Here's what I covered in this episode (you can jump to the different sections in the video timeline):
0:00 - Intro
1:25 - The pricing formula
2:15 - Define your cost per shoot
3:54 - Define what you want to earn for time spent shooting
5:12 - Travel fee - what's that time worth to you?
6:07 - Editing fee
6:55 - Your value and your brand
9:42 - Add a profit margin to each shoot
12:53 - How do you price bigger services or other services?
15:47 - Can you change your fee?
17:18 - Summary of this formula
What should you charge for real estate photography?
What should you charge for real estate photography? One way you might calculate your fee is to use this formula:
Business expenses + (salary x time shooting) + travel fee + editing + your value + profit margin = Your fee
So to work out what you should charge for photography, you would set your value for each of those elements, add them together and you’ve got your pricing! Now some of these values are objective and clearly defined and some are very fuzzy and hard to pinpoint, but they are still values that you need to set, so let’s go through each of these and see if we can help you figure out what you should charge.
We’ll start with your business expenses. Now hopefully you know what your expenses are, but if not then add up all of your costs over 12 months, and you’ll want to include things like:
- Camera gear and office hardware and software
- insurance for the camera gear and equipment
- Car costs, including the cost of gas, maintenance, insurance and depreciation of the value of the vehicle over 12 months. That depreciation value is an important one, so look up a vehicle depreciation calculator for your area to see how much the value of your car drops over time.
- Next you’ll include health insurance if you need that where you are.
- And any other costs that are incurred by your business.
So add up all those expenses, and let’s say it’s $15,000 per year. Then we need to calculate what those expenses are per shoot, and it’s important here that you conservatively estimate how many shoots you’ll do.
So let’s say you estimate that you’ll be doing 400 photo shoots per year. So we take $15,000 and divide it by 400, and that equals $37.50 as the cost for doing each individual shoot.
So calculate your cost per shoot and write that value into the formula like this.
Define your salary
The next element we need to calculate is your salary, and what you want to be earning for your time spent shooting. What’s that time worth to you? Remember, you don’t want to add anything else to this – we’re only factoring in your time shooting, not your time doing everything else. So if a shoot takes you one hour, is that one hour worth $200? Maybe $50?
Whatever it is define what that value is for you and drop it into our formula, and remember you can always adjust this later once you see all of your numbers in here, but for now let’s go with $50 per hour.
So your salary equals $50 multiplied by however long it takes you onsite to do each type of photo shoot that you do. So ultimately this value will vary – if it’s a 1 hour shoot then you add $50, if it’s a 4 hour shoot you add $200. Does that make sense?
Set a travel fee
Next we have our travel fee, so for this we’re concerned with your average time spent going to a shoot, and what that TIME is worth to you. For example, if you typically spend 20 minutes driving to a photo shoot, then what’s 40 minutes in the car worth to you?
Remember, we’re not adding in other costs here, because we’ve already factored in your vehicle expenses into your cost per shoot, so all you need to work out is what’s 40 minutes of time for you?
In our example, let’s say it’s $30 for that time, and you can obviously adjust that for shoots that are further away, but on average, let’s drop this into our formula like this, and we’ll put down $30 as our travel fee for shoots within a normal distance from where we’re based.
Your editing fee
Now the next thing to factor in is your editing and what you’ll charge for that. If you do your own editing, what do you need to charge for your time for editing a typical photo shoot? Or, if you typically outsource your photo editing, you’ll add that value in here instead.
For example, let’s say you outsource your editing, you’re doing 20 photos for this package and it costs you $2 per photo to edit. Therefore, you would add $40 for your editing cost into your formula, and obviously adjust that value for your different photo shoot packages depending on the normal number of images you deliver.
What value do you bring?
Next we need to factor in the value that you bring to your clients, and by that I mean, how does your experience help your clients achieve the results they want? So if your images are awesome and if you’re getting fantastic results, then that would suggest you should set a pretty high price for this.
We also want to factor in your brand and where you are positioned as a business, so are you a luxury brand which means you charge more, or are you a low-cost brand?
We also want to consider your local market, because a high-end brand in a small town would charge less than a high-end brand in a big city because real estate prices will be lower and therefore the value benefit you bring to the real estate agent’s commission fee is lower, so allow that to guide you as well.
Now you might be thinking, why do you even need to charge for your value and not just your time?
Well, at the moment you’re charging for the time spent shooting, but you’re not charging for the time you spend learning and the time you spend building your business and gaining experience so you can deliver the best possible results for your clients.
So this value fee covers those costs when you’re not actively working on a project for a client, because that's part of what your clients are paying for as well. They're not just paying for your time to press the shutter on the camera - they're also paying for your experience and the knowledge you've gained that ultimately helps them sell more homes or sell more of whatever it is they do.
Ok, so in terms of finding the right value for our formula, let’s use a sliding scale where you add zero to your fee if you’re at the low-value end, and you add $200 to your fee or maybe more than that if you bring a lot of value.
