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From Doug's "Heaven, Earth, Tequila" project, which was a commission as well as a book and exhibition, with prints like this one now for sale on his website. ©Doug Menuez

So far in this column I have touched on general issues of starting a photography business. Now we’ll explore the mystery of profits. If you want to make a profit, stay in business, and retire some day, you need to know your break-even point. Break-even is reached when your income is equal to all your costs: production, marketing, fixed overhead, taxes — everything.

Why is this useful to know? Because every decision you make impacts your costs and/or potential revenue, so you should be evaluating all options in the context of your cash flow and whether you will make a profit. When you print a new portfolio, buy a camera, or advertise in a source book, you are taking a calculated risk that these expenditures will yield jobs and revenue. If you can’t do the math and actually calculate that risk, it’s just risky.

Most of the photographers I know take every job they can, happy to be working and oblivious to the fact that some jobs cost them more money than they will earn. This happens because they don’t know their break-even and are not factoring in all their costs.

You simply must know if you can even afford to take a particular job before you consider it. Sometimes photographers take a loss for a great assignment that will help the portfolio. But if you rationalize a low fee because the job makes you feel better, or think it gives you momentum, think again. Sometimes we are asked to do a job as a favor with the promise that next time we’ll be paid properly. I can pretty much guarantee you that this promise is a lie 99 percent of the time. Especially in this economy.

You can go out of business in a hurry working under the illusion that being busy is the same thing as making a living. More likely you are just churning and burning resources without getting ahead. If things slow down, look out. Instead, be strategic. Your goal should be to make a profit to provide financial security and funding for future creative endeavors. Therefore, each job you accept should fit into what you defined in your business plan.

The next step is to understand your profit margin. This is where you can really refine your goals, focus your mind, and get the business in gear. This often-ignored tool is simple: profit margin equals your net profit after taxes divided by total revenue.

Say your net profit is $30,000 on $300,000 of revenue. Your profit margin is 10%, not so great. Average business margins are around 30%. With that knowledge, you know it’s time to cut overhead, raise your fees to earn more, or both. If you regularly check yourself against an ideal profit margin, you are utilizing a potent tool to analyze your business costs. Now you are starting to take control of your own destiny.

Let’s break it all down another way: Say your total yearly overhead at the moment (Fixed Expenses + estimated Cost of Goods Sold + estimated taxes) is in fact $300,000. That is the minimum amount you have to earn to break even. Now look at your income and how it is billed. If you bill per ad, and you’re getting an average of $10,000 per ad for usage fee, and you shoot about two ads per month, your total annual income is $240,000 — and you are losing money.

Until you do this math you probably think you are skating by because the checks are coming in. You are short and late on some bills, but you are working. But by not making a profit, you are actually way behind and won’t last long. You shot 24 ads at $10K each, but you need to do 30 ads at that rate just to break even. To make a profit you’ll need to significantly cut costs, raise your rate, or both.

Based on your break-even today, and considering your market, forecast a number of jobs for the year that seems conservatively realistic and how much you’ll need to charge to arrive at a 30 percent profit margin. Carve that in stone or on your forehead and aim for it. Now you can be strategic about every job you accept and every dollar you spend. You can keep track of your progress easily and push yourself and your team toward that goal. Profit. Make it part of your plan.

Monks from Luang Prabang disrobe and dive into the Mekong for a swim, Laos. By a participant in one of Jack Picone's workshops.

Miki Johnson: Tell me how you’ve diversified from what you were doing before to a lot of workshops and teaching.

Jack Picone: I was based in London in the ’80s and ’90s, and worked mostly for European magazines and the supplements for the UK papers, The Independent, the Observer, The Guardian; or the usual suspects in Germany, Spiegel and Stern; and in France, Le Republic and Liberation. In the ’90s, I covered about eight wars over a decade, including Yugoslavia and the breakup of Russia and conflict on the African continent. Then I lived in Tanzania for a year, and came here to Bangkok after that.

