Understand billing schedules

PJs must understand the difference between price structures and billing schedules. Price structures determine fees for various PJ services and image rights. These are relatively stable. We'll discuss them in more detail on another day. More importantly to PJs are the billing schedules because these directly affect the price structures.

Billing schedules determine when a client pays for various services and rights offered by PJs. The schedules determine the time of payment and set the price structure.

One of the luxuries of being a staff PJ is the ability to front-end bill most clients. Well-established freelance PJs can do the same with their regular editorial and commercial clients.

Meanwhile, most new clients and profit-driven PJs actually prefer back-end billing schedules.

The difference between pay schedules is a matter of who wants to take the greatest financial risk. Most publications and large commercial clients, understand the risks, trust most of their regular image providers and want a certain level of editing and reproduction rights.

Meanwhile, clients who've never hired a pro PJ aren't confident in the process. Consequently, they'd rather have a low price up front and purchase rights and/or prints later a' la carte.

The choice depends on the initial mindset of the client. If the client seeks the lowest initial price, PJs must use back-end billing schedules to break even or make a profit. If the client understands photography and seeks various rights, front-end billing schedules are the best option.

I prefer front-end billing, but I realize most freelance clients prefer back-end schedules. The reason I prefer front-end schedules is to save the client money and my paperwork time. I prefer to charge a fair price for my services and give clients wider latitude with rights.

If the client prefers to pay more and have fewer rights, I can also accommodate their needs. I suppose somehow it's easier for many clients to budget expenses based on back-end fee schedules because the amounts are smaller although they add up to a much larger total fee for the client (and far more paperwork for the PJ).

Pure front end
Pure front-end billing schedules involve a verbal or contractual agreement between PJs and clients about both rights and pay. The client takes all the financial risk. They pay a lump sum for PJs' time, talents and specific rights to the work.

If something goes wrong mechanically, with the subject or otherwise, PJs are still paid the agreed fee. Even if no images are made for reasons outside the PJ's control, PJs are paid for the assignment because time and cost was involved.

In exchange for this financial agreement, the client is given the right to first edit and agreed reproduction rights (normally one-time or first).

On a typical pure front-end shoot, the PJ is paid by the client or invoices the client before the shoot begins. Once paid or in concert with payment, the PJ makes the images and presents or ships the images to the client. The client edits the whole take, selects images for reproduction, and returns the originals to the PJ after production images are selected and prepared.

After production or delivery (depends on agreement and image format), PJs are often free to make additional income from the images (i.e. new stock images).

Pure front-end billing structures are extremely rare and often reserved for only the most sought-after editorial PJs and many wedding PJs.

Pure back end
Pure back-end billing involves a verbal or contractual agreement between PJs and clients about access and solicitation of images. The PJ takes all the financial risk. The PJ's time and talents are unpaid unless images or rights are purchased. The PJ retains all rights until the client(s) decides to purchase some.

If something goes wrong mechanically, with the subject or otherwise, PJs are left holding the bag. If no images are made for reasons outside the PJ's control, the PJ loses the time and income.

For these agreements, the client(s) must purchase individual rights and must often pay fees. Until payment is received, the client has no access or rights to any of the images. The agreement merely grants the PJ access to the event and grants clients an opportunity to have subjects or an event photographed. Few additional terms exist.

On a typical shoot, the PJ fronts the money and time to make the images and contact is later made between the client(s) and the PJ to establish interest in the images.

Often, clients are allowed to view selected images online. However, the PJ is free to open the images to any potential clients.

Pure back-end billing structures are most common with standardized, volume portrait photographers (mostly school or team photos). Often, part of this agreement involves the right of the PJ to distribute sales order forms or promote the PJ's business through the client's Web site or "donor" displays and brochures.

It's very uncommon for PJs to agree to pure back-end agreements with clients. However, they may get into de facto pure back-end agreements for photo stories or essays of personal interest.

There are some rare wedding and event PJs who prefer this arrangement to glean maximum profit from the sale of images afterward. These PJs charge a premium fee for the images and immediately make them available for stock sales.

Standard PJ front-end
Standard PJ front-end schedules involve a verbal or contractual agreement between PJs and clients about both rights and pay. The client takes the majority of the financial risk. They pay a lump sum for PJs' time, talents and specific rights to the work.

If something goes wrong mechanically, with the subject or otherwise, PJs are still paid the agreed fee. Even if no images are made for reasons outside the PJ's control, PJs are paid for the assignment because time and cost was involved. Occasionally a "kill fee" may be negotiated in lieu of complete payment for problematic assignments.

In exchange for this financial agreement, the client is given the right to first edit and agreed reproduction rights (normally one-time or first).

