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|| SportsShooter.com: News Item: Posted 2001-01-23
Let's Talk Business: A New Year/ A New Opportunity
By Rick Rickman
I' ve been spending a little over a year talking about business on this forum and I had a wild idea a couple of months back. I decided to see if any of you had actually made any headway to know how you were doing business wise.
I did a little impromptu survey to see if any of you had actually taken the steps needed to find out how much it costs each of you to stay in business every day. This is one of the most important pieces of information any freelance photographer can know and is the very first step to knowing how you're actually doing and what you need to do to do better.
The good news is that a few of you have actually done the work. The bad news is that most of you haven't.
In my impromptu survey 3 out of 26 people made the effort. Granted, this wasn't a scientific sampling but it's clear from the results that many of you either don't know how to do this or are just afraid.
I can't imagine that a bunch of adults could possibly be afraid to do something for themselves that will be educational so, I'll assume most of you just don't know how. I'd be awfully disappointed to find out that the majority of sports photographers were just lazy, hapless, cowards.
In my own hopelessly optimistic way I'll assume that the majority of you just don't know how to figure out what you need to look at to get to your own figures. Well, since it's almost tax time and each of you are going to have to get to all this necessary information anyway I figured that this is the perfect time to explain to each of you what information you need to put together to get this little job done. I'm going to make it real easy for all of you. The cost items you need to compile are listed below.
1. Rent or the amount you deduct for taxes for your home/office.
2. If your home/office is a percentage of your house as mine is, that percentage of your annual utilities bill. All the utilities for your office if you actually have one.
3. The cost of your alarm system.
4. Phone - cell, office, fax, beepers.
5. Automobile costs - gas, maintenance, insurance, etc.
6. Depreciation on your camera gear.
7. Office supplies.
8. Office equipment.
9. Health Care.
11.Computers and software.
14. Advertising and promotion
15. Magazine subscriptions
16. Professional dues.
17. Salaries for your employees NOT including you.
Total these figures for the year in each category. Add all the totals together, and divide the total figure by the number of weeks you work (i.e. 52 ) for most. Divide that figure by 7 and you have a basic cost per day required by you to keep the doors of your business open. See that's not so hard is it.
If you took my suggestion at the beginning of last year and purchased Quickbooks or some other related software, all these figures would be readily at hand for you at the push of a computer key making the task that much simpler.
Most of you may be a little surprised at the total cost of your business at first. I know the first time I did this I was staggered. My costs have actually gone down a little bit in the past couple years because I haven't had any huge purchases like a new car or lots of new camera equipment. My costs are still pretty high at around $257.50 per day.
The one thing that this figure does for you immediately is show you the bottom line of what price you are able to actually make money at a job. If for instance, you are taking jobs that pay fees of $200.00 or less, chances are you are loosing money. If these jobs have enormous resale potential, and you're keeping the rights to your film, then maybe you're ok. You'll never know however until you know your own cost of doing business.
I know many of you are out working for clients who are paying you $250.00 to do a shoot for them. In many cases, these same clients are asking you to turn over your film to them. Let's say that your cost of doing business is close to mine. If it costs you $250.00 to keep your doors open then with the cost of inflation currently at about 4%, you have actually lost money taking these jobs.
Let's look at another example. If you work for the NBA lets say. Many of you who do, get between $300.00 - $350.00 per game. They keep your film and after your shoot pays for the expenses it costs the NBA, they send you some money. I think it's a fifty/fifty split of sales.
Anyway, strictly from a profitability standpoint, if it costs you $250.00 to be in business each day and you shoot a game for $300.00 you have made $50.00. If you shoot "fifty" games for them a year, (highly unlikely for most people,) you will have made $2500.00. Not a particularly successful take if we look at things from a profitability standpoint. We can only make these important assessments if we know our own cost of doing business.
Once we have established this cornerstone of base profitability, we can then start to assess how we can maximize our time and what kinds of shoots will be most advantageous for our business. If your cost of business is $300.00 a day it stands to reason that for you to make a profit, you have to work for more than $300.00 a day or make sure that you are photographing something that has tremendous resale value in the long term.
For instance, my cost of business is $257.50 a day. A client comes to me offering an assignment to shoot the Olympics for $300.00 a day plus expenses. It's 28 days work which will be $8400.00 in fees. Is this a good deal for me? No, it's not a good deal! It's actually a terrible deal! I'll be gone for almost a month and will only end up making $1204.00 for that month's work.
I know from some experience that the resale on Olympic images are only somewhat valuable (with a few exceptions) and for this reason it wouldn't be worth taking this job for this fee.
In another example, lets say baseball card company "X" calls me up and asks me if I'd like to shoot 80 days of baseball @ $400.00 a day. They tell me that they'll go through all my film and pick out a select few images for a select group of cards and then send the film back to me to do with as I choose. They promise me that they'll get each take back to me within 45 days of submission. I'm affiliated with a very good Sports agency and I know that the agency will be able to make sales from this material. Is this a good deal for me?
This is a better deal than the first. I will only actually make $142.50 a day from this job but it will give me a total fee of $11,400.00. This coupled with the fact the Sports picture agency will make money for me this year as well as in the next 3-5 years will make this a decent arrangement and something I'd be inclined to take.
Now, lets all be conscientious little sports photographers and actually find out what we require to keep our doors open this year. I'd like to have each of you do this and then report back to me your annual figures because I'd like to report this in my next column so we all can get an idea as to the breadth of these figures. If we all know how much it costs to do business we have a powerful device to use to negotiate higher fees.
It will be valuable information to have. I will be dealing with the art of negotiations in an upcoming issue. Please do these calculations and then e-mail your result to firstname.lastname@example.org.
By the way, there will be a test on this material later. Now get out there and make some money!
(Rick Rickman is a freelance photographer based in Southern California. His periodic columns cover the business aspects of photography.)
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