Those magazine assignments were my backbone when I was in London, and it was a much simpler existence. All I did was go off on assignment for them, or I would have a guarantee. Now I just let those assignments come to me by osmosis. I still get work trickling in from Germany, France, UK, and a bit from Australia, where I’m from. People ask me why I still do occasional assignments. I tell them: “When you go on assignments, it takes you to places and puts you in situations that you would never be in. You meet people you would never meet otherwise, and that’s good for your creative spirit and soul.”

I realized in the early 2000s that I would have to start diversifying because it wasn’t financially viable to continue as just a photographer. That’s when I started teaching photography: at other people’s workshops, for the World Press, or I’d get invited to universities to do workshops and critiques. Then I realized I really enjoyed teaching; it was interesting and it still involved photography. I kind of got the teaching bug. It’s quite electric when you can impart some experience and knowledge to people who want it, and then actually see them improving. So I started diversifying into teaching, at first other people’s workshops and then my own. I still do both, along with other things like fine-art exhibitions. Teaching, like photography in general, is not a very stable marketplace. It’s so mercurial, you can’t bank on it 100% either.

Jack Picone instructs photographers during a workshop.

MJ: Walk me through a workshop week. Do you have help putting it together?

JP: It’s pretty much just me most of the time, but then about a month before the workshop starts, I bring people in on a freelance basis. For instance, the last big workshop, in Katmandu, I had someone doing the administration stuff and then I flew in a photographer from Australia who’s a friend of mine, Stephen Dupont, to work with me full time. Then I flew in about five other photographers as guest lecturers. Normally I just pay their air fare or their accommodation or do some sort of contract deal.

For the workshop, the students turn up and there’s an introduction. The first night the instructors will show some work to inspire the students. Then normally I give them a word, like “hope,” with a brief, something vague — they’re not meant to be spoon fed. Then they have to interpret the word, find their subject, and start shooting it.

We usually get into a pattern where they’ll go out and shoot early in the mornings or late in the afternoon when the light is best and work the other part of the day in our computer lab. We critique and edit in the afternoons, and then go into the night sessions, where we start showing their work and critiquing it in front of the other participants. And then, of course, each night is peppered with the photographers I fly in, who do a formal presentation each night. There’s a lot of stimulation.

Finally we critique and edit all their work from the week and then put together an A/V presentation that we project during the final night show. On that final night, because the workshops migrate, we will invite locals to come and see the show, so it’s a real community thing. Whatever country we hold the workshops in, we also give a couple places to local photographers who can’t afford the fee.

The best thing about the workshops is the cross-fertilization. And not just between the tutors and the participants, but among the participants themselves. They learn a lot from each other and from their own work — what they’re striving for and what they’re failing at and what they’re achieving. Lots of people from the workshops become life friends and stay in touch, with me and with each other. Some of them have gone on to be very successful, like Jean Chung and Richard Humphries. Jean was on one of my first students, in Laos, and she’s doing amazing things now, has won all sorts of awards.

There was another young guy, in Katmandu last time, named Solendra. He was basically a news photographer covering all the political problems in Nepal and Katmandu. And my course is very documentary, not news or hardcore photojournalism — although we will have photojournalist tutors because it’s a fluid edge between the two. The workshop was an epiphany for him because he discovered this documentary way of taking pictures, and he hasn’t stopped practicing it since he left. He’s so appreciative that he got the chance to be exposed to that, as well as a whole lot of other photographers.

That cross-cultural fertilization is very important, too. The local photographers are great to have on the workshops because a lot of the other students are mostly Western or European. The locals can help them out with local knowledge and help them really experience the local culture.

Thanks again to everyone who contributed to last week’s “After Staff” series on RESOLVE. That includes everyone who commented, asked a question, or emailed us with feedback. I was excited to hear that people had not only learned a lot, but also felt less isolated after reading about so many former staffers’ experiences — many even got in touch with people featured in the series and started up offline conversations.

We hope these conversations continue and that “After Staff” and RESOLVE will continue to be a place you come to for community as well as resources. If you’d like to look back at any content from last week, a permanent page with links is here. A few highlights from later in the week included very personal insights from David Leeson, his first public comments about leaving the Dallas Morning News last year, and a no-holds-barred interview with the inimitable Bill Owens.

~Miki Johnson

“It lets your clients become evangelists for your business.”