A penny saved...

Benjamin Franklin is one of my favorite people of all time. He said and did much. He stated, "Beer is living proof that God loves us and wants us to be happy," but that's a tangent I won't follow today. ;-}

Instead, let's discuss one of his other highly-quoted statements. It is, "A penny saved is a penny earned."

Over the years, people have misunderstood this powerful business statement. Additionally, Ben didn't get it entirely right. I'll explain why in a moment.

It's basic business
While some marketing genius convinced people that Ben's statement is about opening a savings account and letting someone else use their money, it's not. It's actually the exact opposite.

What Ben meant was any penny you don't waste equates to earning a penny. Pennies don't mean much anymore, so think of it as $10. Basically, not wasting $10 is the same as earning $10.

Still not convinced? OK. Load $10 into the paper shredder. Once it's pretty confetti, do you need to earn the same $10 to pay bills? Probably.

As businesspeople, PJs must understand each dollar we don't waste is a dollar we don't need to earn elsewhere. Better yet, every buck not wasted is profit.

Ben was wrong?
I said Ben didn't get this concept entirely right. Here's why:   it costs more to earn money, than it costs to spend it.

Think about what earning money entails. There's overhead involved in equipment, communications, utilities, travel, taxes, etc. These expenses come from somewhere. They come from PJs' earnings. It easily costs $10 (or more) to earn $20.

Therefore, Ben's statement relates to the PJ biz as "$10 saved is $20 earned."

Yes, it's all a write off, but it takes more time. Use the same time wisely.

Big biz
As businesses become larger, it takes more money to earn money. However, any incremental cutting of waste creates substantial rewards. It's worth more than earning the same amount because it costs nothing.

We understand this principle when it comes to manufacturing. If a magazine reduces one centimeter of paper waste, those centimeters add up to reams in short time. The amount saved in one press run could easily offset the entire editorial expense for the magazine.

Let's ignore how the newsprint hedge system works today. Instead, think of cutting costs as a way to earn money.

How this affects PJs
PJs work with extremely large, profitable companies. Since Ben was a printer, it's fair to say most buyers of our work understand exactly what Ben stated.

It's also fair to say publishers understand our work is often negotiable. Sure, we have a point where we walk away forever, but they can squeeze most PJs fairly hard before most PJs drop a publisher.

This is precisely why it's important to understand Ben's simple statement. This is how the industry operates. Publishers look to save a penny wherever they can. If a publisher pays less for content, it's profit.

Publishers may try to cut "non-essential" (from their point-of-view) expenses such as mileage, transmission fees, digital fees, use fees, etc. All of these are essential to a pro PJ's survival, but publishers are trying to save pennies.

They're smart businesspeople. They're doing exactly what they should be doing.

Meanwhile, PJs must battle these attempts to encroach on our fees. As I stated, fees are negotiable. Part of the negotiations involves walking away from bad deals. If PJs accept bad deals, they must work doubly hard to earn the same amount. This is a recipe for hardship.

If we're smart businesspeople, we do exactly what we should do. We set fair prices, and stick to our prices. Publishers still buy images. They pay the full price because it's a cost of doing business (a full write off).

Like I said, publishers are smart. They try to cut expenses wherever they can. If they find PJs willing to work for less, they'll occasionally save those pennies. If they find pro PJs won't back down, they pay the fees and look to save pennies elsewhere.

The publishers did their job by trying to save pennies. Cheap PJs failed to do their job if they accept low offers. It's not the publishers' fault, it's the PJs'.

Legitimate costs
Every tiny expense involved in making any image is legitimate. It's a business expense to someone. It should be the publisher's expense because they need the images.

If a shoot is 10 miles from a PJ's house, charge the mileage. Otherwise, PJs are PAYING the publisher $18.20 to make an image for the publisher (.455 x 20 miles = 9.10 * 2 [Ben principle] ). A 100-mile gig costs $182.00 - enough to buy a new lens or some quality filters.

In turn, these purchases are a write off for a pro PJ, so the after-tax purchasing power of any 100-mile trip is about $364 [(546/3)*2]. This is 36,400 wasted pennies if mileage wasn't properly charged to the client.

It's up to the PJ to either PAY to make images for a client, or get new equipment. It's the same amount of money. I choose to buy new gear with my money and let the publishers pay their share of my car expense, which is a total write off for them.

Alternatively, they can spend $600 to fly another PJ into town. Then, they pay this other PJ for her/his time, rentals, etc... It'll cost the company more in the long run, so they'd rather hire a local shooter and pay these fees if all things are relatively equal.

My point is:   clients pay fees if the fees are reasonable and understood up front. If a client wants to walk away from a deal over a $30 expense, it probably isn't a client worth keeping. I'll happily give them the phone number to an area high school to hire someone in their price range (yes, I've done this before).

While some may think this is irrational, consider I frequently have gigs in Houston and Lake Charles. Both are about 90 to 100 miles from Beaumont.

Are either of these cities lacking PJs? No.
Do clients specifically hire me and understand my fees? Yes.

Editorial work costs money. Publishers don't spend this money because they want to be good people. They pay to create a product to sell to their customers. Smart publishers create better products to sell more copies or get more viewers. Better products cost more money, but create more income.

In this sense, the penny invested earns two cents. Likewise, the pennies "saved" by the competition probably cost them those same two cents. So, how much does a cheap publisher really save? Nothing, they actually waste this money. According to Ben's principle, this costs twice as much.

What it means
Today, we understand a buck saved (by a PJ) is the same as a two bucks earned. We can look for bargains while purchasing, and we can cut waste to earn more money. Most importantly, we can ensure clients reimburse our expenses and pay other legitimate fees.

We know publishers must try to save some bucks, and it's up to us to reject low offers. This is because our work is valuable and considered an "investment" rather than "waste."

Just as PJs invest in better equipment to improve the quality of our work, publishers invest in quality PJ work to improve their product(s). Investing in quality PJ work yields extra income for publishers. It's the cost of doing business.

It costs nothing extra to hire good PJs because it's a business expense. The publisher is reimbursed by the government (via taxes) for our fees. Meanwhile, they get additional readers by acquiring high-quality images.

Therefore, quality PJ isn't a "waste" of money for the business while hiring an unqualified shooter is. The penny invested returns two-fold while the penny wasted is lost forever.

This is why the thought of putting money in a savings account is backwards to what Ben meant. The bank invests and doubles money while only paying small dividends to the savings account owners.

Meanwhile, the business principle of not wasting money and using it to earn money is as valid today as it was when Ben sipped his beer.

Enough for now,