The Tyranny of Low Price

June 4th, 2012

Seth Godin, the famous marketing guru, did one of his pithy little posts recently that reminded me of the dynamic that we all see going on in real estate photography where real estate photographers choose to compete in their market by pricing under everyone else in their market.

As Seth puts it:

“If you build your business around being the lowest-cost provider, that’s all you’ve got. Everything you do has to be a race in that direction, because if you veer toward anything else (service, workforce, impact, design, etc.) then a competitor with a more single-minded focus will sell your commodity cheaper than you.”

As a real estate photographer, what other ways can you compete other than just being the lowest-priced provider? Here are a few:

  1. Service: Much about this business is being easy to work with, being easily accessible, delivering the photos quickly, going out of your way to meet the needs of your client. All those things that make up great service.
  2. Providing related products: A tour and related marketing syndication is a big deal to some agents. So is a professional looking marketing flyer, floor plans or brochure. You can provide these products easily if you are setup to do it. For example, you are going to make a trip to the home and walk through it anyway, if you are setup to do a floor plan while you are there, it can be a natural add on product. Same way with a flyer – if you have a bunch of professionally designed flyers/brochure templates, since you have the photos already, making the flyer/brochure is a matter of getting some words from the agent. Most agents hate writing ad copy. After you’ve photographed the property, you could easily write ad copy and would be a hero to most agents.
  3. Quality: Whether you can successfully compete on quality or not depends on your skills, what quality others in your market are providing and not least of all if agents can even recognize high quality. Competing on quality is an approach that’s likely to only work in upper-end markets. Lower-end agents usually aren’t willing to pay for quality.
  4. Do something others aren’t doing: Constantly be on the look out for new ideas for your product or for delivering your product that will make you and your product standout from your competition. Don’t just keep doing the same old things everyone else is doing. You have to be willing to continually improve your products and be innovative. Innovation is what sparks great businesses.

A classic example of a company that chose to compete only on price and not focus on new ideas is Dell computer. It participated in a price race to the bottom. Competing on price worked for a while but in the long run it’s been a bust for Dell.  On the other hand Apple chose not to compete on price. Apple competed on design and new ideas and it is now the largest publicly traded company on the planet and is often used as a model of a successful business. As of the first quarter of 2012 Apple was worth fifteen times what Dell is worth. I would say that Dell has suffered the Tyranny of low price.

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16 Responses to “The Tyranny of Low Price”

  • When I talk to agents, they rarely tell me how great our photos are. They expect that. They rave about our customer service and our tours.

    We lose a shoot here and there to newbies or hacks that offer cheap pricing, or even “free deals”. But our clients always come home to us, more loyal than ever.

    Real estate photography is definitely a commodity now, and I truly believe our success is because of customer service and systems that provide consistent results. A customer wants to be treated like they are the most important person on earth, and when they are, they tell everyone.

    I’m not sure what’s considered low price in this business. We charge an average of $150-$190 for a shoot w good margins. We think it’s fair. We also offer a higher quality product for homes that require more time and skill, fewer pics/higher quality – $350. But sometimes I wonder if we’re too cheap. We raised our prices 10% last year and our customers didn’t even blink. Well, most of them didn’t.

  • Having a fixed price is not good for both parts. Shooting a house is just a part of the job. Also properties are not all equal. A good pricing scruture is key for the costumer to understand the offered service. imo price per photo plus extras for more services is a great way to do it.

  • We had this same issue when we ran a youth sports photography business. We provided excellent quality and turnaround, even though that 90% of the time the organization had a bad photographer the year before; so no one would spend much. This is usually the case in that line of work. We expected to make more money the following year after families saw the quality [the concept worked with clients we kept]. More times than not, someone would come and undercut us like Steve C above; then we found out that the photos were not the quality we provided. Because the trust was gone, I refused to shoot the photography for organizations that changed photographers because it would always be an issue [suffering financially for bad photography from the year before].

    I’m brand new and just getting into RE photography, so some may disagree with my approach; but I will decide based on my volume of clientele whether or not I will photograph again for an agent that switches photographers based on cheaper pricing. I’ve seen it happen too many times and if the work product and service are good and the only reason for the change is price, then I need to really look if that agent/client is worth keeping. Loyalty goes both ways.

  • Most agents are only interested in two things;
    i) How much
    ii) How many shots do I get for that

    They may not appreciate the extra effort you can go to, over above your competitors.
    Or they just don’t care.

    Often they can’t even see the difference between a nicely lit shot, and a gun n run shot with single on camera flash pointing straight in casting ugly shadows, etc.

    How much, how many?
    That’s usually it.
    Ignorant dumb-asses looking to cut corners and keep their own costs as low as possible.