Don’t be afraid to go high with this IF you know you bring a lot of value and IF you can sell that value to your prospects and clients. So place yourself somewhere on that sliding scale, and you will need to factor in your competition here, but let’s say you offer a basic service for your area relative to everyone else, and let’s say you’re in kind of a smallish town, so let’s add $20 to our formula for the value that you bring, which is very much towards the low end.
Add a profit margin to each photo shoot
Finally, we want to make sure you’re adding some profit that you can put aside and make your business strong. Now if we look back at 2020, if you were running a photography business in 2018 and 2019 and you were running a tight ship in terms of your cashflow, then you would have had very little in the bank to get you through the lockdown period.
On the other hand, if you’d been putting aside $20 or $40 from every shoot you had over the previous 12 months, then you could have had an extra $10,000 to $20,000 sitting in a dedicated bank account that you could have accessed in an emergency situation.
Having that extra security to help you through difficult cashflow times is super valuable, so let’s factor that into our formula and for our example we’ll keep it low at just $20 per shoot. You might want to set your profit margin at somewhere between 10 percent and 30 percent of your total fee, and when we do that our formula looks like this, with $20 added as our profit margin value.
How do you find a price?
So now when we want to set a price for one of our services we just punch all of the numbers into the formula. For example, let’s say it’s for a shoot where we spend 1 hour on site. Ok, so we add up all the numbers and we get $197.50 as the fee for this particular service.
In terms of what you personally make from this, from that $197.50 we take away the $37.50 in expenses. We take away the $40 for outsourcing the photo editing, and we’ll take away the $20 profit margin, because although it’s your profit we’re going to set it aside in a special bank account, so it’s not something you get right now, and that’s the point of having a profit margin value.
So when we do all that it leaves you with $50 for shooting
… + $30 for your travel fee
… + $20 for your brand.
Adding that up gives you a take home fee of $100 for that photo shoot.
So if you’re doing 400 shoots per year, then that would give you $40,000 as a salary before tax, and you’re also banking $16,000 per year in profit that you can set aside and let it build.
Pricing a larger photo package
Alright, let’s do another example for a bigger photo package, and all we do is use this same formula but we make some adjustments to it when things change.
So let’s say a photo shoot takes you 2 hours, and you do twice as many images so your editing fee needs to double. Therefore we put all the numbers in like this, and we're now charging $100 for our time spent shooting and we're adding $80 for our editing fee, and when we add it all up it equals $317.50.
Pricing for another service
Ok, so what about charging another service? Let’s say you want to offer a walk-through video tour. In that situation your pricing equals:
Your expenses fee, which we’ll leave as the standard rateThen multiple your salary by the time you spend onsite shooting. So if your hourly rate is $50 and it takes you 1 hour to shoot a video, then add $50 to your formula.
Then you’ll add a travel fee, but if you’re already at the property because you’re also doing a photo shoot then you would probably remove this fee because your time spent travelling to and from the property is already covered by your photography fee.
So then add your editing fee for editing the video. Again, this might vary depending on how much time is involved and whether you’re editing yourself or if you’re outsourcing. But let’s say it’s $75.
Next you’ll include the value you bring to your clients with this service, and this number might be different to what you set it at for still photos. So maybe your real estate videos are amazing and they bring a lot of value for your clients, so you might add $100 to your fee for the value you bring.
Finally, you’ll once again want to add some profit margin to the shoot, so add that on as well, and again it could be different to your still photography profit margin value if the cost of the service is higher, so in our example let’s set your profit margin at $35.
So when we add all that up the total comes to $297.50 and then of course feel free to slightly tweak this price to suit your pricing table. So rather than $297.50 you might charge your clients $299.
Can you change the numbers?
So as you can see, with this formula you can pretty much price any service you offer – just add the various values into the formula, add them up and you’ve got a price.
Of course, once you’ve estimated some numbers you don’t absolutely have to stick with them. If you think you need to make some changes then that’s OK, but just be aware of what you’re changing and the impact that has for your business.
For example, if you feel that you need to drop your price because you think it’s a bit high, what value will you remove from this formula?
Now maybe you’ll reduce the number you attached to your value, or maybe you’ll remove your profit margin. But then if you’re not operating with a profit and you’re not setting money aside, then I’d question whether you really have a business or whether all you’ve got is a job with fairly low job security.
So feel free to adjust any numbers, but make sure your business is viable as a business entity and to do that you need to charge enough where you are covering your expenses, all of the time you spend working on a photo shoot and editing your images, as well as your brand and all that entails, plus a profit margin so you can get through difficult times or maximize the return you get during the good times. That’s what a responsible CEO is going to do and it’s what you need to do as well, even if you’re working by yourself.
Summary of this pricing formula for real estate photographers
Ok, so in summary, if you want to know what you need to charge in your market, based on your expenses and everything else that is unique for you, use this formula: