Busting a myth!

[RickArnold]

This Subject comes up more and more with the affordability of Digital SLRs these days.

My problem with people always analyzing this is that one section of those individuals who come into a market and sell for less are not accounted for.

I started my studio 3 years ago from nothing and I mean nothing. All I had was a 10D and a couple of good L lenses. I shot anything and everything I could at next to nothing. All the while reading posts about this very subject and never posting another reason for the price undercuts.

Now 3 years later I finally have all my workflows down, a fully equipped studio and have brought all my prices into range with my competitors. I now have a very good portfolio of all different kinds of work. 90% of my work going forward is all referals as up until now I had no budget for marketing or advertisment. I lost only about 5% of my customers when I raised my prices by 60%.

Believe me I lost my butt over that time but now I am sitting with 100K worth of assets in my studio and wedding contracts for the next 9 month to keep me running even if I get no other work.

There is no way in hell I would be able to jump into a market and start a studio from scratch and demand the top $ the other studios were getting. "can I see a sample of your work?"... "Umm I have some B&W stuff I did in my darkroom at home."

I completely understand the reason for these discussions because there are a lot of rank amatuers that have no business charging people for what they call photography. I have over 25 years of avid shooting so I am not one fo those people but I did have to do the price undercutting just to get my foot in the door to a business doing what I truly love.

Rick

P.S. I deal with customers who want to go to one of those amatuers instead of me by telling them to go right ahead. I know they will not get the quality and the person will be gone within 6-9 months anyhow. I will see them again

[Norm_Cabana]

It's interesting that this particular thread came back alive. Regarding the original positon, it's still valid.

I wanted to illustrate that there are many people who have this grand idea that they are going to enter a particular market, with no real knowledge of what it takes to compete, and simply underprice the existing people and they will simply walk away with all the business. It doesn't work like that. It was never meant to be a comprehensive treatise on the subject, just something to get the new folks to open their eyes and do a little thinking. That's usually why I post here, to get you to think.

If price is the defining factor, as so many believe, there would no room in the market place for anything but the absolute lowest priced products. Rolex, Mercedes, Cartier, and numerous other companies could not exist, yet they do and they do quite well, thank you. In your own businesses, how often does a customer buy the absolute lowest priced item? Just think of the cameras you use? Is Canon or Nikon or Hasselblad the cheapest camera you can get? No, you buy quality don't you? Do you buy your camera by mail order or do you instead buy from your local camera store? I've done both and often the mail order purchase makes me wonder if the dollars I save are worth the headaches I get.

I had an incident this past weekend that illustrates my point exactly. I was covering a new event, for us, and one person in particular was having problems with our prices, or so he said. He asked if I was firm on my prices and I replied "Yes I am." He then said that the other guy was much cheaper and I replied "Yes he is. However, he is not going to be covering these events any more. He is not being invited back." He was interested in getting several single digital images but I explained that there were more than sixty images of him and for the price of two single images, he was within ten dollars of getting all the images. He went away saying that he'd have to see if he could get a loan to buy something. Stop and think about this for a minute. The guy was going to BORROW money to buy SOMETHING? He didn't want anything in particular, he just wanted to buy something. If you're broke, the smart person doesn't buy ANYTHING!

In about an hour he came back. He looked at his images again and filled out an order form. He then asks if I take PAYMENTS? I asked him if he was trying to say that we are too expensive and of course he said yes. He then handed me the order form and what did he buy? Did he buy the cheapest thing I sell? Did he get that mouse pad or coffee mug that's thirty dollars? No, he buys an 11x16.5 print for $60...twice what my cheapest item is and ten dollars more than my smallest print. Was price the deciding factor here? No. He really liked the images and was super impressed with the quality of the work. The price might have limited what he could buy but it didn't stop him from buying.

I'm going to post another message about this event and you'll see that price is not as important as many of you think. Does this mean that you should go out and raise your prices? For many of you...yeah you really should.

[Norm_Cabana]

"I shot anything and everything I could at next to nothing."

Rick,

My question to you is why? Why did you price yourself so low? Did you believe that you had to do this to get sales? When I started, which wasn't that long ago, I joined a group where I could get some answers from veterans about what should be charged. It was far less than I charge now, but I was in the ball park with my peers at the time.

[Mike_Guilbault]

Originally Posted by Norm_Cabana

Does this mean that you should go out and raise your prices? For many of you...yeah you really should.

Have you heard the one about the hot-dog vendor in New York. A man was standing at the bus stop and a customer came up to the hot dog vendor beside him. The customer asked how much for a hot dog. The vendor told him $2.00 and the customer bought one. A second customer came up and asked the same question. This time the vendor said $2.50... and the customer bought one. A third customer came up and the same thing happened again but at $3.00.

The man was curious and walked up to the hot dog vendor and commented on his observations. He then asked the vendor, exactly how much are your hot dogs? The vendor looked at him and said, "I haven't established that yet".

I learned many years ago that raising prices is healthy and helps you establish where your prices should be. Quite often, it's higher than you think.

[Dave New]

I believe I'm in violent agreement with Norm, but I'd like to reiterate/expand:

"If you're broke, just about anything is 'too expensive'".

In other words, don't trust your judgement about whether or not your prices are too high, based on a few whiners that reveal that their problem is that they don't have enough money, which is a completely different problem from whether they'd pay the price you are asking, if they thought they could afford it.

Listen carefully to your potential customers, and what they are saying. Anyone that is simply too broke to afford your stuff, is not really a potential customer, and should be discounted as a data point in your price calculations.

I can speak authoritatively on this subject , having been broke on a regular basis over the years, and wanting to be able to afford something that was just simply out of my reach at the time. Older (and hopefully wiser) these days, I have hopefully reached the point where I hold my tongue rather than whine or complain to an artist that 'your stuff is too expensive'.

[RickArnold]

Originally Posted by Norm_Cabana

"I shot anything and everything I could at next to nothing."

Rick,

My question to you is why? Why did you price yourself so low? Did you believe that you had to do this to get sales? When I started, which wasn't that long ago, I joined a group where I could get some answers from veterans about what should be charged. It was far less than I charge now, but I was in the ball park with my peers at the time.

I did this not to compete with anyone else but to get the people who wouldn't have bought pictures to begin with because of price. My whole plan for the first 2 years was to build a portfolio and amass equipment that I can use to do larger jobs. Could I have come into this market charging going rates and got work... Yes I could, but nowhere near what I did the way I did it. I had one thing going for me in starting this company ... 3+ years worth of living expenses built up from 20 years as a software architect.

In short, coming into a market and working out of your home does not look good to those wanting to drop $500 on pictures without a great portfolio. Yes it can be done, no it wouldn't have been easy. I got probably 50-60% more work doing it this way and now I have good word of mouth and a sizable portfolio in almost every aspect of this business. Now going forward I am on par and actually more expensive than some of my closest competitors but I certainly don't function like they do.

I just think that saying someone coming into this or any other business has to function or price items like their competitors is extremelly short sighted. If someone can do it differently and cheaper and can survive well I salute them. Its called a Free market