Best Business Practices for Photographers [62]
Figure 7.1
CODB calculator.
After you've determined your CODB, it's time to compare that to what you're charging for what are typically referred to as photo fees on many generic invoices. These are a separate line item from all the expense lines.
Suppose you have an editorial assignment for which you are charging $1,200 plus expenses, and, using the NPPA's default figures for their CODB calculator, your business costs $898.50 per day of shooting. This means that the difference between what you are charging and what your CODB is—$301.50—is either a profit for the business, a usage fee for the use of the images, or some combination thereof. Typically, in this line item of $1,200, you've rolled in your CODB costs as well as usage. There is, however, a school of thought that suggests those two items should be separate, and both sides of the debate are passionate about the issue amongst photographers.
I'll present the two schools of thought as fairly as I can regarding photo fees. Before moving to that, though, it is important to consider whether what you are paying yourself is going to be a fixed cost within the CODB calculation or a percentage of profits. I would submit that you should determine a fair wage and include that figure as a fixed cost, and one that increases annually—not only by approximately 5 percent for standard cost-of-living-adjustments (COLAs), but also commensurate with your growth and increased experience as a photographer. A 5-percent annual COLA and a 10-percent increase every two years would be more than reasonable.
The following sections discuss two schools of thought regarding photo fees.
School of Thought #1: All Creative/Usage Fees Are Listed as Single Line Items
Many photographers simply put both CODB costs and usage fees together. Typically, they do so because they don't want to separate the two or they don't have a solid grasp of how to best separate the two. (Or perhaps they don't know their CODB.) Thus, many photographers list both items as a single line item because they don't want to get into unknown territory. They do what they've done before, which has seemed to work so far.
One argument for keeping them together is that this is the way software companies handle it, and that's a fair comparison. When I purchase my license to use a piece of software, I am obtaining, at nominal expense, the materials (CD, manual, and so on) and, at a larger expense, the license to use the software on one desktop (and one laptop, according to the last EULA I read). If, after buying the software, I learn it's not compatible with my PowerPC machine and only works on an Intel Mac, I opt not to even peel the wrapper off the box. (This is a Mac issue, so you PC users need not worry about this—yet—but it's an understandable analogy, so go with it.) I continue to run the previous version, because all the online reviews say it's better. I then call the creator and say I've opted not to exercise my licensed rights, and, therefore, I would like to not be charged (or to get a refund) for the license.
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NOTE
Please make sure you're not using pirated software. Photoshop is one of the more ubiquitous software packages and is highly pirated. If you don't respect others' licenses, you have little room to object when someone steals your photographs.
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NOTE
A EULA (End User Licensing Agreement) is a standard agreement for which you usually just click Agree when you are installing the software or before you open the CD jewel case. Sometimes it's a sealed envelope with the text printed on it, and sometimes it's a sticker that, by breaking, you acknowledge as having read a printed document that accompanied the CD in the packaging.
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The argument is that the license is included in the fee because regardless of whether you've exercised your right to use the photo, you contracted for that fee and are obligated to pay it. Were there to be line items of, say, $1,800