The economy vs photography

[KevinStecyk]

Originally Posted by ChrisPerry

Simple math: A barrel of oil yields 28 gallons of gas. If oil is $110/barrel then gas is $3.92 a gallon. Plus distilling, additives, transport, overhead, markup and profit and tax...

Actually, a barrel of crude produces different amounts of products depending on the crude. Some crudes produce more or less gasoline than other crudes.

What's In A Barrel of Oil?

Refiners recently have been getting hammered, in part because feedstock prices have gone up much more than sales products.

Oil companies are enjoying record profits, but part of those profits are illusionary. What does that mean?

It means that their older existing fields are generating huge profits. Oil companies originally bought some their oil leases when oil was trading in the $20s. Hence the lease costs were low. So oil produced from those fields is at a high profit.

Now, oil prices are much higher. To buy replacements oil leases is much, much more expensive.

An analogy is having bought a house ten years ago. Yes, you've made tremendous profits on your house. But if you sell it, you have to buy another in order to live somewhere. And there go your profits into your new house.

So a large part of the profits you are seeing with oil companies is the selling of their oil from older fields. The newer fields are costing them much more dearly.

The real challenge is simply finding new fields to develop profitably.

[ChrisPurves]

Originally Posted by ChrisPerry

Here when gas as $1.24 a gallon the tax was 44c per gallon. Now that gas is $3.29 gallon tax is still 44c a gallon. ...

Well Chris, in Canada our governments are much better at taxing things. They always apply tax as a percentage of selling price. That's so they never have to tell us they are raising the tax. They just let the oil companies take the blame. I'm not really sure but I think the tax rate in Canada is somewhere near 40 to 45% of the selling price is tax. So at $ 45.00 per tank in my truck and $ 25.00 per tank in my wife's car I wonder how many more tanks before they fill in the pothole in front of the house.

So, to get back to the original topic. Hobby photographers are going to suffer the most with travelling and equipment costs and freight, etc. I'm lucky that I can raise my prices and get away with it. So my extra costs should be covered this year.
Cheers
Chris

[Edmond_Terakopian]

Well, just to make you all a little happier, in the UK we're paying around $10.00! In London if you want to drive into the central area, you have to pay an extra $16.00 charge. For bigger engined cars, this is due to rise to $50.00 per day!
I'm a little surprised how little there is mentioned of the conflicts in the Middle East; war is an expensive business and I'm pretty sure that like in the UK, there's a fair amount of tax being funneled into the war machine. I can pretty safely say that a lot of this is being done transparently. This will come to light when the state of the roads and hospitals falls as the tax dollars that should have been spent on them isn't and instead is used on armaments.

Edmond

[MikeA]

Originally Posted by ChrisPurves

Hobby photographers are going to suffer the most with travelling and equipment costs and freight, etc. I'm lucky that I can raise my prices and get away with it. So my extra costs should be covered this year.
Cheers
Chris

Actually, when you think about it, hobby photographers aren't as bad off in times of rising prices as pro photographers. Their expenditure is discretionary, and they often go to places for more (family) reasons than to take photographs. If prices go up, they can easily delay their purchase/trip/printing/whatever. The money they spend is tax paid and the result of some other endeavour. They spend it because they want to, not because they have to.

Mike.

[ChrisPerry]

Originally Posted by ChrisPurves

So at $ 45.00 per tank in my truck and $ 25.00 per tank in my wife's car I wonder how many more tanks before they fill in the pothole in front of the house.

So, to get back to the original topic. Hobby photographers are going to suffer the most with travelling and equipment costs and freight, etc. I'm lucky that I can raise my prices and get away with it. So my extra costs should be covered this year.
Cheers
Chris

Most folks live on a fixed income - a paycheck- that is pretty steady week to week. What we spend on gas has gone up about $100/month in the past year, and if prices to go $4.00 as expected it's gonna go up another third from where it is now. That's some $1800 a year. And food prices are up over the past year as well - be that in the grocery or a restaurant, so we're spending about $60 a month more there, or $720 a year.
Photography is a luxury good, and when things get tight for middle america the first thing cut is luxury goods. You gotta have a house, food as well as a car and fuel to get to work. You can only raise your prices so long before you too become a casualty of the economy.

My concern is weddings, as most of my business is wedding photography. How do parents pay for a $25,000 wedding? Home equity loans are a large part of it, or loans in general. The mortgage crisis and dropping home values will hurt this source of funding if it hasn't already, and add in $200/month in extra fuel/food costs for Joe Public and I see problems on the horizon for me. Yeah, they'll still get married but they'll buy cheaper packages or choose a weekend warrior for $800.

As to potholes, the one that opened up in from of my house a couple weeks back on a weekend was filled tuesday morning - and I never even had to call.

[David_Buzzard]

Being in Canada, and having mostly American clients, I'm seeing a big move to smaller weddings, and a lot less money being thrown around. When you're worried about keeping your house, a destination wedding goes out the window.

Gas prices are a big part of the crunch, and the most noticeable. For a lot of people on salary or fixed income, it's probably the expense that fluctuates the most. Far more damaging though is the credit crunch, with a near market collapse today with Bear Stearns being bought out for less than $0.02 on the dollar from what they were worth in January 2007, being the latest example. High paid manufacturing jobs are being lost, and along with those go the executive positions, and the lawyers and bankers that supported the manufacturing plants, and those people will start to default on their loans. All in all, it's a very scary time.

This year, I severely cut my wedding rates, which has actually led to an increase in my gross revenue by about 20% this year to date. Luckily, my cost of sales with digital are almost none, and I'm forgoing any capital purchases this year. I wish I could go for the D3, but it looks like it's going to have to wait a year. I've also taken a commercial photography job that will fill in my down time space in April and May, and from October to December. Both my wife and I were kids when interest rates in Canada were almost 20% in the early 80's, and we saw our parents almost lose everything because of that. We made a decision years ago that we would take advantage of low interest rates to pay off the principal on our house at an extra 50% more than we were required to do with our mortgage, and that's left us in a more secure position than most.

All in all, I think I'll weather the storm pretty well. Hard times always roll around every 10 or 20 years, and they always pass.

David Buzzard's Technical Blog

[Ronald Garrett]

On top of everything else:

A new Portrait business just opened up in town, {15 miles away}. I just got one of their flyers, four half page foldout, Done in color. Had to cost at least a couple of bucks if bought in volume. Then another dollar each for another company to mail out?

Here is what they are advertising:
1. 10 X 13 { 1 ea}
2. 8 X 10 { 2 ea}
3. 5 X 7 { 2 ea]
4. 4 X 6 { 2 ea}
5. wallet {32 ea}
All done on a $20,000 Fuji printer on archival Fuji paper.
36 poses promised.
Whole shooting match for $9.95 us.

This business is located in a very upscale shopping area, not a mall, but 200 acres of restaurants, and specialty shops. Their rent has to be tremendous. They advertise multipule photographers on duty with a 15 minute or less wait time.

How do you compete with that? All I can do is wait em out. I know they are losing serious money at those prices.

[Pro Photo Store]

Visit the B&H Pro Photo Store for the best Gear Prices and regular specials!

Brilliant Color for any Digital SLR
White Balance Cap
The Pros Agree on ColorRight
What People Are Saying