Best Business Practices for Photographers [63]
Another argument is that clients often come back to photographers for additional uses or to extend the existing rights package to include another six months (or longer), and if you're figuring this based upon the larger creative+usage fee, then the end result is a higher additional fee for the added or extended uses.
School of Thought #2: There Should Be Separate Line Items for Creative and Usage Fees
Some photographers break out these fees, often at the request of clients trying, as they've said to me on more than one occasion, "to compare apples to apples." This means that other photographers are regularly separating the two. In addition, the client can understand that you're not earning $13,800 for the day, but $1,800 for the day, and the $12,000 is for X period of time, during which the client can exploit the work to serve their company's interests. This often makes for a better understanding of the fees outlined on an estimate— something that must be justified to the end client. Even when the bottom-line total is the same, details such as a separation can make a difference.
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NOTE
Exploit is not a bad word, so get used to seeing it. It basically means "use to the fullest extent allowable," but it has been perverted into its more commonly used meaning—"to take advantage of." Almost all contracts drawn by lawyers who know what they're doing use the word (albeit sparingly). Dictionary.com's first definition of the word is, "to employ to the greatest possible advantage: exploit one's talents."
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A downside that becomes obvious when you apply the math from #1 is that if you're basing your quoted fees for additional or extended uses on the original figure, subtracting $1,800 will reduce your additional fees when you are coming up with a percentage-based rights extension. The upside, though, is that clients understand the percentage better when they see how you arrived at the original, and now expanded, fees.
After you've figured out whether usage is a part of creative fees, then figure out your fees. As a baseline, take your CODB and add 7 to 15 percent as a profit for the business, and consider that as what you charge for an assignment for which you remain in "first gear" (if you're a five-speed manual) and for which little of your extensive skills or creativity are called for. With a CODB of $900, that's a $990 creative fee (which includes a 10-percent profit for the business).
For assignments that require a bit more effort and creativity, consider a percentage-based increase in your creative fee—say 30 percent to hit "second gear," for $1,200. For assignments that require you to get moving (and creatively interesting), you bump to "third gear"—say a 50-percent increase, or $1,350. For assignments that are creatively exciting, you hit "fourth gear" at a 75-percent increase over your CODB, or $1,575. For assignments that are creatively challenging and taxing (and exciting), you could end up at 100 percent of your CODB, or $1,800. For a more extensive discussion, refer to Chapter 6.
On top of all this is usage. With all the resources available to you via software and online sites, you can determine usage guidelines (and modifying factors) fairly easily after you review the available historical surveys, more recent surveys, and, in some instances, factors of a media buy. Following the review, you'll have a good idea of what to add for usage.
A model that has been discussed and debated, and one that I feel is not only fair, but also comprehensible by clients—especially those who are art buyers—is a percentage-based model. I first came across this concept during a panel discussion at a conference where primarily advertising photographers were speaking, and the concept struck a chord with me. Usage, it was