Best Business Practices for Photographers [68]
Raising Your Rates: Achieving the Seemingly Impossible
No matter what rate structure and fees you've decided are right for you, ultimately you'll need to (and want to) raise your rates. The federal government gives its employees a cost-of-living adjustment (COLA) each year, as do most corporations across the country—or at least they used to! This is done for purely economic reasons. If a loaf of bread cost $1.29 last year, this year it costs $1.35, and the government wants to take this into consideration. Otherwise, over time, you wouldn't be able to afford the same grocery needs that you had, say, five years ago. If for no other reason than "everyone else is doing it," your rates should increase over time. If they don't, everyone but you will have more buying power, and you'll be at a disadvantage. The car that cost $20,000 ten years ago now costs $27,000, and you can no longer afford it—among other things.
Understand, though, that the COLA does not take into consideration promotions and raises that everyone else is striving for in their jobs. You, too, should strive to earn more as an employee of your business than you did last year. How much is up to you. Ten percent? Fifteen percent? Did you do a bang-up job for the business, working extra hours and weekends, outperforming last year? If so, a promotion of 20 or 25 percent is what others are achieving. Yet how do you do this when you are both the raise seeker and the raise approver, as well as the justifier to the customer of the new rates? It's a huge challenge.
Consider the scenario in which you have based your rates and fees on time—typically covering luncheons, dinners, galas, or even rites of passage. I adjusted my rates somewhat quietly. Early in my career, I had a four-hour minimum and was charging $100 an hour—in other words, a $400 minimum—but for that, the client could book me for up to four hours. After a few years, I raised my rates to $125 an hour, reduced my minimum to three hours, and added an administrative fee that was 10 percent of the estimate total—usually around $48 or so. This meant that the combined photo fees and administrative fee was $375+$48, or about $423. In addition, for the clients who did need me for four hours (or booked me for three and then ran over), I was able to bill an additional $125, so my four-hour assignments were bringing in $500, and no one was complaining. In addition, this eliminated situations in which clients figured out that it was the same to have me arrive at 8:00 a.m. for a 10:00 a.m. event concluding at noon as it was for me to arrive at 9:30 a.m. Not only did this save me the headache of fighting rush hour traffic and getting up early (one of my least desirable things to do), but I was able to take assignments that ended, say, at 5:00 p.m. and move on to assignments that were from 6:00 p.m. until 9:00 p.m. Previous clients were having me arrive at 5:00—something that I couldn't do, and thus I had to lose one job or another.
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NOTE
A study of my client bookings revealed that most clients hiring me for this type of work only needed me for two or three hours, and my risk involved the few clients who did need me for four hours.
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A few years ago, I decided I was busier than I expected, and I thought I might be able to weed out a few clients if I raised my rates again, so I did. I increased them to $150 an hour, with the same three-hour minimum, and the administrative fee jumped to around $68, meaning that a three-hour event earned $450+$68, or $518, and that four-hour event was earning $600+$75 (approximately) in administrative fees, or $675. This was a decent increase over the original $400 of a decade earlier. Is almost a 60-percent increase over, say, 10 years good? Perhaps. Does it take into consideration a COLA? Yes. Did it award me raises and promotions because I am more competent than I was 10 years ago?