Photography Pricing Smackdown: Packages vs. One Price

PhotoMint photography pricingThis article is inspired from my talk at the Sonoma/Napa Pug group last week. I gave a presentation on upselling photography products and pre-designing albums, and the conversation naturally meandered towards pricing and package models. I thought you might appreciate discussing this as well.

Should you offer one set price or packages? How can you know which model is going to be the best for your business? It depends. There is no simple answer-your business is unique and you need to find a solution that works with your selling style and will allow you to be profitable and stay in business. What works for me is not necessarily going to work for you. Your location, competition, style, price bracket, and sales skills all factor into this decision.

There are two basic models you can offer, a single price for your time (the coverage) and an a la carte menu for products, or a package model, which groups together the coverage and popular products such as albums, disc of images, engagement sessions, and so forth. Let's take a look at each model and what you need to understand when determining your best price structure.

One Photography Price

This method works best for photographers who hate selling and want to keep things as simple and easy as possible. The biggest drawback is that there is less opportunity for upselling photography products such as albums, wall prints and all the extras.

If you don’t charge by the hour, you may end up losing quite a bit of additional profit in extended coverage hours. One way to handle this is to let clients know that complete coverage means you decide when the coverage is complete, and you will typically leave sometime after the cake is cut or when you think things are starting to wind down.

If you go with this method, be sure to offer a la carte items, and that you talk to clients about them so you have the opportunity to create albums and wall prints for them. You should price yourself expecting not to sell any a la carte items, that way you are not dependent on income you may not make. With this pricing model, it is difficult to upsell and add additional profit since products are not included in the base price. Many studios find that most of their profit comes from albums and upselling additional products, so if you don’t give yourself a head start with packages, you'll either want to create opportunities to highlight additional products or simply price yourself with the expectation that you will not sell much else.

If your creative fee is $3,500 for complete wedding coverage, assuming you won't sell additional products, and you book 25 weddings you can expect to gross just under $90,000. Just remember that number is gross studio earnings, not your personal earnings. Photographers typically clear 30-35% of their gross earnings (remember all that stuff you have to buy, like equipment, insurance, marketing, website design, production software etc.), so in this case take home pay would range in the $30,000 range.

One of the biggest benefits to this model is eliminating the back and forth negotiating that comes with offering packages. Your pricing structure is transparent and some clients will prefer this approach.

Photography Packages

Packages tend to be more popular among photographers and there is good reason for that. A package model tends to maximize your profit, offers you the opportunity to upsell products and services both at the initial consultation as well as later. 20-page included album seems too small? No problem, upgrade. 7 hours not enough? Add 2 more hours. See how this works?

Here are some of the other benefits to using packages:

Packages are great because you can use them to attract different types of clients. For example, your lowest package may bring in clients who aren’t sure if they can afford you, but later realize they want some of the extras included in a higher package, especially if it's priced as a great deal. On the other side, your biggest packages appeal to the client that wants to go all out. Many photographers use a “whopper package” to make the other packages look affordable. It's a psychological trick, but one that works. That doesn’t mean you won't book your top package though. Many photographers find that about once a year, a client comes along who wants the very best you offer, and they go straight to your top package.

In a package model, you get paid for your time. Additional hours are offered for an additional fee. My studio averages about $4,000 in additional income each year through added hours, so it’s a nice bonus. Most weddings don’t need more than 8 hours of coverage, and 7 hours tends to work for most, so my middle package reflects that. As I've said before, Album predesign sales range from $29,000-$60,000 per year since 2006. That income is critical to us. Read more on pre-designing albums.

What's great about the package model is that you can set up your packages to guide the clients towards the package you would like to book most of the time. How do you do this? Start with a stripped down package with minimal offerings for perhaps a very small wedding. This lower price will bring in people who aren’t sure if they can afford you, but they are willing to meet with you since your lowest package falls within their budget range. Your middle package is the package you actually want to book most of the time, and you can include the most popular coverage and products so clients are automatically drawn to it. Finally, you can offer a larger package for your clients wanting the best of everything.

You'll want to structure your packages so that there are very clear differences in price and offerings. If the packages feel too similar, clients will get confused and discouraged.

One drawback to offering packages is that you may spend quite a bit of time negotiating back and forth with a client wanting to take this out, add that, etc. If you don't know exactly what your costs are, you might end up not making any profit at all. For example, let's say you include a slideshow in a package that costs only 2 hours of time, but it is listed on you’re a la carte pricing as $400. The client might want to remove that item and expects to receive $400 off the package price, which is only going to cut your profit. So it's key that you understand your costs in both labor and hard costs for each item included in every package. That way you always know what your bottom line profit is when you are negotiating or customizing.

I offer 5 packages including a top tier package designed to make the other packages look affordable-but it still gets booked. The package I like to book includes lots of extra goodies to create outstanding value for the client. These are items which don't cost me much, such as a print credit, DVD slideshow and extra coverage. By loading up the packages I want to sell with lots of extras, it makes the price feel reasonable. If you are interested in learning more about the psychology behind pricing your packages, Click here to visit Tofurious and check out his ebook “Creative Pricing and Packaging for Creative Professionals”.

Personally, I'm not a fan of the single price model, simply due to the lack of profit opportunities. Most photographers have no idea how much it costs to run their studio. If they did, they would probably be horrified to learn that with their current pricing structure, they are most likely losing money each year, meaning the expenses are more than the income. Not pretty, people. Oh well, we all have to learn. You can try one approach for a season and if it's not working right for you, change it up.

What do you think? Are you currently offering a single price or packages?

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