post about front-end vs. back-end billing soon).
In many ways, weddings consume more time than PJ. The more time the PJ invests in the process, the higher a fee the PJ can expect. So, rather than minimize, see how much time and work it actually costs to do it right and charge appropriately.

picturegrl said...

Timely post as I am facing this situation right now. I have been asked to travel almost three hours away and photograph a rehearsal, rehearsal dinner, and the actual wedding over the course of several days. Because it is a somewhat distant family member (fiance's niece) it is a little awkward. I am tempted to skip the whole deal because a). I am not a wedding photographer and b). I am afraid to tell them what all that would really cost.

I usually shoot weddings with another older, more experienced photographer, and quite honestly, I imagine he will charge at least $5,000 if not more. It's a little unnerving.

I think sometimes as PJs we are almost AFRAID to make money. Afraid to ask for what we are worth. And from my standpoint, I often have problems saying and/or believing I am worth X,Y, or Z.

Nine times out of ten, when I price the going rate I am turned down. People think I will be easy and/or cheap, and when I am not they move on. I am not sure if this says something about me or about them. It's hard sometimes not to internalize it though.

Mark M. Hancock said...

OK. I hear you. I’ll do a wedding post and a schedule post. I was working on lighting. Oh well.
For now, a way to handle cost is to make fees they can choose to pay. Set travel mileage at $50 p/hour (very reasonable) plus standard mileage (50/60 = 83+.405 = $1.24 per mile) – round trip. It’s the car charging this price, not the PJ.
A 10 mile trip costs the couple $12.40 (reasonable), a distant trip costs the couple based on their choice of location.
Get with your local camera dealer and establish how much it would cost for the couple to rent the same gear as you own (probably around $700 p/day, which you will need to pay if your equipment breaks the day before). Add this as a one-time fee p/day. It’s the equipment charging this price, not the PJ.
This is already more than $1,000 that the couple has chosen to cover basic expenses. Not including a PJ fee. You might be willing to shoot it for $50 p/hour with their equipment, their car, their liability insurance, etc... If they can’t provide these, explain the fee.
If you use an assistant, add the fee. If they don’t want you to hire an assistant, make them provide one.
Point is, weddings cost the PJ money. Charge appropriately and explain the process. If it’s too steep for this couple, they’ll tell their friends and their friends may want to hire you in the future.

picturegrl said...

All very good points. Thank you for taking the time to help younger PJs such as myself.

Michael Rubenstein said...

Hey Mark,

I LOVE this post considering I have this conversation at least once a week either with a wicked cheap editor at a small paper I'm freelancing at, or with my competition at events or assignements. My favorite story though happened last week.

About 2 months ago my friend (and colleagues') dad called me about shooting a Bat Mitzva (never in my life have I ever shot something like this or wanted to). He asked me to put aside 2/21 and that he would call me the next week to discuss price. I never heard from him again. On 2/19 he calls me and asks me how much it will cost, he doesn't even bother to ask if I'm still available (which as luck would have it I was). I told him that because he was the father of a friend, and because he only wanted me for a couple of hours I would charge him 1/4 of my normal event rate ($500.00). I explained to him that I would need time AFTER the event to process his photographs, and that my equipment and my expenses would have me just about break even at that price.

He said he'd have to call me back.

When he did, he offered me $250.00 which I politely declined. It turns out that he forced my friend (HIS DAUGHTER) to work at her sister's bat mitzva for free.

The moral of the story is, don't sell yourself short, if you don't think you're being offered what you're worth, turn it down, and explain why. Maybe next time they will think twice before insulting you with an absurd offer.