livebooks blog

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.

Stuart Thurlkill
I talked with everyone I knew and then went and talked to everyone I didn’t know. I found out what each person’s greatest need was and tried to find a way to fill that need. I made it a point to go everywhere with advertising and marketing material. I worked with some great photographers here in Arizona who gave me a chance to cut my teeth while I built a portfolio. I also built my own flash website. I don’t recommend this unless you have a lot of time on your hands. I also put together a print portfolio and started to shop it around to as many people in my community as I could get an appointment with.

Michael Mulvey
I instantly jumped on getting my website together and I happened to use liveBooks. I also started a blog. This allows me to routinely update a photo area with what I am immediately doing at the moment. I joined several associations and jumped into the business end of photography concerning branding, copyright law, marketing, etc. I also started networking and using the various social media sites to get the word out, build new relationships, and keep the ones I always had. More »

Maren Levinson

www.redeyereps.com

Photo by Amanda Marsalis

I founded Redeye in 2005 as a photo agency that supports photographers with both fine-art and commercial careers. I have always believed a photographer benefits from a multifaceted career, and I am interested in inspired work of any kind. Redeye currently represents six photographers, each with their own distinct photographic voice.

Before starting Redeye, I was a photo editor at Dwell and Mother Jones magazines, and consulted at various publications including Big, Chow, and GOOD magazines. I have also consulted with design firms and emerging photographers.

I love to edit and match up a photographer with their perfect job, path, or next project. Feel free to ask me anything and, if I don’t know the answer, I will make up something really good.

Click here for a list of all other “After Staff” posts.

©Nader Khouri

Miki Johnson: How and when did you transition to commercial work after leaving your staff position?

Nader Khouri: Immediately after leaving the Contra Costa Times a year-and-a-half ago, I knew that I was going to be doing commercial work. I am shooting mostly food right now and many of my clients are branding firms and restaurants. I would love to be shooting food-related subject matter most of the time, but I am still building my business. I am also doing corporate/nonprofit work and am very thankful to some of my photographer friends in the Bay Area for giving me referrals during this transition. For me, this change isn’t happening overnight, and I don’t expect it to.

MJ: How did you present yourself to commercial clients? Were they drawn to your photojournalistic background?

©Nader Khouri

NK: Most of my food clients have come from doing a lot of networking. I got to a point where I said to myself, “I’m sick of hanging around photographers.” So I got as far away from them as possible and started meeting people who I could potentially collaborate with. I had discussions with them about photography and gained their trust. My website was just a confirmation for them. I’ve gotten to the point now where I’m back in the loop of being around photographers. I became a member of APA and am using a lot of their resources. Also, I have done a ton of email marketing and I have to say, even in this day in age of Twitter, Facebook, and Adbase, seeing someone-face to-face is still number one for me.

MJ: Did you work with a consultant or rep to re-brand and find commercial clients?

NK: I studied marketing and it helped me go back and ask myself, “What am I passionate about?” and then set goals for myself. It also helped me focus on how could best serve my clients. I started hearing the word “partnership” more, and that helped me think more about how I can reach out to other professionals to meet my clients’ needs. Photojournalism and commercial work are both collaborative processes. Commercial work just has a whole host of different players. And I think that’s where photographers might end up getting discouraged.

During a transition, photographers need to take the time to understand the scope of the markets they are in and to identify growing markets. I constantly say to myself, “Even in this down economy, plenty of work is being done and plenty of money is being made.” Instead of learning video like many still photographers, I am spending my time researching my markets and making connections there. I think spending time on the content of my images is more valuable than the medium in which I shoot. If I have a client who wants motion, then I’ll hire someone to do motion. But I am still quite passionate about still images and don’t plan to change what I do anytime in the near future.

MJ: I notice that you have a strong “mission and values” section on your website. Has that helped you focus in on the kinds of jobs you want? More »