Best Business Practices for Photographers [64]
In addition, media buys can be a moving target. The initially stated buy could be midsized, so you estimate for that, and then when/if it's reduced (sometimes significantly), your percentage total must go down. Perhaps you'll have a minimum buy, or perhaps you have a sliding scale.
Almost all advertising agencies are paid a commission based upon the media buy, and the commission ranges from 10 to 15 percent. However, for extensive multimillion-dollar buys, agencies have been known to accept commissions as low as 3 percent. This approach of a sliding scale makes a great deal of sense. Although some art buyers may state that they don't know what the media buy is (and that may be the case), more than likely many just do not want to disclose to you the media buy.
Here are a few ranges and percentages that would be fair and appropriate to apply and would take into consideration the value of the usage:
$2,000,000 or greater: 3 percent
$1,500,000 to $2,000,000: 4 percent
$1,000,000 to $1,500,000: 4.5 percent
$600,000 to $1,000,000: 5 percent
$450,000 to $599,000: 5.5 percent
Less than $450,000: 6 percent
There are, however, a few caveats to this list. If it's a full-page ad with a heroic photo that's not yours, and yours is a quarter-page inset photo, then your percentage should be adjusted downward. If it's all your photos in the ad, even multiple photos taken at different shoots, you would have been paid for each of the shoots, but the usage fees would be a single sum combining them all. If nothing else, in the end, you can do the research and find that a full-page ad in a trade magazine with a circulation of 30,000 costs $8,000, and if they want unlimited rights to advertise in all trade magazines for two years, that's 24 months times $8,000, times four or so magazines, or $768,000 in possible media buys. In this case, a 5-percent usage fee is $38,400. Of course, this would be the likely maximum media buy they could make under those rights, but this certainly gives you a starting point to quote from for usage; moreover, you can negotiate downward for the total and the expanse of usage. A percentage such as this is often something that clients can not only get their heads around, but also can accurately and in simple terms convey to their own clients.
At the conclusion of your determination of how much you'll have to put into delivering the best images to meet client needs and usage, you can combine them or not, consistent with your decision about the aforementioned factors involved in delivering a clear and understandable estimate for the client's consideration.
Calculating Rates and Fees and Presenting the Figures
Few questions raise more quizzical looks than one colleague asking another, "What should I charge for this?" Everyone has an opinion on the subject, but few of them are informed well enough to give good advice. The problem is, more often than not, when someone with a modicum of knowledge on the subject says, "That assignment should be $2,750 plus expenses," the inquiring colleague will no doubt say something like, "Wow, that's a lot of money. Really?" And they often will price the assignment at something like $1,800 including expenses, and the downward spiral continues. The same issue arises when the question is, "What should I license this image for advertisement X for?" and the response is, "That should be a license of $4,480." The inquiring photographer