On a typical shoot, the PJ makes the images, presents or ships the images to the client, and then bills the client. The client looks at the whole take, selects images for reproduction, and returns the originals to the PJ either after production or before.

If the agreement is "on acceptance," a check is cut to PJs shortly after the images are received. If the agreement is "on production," PJs get their check after the images are published.

For the PJ, it's always better to have "on acceptance" agreements with publishers because "on production" is determined by space and aesthetics rather than by job.

After production or delivery (depends on agreement), PJs are often free to make additional income from the images (i.e. new stock images).

Standard PJ front-end billing structures are almost always arranged for editorial clients and some wedding clients.

Standard PJ back end
Standard PJ back-end billing schedules involve a verbal or contractual agreement between PJs and clients about both rights and pay. The PJ takes the majority of the financial risk. The PJs' time and talents are unpaid unless "acceptable" images are presented. The PJ retains all rights until the client decides to purchase some.

If something goes wrong mechanically, with the subject or otherwise, PJs are left holding the bag. Even if no images are made for reasons outside the PJ's control, PJs have lost the time and income and occasionally expenses.

On a typical shoot, PJs make the images and contact is later made between clients and PJs to establish interest in the images. The review is often tied to a set of cost-covering fees. Frequently, these agreements consider the PJ's out-of-pocket costs or fees. These are often covered before or after the job by agreement.

In exchange for this agreement, the client must purchase individual rights and must often pay fees related to the images. Until some payment is received, the client often has only limited review of selected images.

For these agreements, clients must purchase individual rights even after paying PJs' basic fees. Until payment is received for reproduction, the client has no rights to any of the images. Upon payment, clients are granted limited use. However, the PJ is free to open the images to any potential clients after initial contact.

As expected, this is the most expensive for the client as well as time- and paperwork-intensive for or PJ. Frequently model releases are required (by the PJ) to ensure a potential profit from the shoot. Likewise, each individual print or licensed use requires additional work for the PJ and expense for the client.

PJs must control all images throughout this process to ensure adequate income from the assignment. If the client has access to full-scale digital images, there is no need for the client to contact the PJ to order additional prints or reproduction rights. Although there is redress for illegally used images, PJs would not know about many of the in-house infringements or illegal use on an organization's restricted Web site.

Standard PJ back-end billing structures are frequently arranged for commercial clients, new editorial clients (spec clients) and rarely for wedding clients. Often, part of this agreement involves the right of the PJ to promote the PJ's business through the client's Web site or "donor" displays or brochures.

Hybrid billing structures
As most folks should have guessed by now, there isn't a black-and-white billing schedule for most PJs and clients. Rather, it's a continuum of arrangements based on each partner's willingness to accept risk. Whoever assumes the most risk reaps the greatest reward.

Most PJs find a few structures to accommodate most of their customers. PJs who work for multiple freelance clients may find back-end arrangements more profitable. PJs who work frequently, but for fewer clients, may find front-end arrangements more beneficial.

In these arrangements, initial rights, fees and payment schedules are agreed upon before the shoot begins. In other words, if the client wants 1st review, an additional fee is agreed to be paid upon delivery and review.

Hybrid editorial
PJs may shoot and grant rights to a frequent, well-paying client and bill afterward to ensure repeat business by accommodating the business' accounts payable department.

New (unproven) PJs may shoot "on speculation" for a preferred editorial client to establish the situation mentioned above. In such case, if the editorial client opts not to purchase assigned images, the PJ is free to sell the images elsewhere.

The latter agreement is not suggested for PJs unless they can see a secondary potential income from the images produced (i.e. a professional sports team, a well-known or promising musical group, a large social function, etc.). If a 2nd grade "invention day" program is offered as a spec assignment, it's not worth the trouble. Walk away and don't look back.

Hybrid commercial
PJs may require basic fees or expenses are paid by the client before the shoot to secure the PJ's time for a scheduled back-end structure. Upon review, the client pays the remainder of pre-established or a' la carte fees to secure reproduction rights.

Under this arrangement, if the client – for any reason - doesn't accept the images, the PJ's expense fees have been covered, and the PJ has secured model releases during the shoot to allow the PJ to resell the images in other markets to make up the difference. Again, the PJ grants no rights and leaves no images with the client because the client has refused the images. The PJ is free to create profit from the images elsewhere as all agreements of the hybrid back-end schedule are complete.

Hybrid wedding
PJs may demand half of the total cost to secure the wedding date and the remaining front-end fees before the wedding date to grant the couple typical access to the images and a pre-set package of images.

Another common schedule is all basic fees must be paid to secure the date and the remaining potential income is dependent on the clients' print requests at the time they review of PJ-selected images. This option has become more popular with online-review wedding PJs.

We'll discuss price structures next time.

Enough for now,