January 27th, 2015
…when I give them a price they say they can get it done cheaper or do them selfs. My question is what is a good price to charge?…
Cristophe’s complaint led me to give him my Pareto Principle lecture.
Italian economist Vilfredo Pareto observed in 1906 that 80% of the land in Italy was owned by 20% of the people. It turns out that what is now known as the Pareto principle or law of the vital few, shows up in economics, in business, and in almost every aspect of human endeavor. Yup, you guessed it, it shows up in real estate and real estate photography too.
Stated for real estate agents it says: “20 percent of the agents close 80% of the transactions“. There was a NAR study back in 2004 (no longer available) that essentially confirmed this was the case. It also stated that the median income for agents who had been in the field for 2 years or less was $13,000. In 2004 the real estate market was roaring!
Anyone close to the real estate industry these days will agree that Pareto was an optimist! I’m inclined to say that 5% of the agents do 95% of the transactions. The exact percentages for my point aren’t all that important. My main point I want to make, is that to be successful as a real estate photographer it’s important to understand that you really don’t want to do business with all agents. As anyone in this business will soon discover, 90+% of agents think that shooting photos with their cell phone or their point and shoot is good enough.
Here are two facts that it’s essential to understand if you want to be successful in real estate photography:
- When you are building your business focus on pursuing business relationships with the top 10% of listing agents. The fact these agents are successful demonstrates they have the business figured out and they are willing to do what it takes to be successful. You’ll find that most of the top 10% of agents appreciate and can afford professional photography. The bottom 90% may understand the benefits of professional photography but are not closing enough transactions to be able to afford professional photography for their listings.
- The bottom 90% of the real estate agents don’t have the money to pay you the per shoot price you need to charge to run a sustainable business. This encourages beginning real estate photographers to reduce their prices to $50, $60, $75 or $99 and neglect the fact that it’s not possible to run a sustainable real estate photography business buy charging these low prices. Yea sure, you can snag some extra cash for a while, but you are not recovering your fixed costs of being in business at these prices.
I go into this subject in more detail my Business of Real Estate Photography eBook includes a Cost-Of-Showing-Up spreadsheet and walks you through the process of figuring out what it costs you to show up at a shoot and how to figure out how much to charge to operate a sustainable business.
Bottom Line: To operate a successful, sustainable business you must do business with clients that are operating successful, sustainable businesses.