    With promised volumes, don’t believe it.
    I had one guy promise me he’d have 50 listings a year, and wanted a good volume price.
    It’s less than 10/year he provides.

    Can you imagine the complaints you’d get, if you promised 20 images, and only delivered 4? !!!

    If you’re going to offer discounts, make the 10th one free, or whatever.
    If the agents lives up to their word (good luck there), then they ultimately do get the 10% discount, or whatever.
    You soon get to know who the bullshit artists are.

  • I agree Harold. I had a similar instance where I had to sign a contract [not RE] in return for certain kickbacks for 1800 kids, 700 of which were guaranteed on the first shoot. I got less than 200 on the first shoot, had to legally give them the high kickbacks. Then I wrote a letter to them [as recommended by a lawyer], cancelling the agreement for the rest of the year due to the low #’s. I had a feeling some [not all] RE agents would be the same. I don’t have the time or patience for BS [deal with it enough on my regular job] and lack of integrity. Life is way too short.

  • I tried, man did I try to get into RE photography in my market: but due to a combination of lack of product warranting serious promotion $, and the ‘new kid’ issue, it never happened. But I echo the sentiment, that it’s not the gear, the location, or ‘quality’ that’s the issue; it’s the bottom feeder blinders that’s the biggest hurdle. And it’s an issue for all professions nationwide and as an economy: see How Walmart is Destroying America or The Price of a Bargain, the list goes on. . .

  • I seem to disagree with the above posts. I do think that quality is important to most good Realtors and your overall service is equally important. I don’t think that perfect images are needed but good B+ work will get you pretty far in this industry.

    Good pictures+ Great customer service= lot’s of business.

  • If your plan is to compete at the bottom of the market, then I think you’re doomed to fail. It would be like opening a little general store next to a Walmart.

  • Quality is important, absolutely. But, if you only have the money for a BMW, you ain’t getting a Bentley.

    My point is (and I’m bracing myself for this one), what is the market ? is it for Rolls Royce, Bentley, Lamborghini etc. or, is the market for BMW, Mercedes, Audi etc.

    It is what we all want to do, provide the best, but, is the market for the best. Somewhere there must be a compromise. On both sides. IMHO.

  • Nice comparison to cars! I totally agree. I know that on every shoot I do I could do better if time wasn’t a factor but we have to compromise with a quality that our clients are happy with and we can be proud of without spending too long on one house. I’m not saying it’s OK to be at the bottom of the market, but even the best in the business are still making compromises.

  • Ian, Mark – I think those are valid points (and I use the car metaphor all the time). But I still say that competing at the very bottom of the market is a bad business plan. There’s just no way you can compete with the Obeo’s, CirclePix’s, etc. at that level. If the only thing differentiating you is price, they have the pockets and the resources to drive you out of the market.

    BUT – the minute you start bringing service, reliability, quality, art (gasp!), professionalism, etc. to the table, you’ve moved off the “bottom” and into territory where you have a fighting chance. I’m not saying you have to sell Bentleys to the guy who only wants a Ford, but if your only product is a Ford Pinto….you’ll get crushed by the mass of competition at that level.

  • Scott, they still making pintos? Lol. We for sure don’t want to be known as “those 70’s photogs”.

  • Actually, all cars pretty much look alike to me. I wouldn’t know a Pinto from a Porsche.

  • Scott, I’m not for one minute suggesting competing at the bottom of the market. No way.

    Upper middle, sufficient to make the cheap guy look cheap, but, not too time consuming. Most agents associate employing us only with the highest price tag property. Fair enough, they have a valid point. But, there is a huge amount of property out there, not so expensive, but equally deserving of good photography. I’m having a lot of success in this mid range. There are such things as pricing yourself out of the market and working too cheap (for what you are giving).

  • Ian, I agree with you on this. For me the money makers are the $300k-$500k houses. These houses tend to be not too time consuming and nice enough that it’s easy to make them look good.

  • I’ve been considering offering the typical “bakers dozen” for top producers. The 13th gig is free – BUT it has to be commensurate with the other properties photographed. Its not fair if they give me 15 condos and then for their freebie pick a $3 million home.

    As someone who is still a licensed agent, I do “get” the need to keep costs down. What the photographers here need to understand is that the agent takes the risk on their shoulders for marketing the home. Right now we are in markets where things don’t sell. Some agents put in large sums to market and the listing expires – despite their best efforts. So they are left holding the bag.

    Targeting the home seller works. I’ve had a couple of sellers hire me directly. The money made on the home seller’s side is worth more to them than it is in commission for the agent. This is particularly true if the commission rate has been squeezed to death as it has been in my neck of the woods. Even without having to pay a referral, most agents are walking away with a gross margin of between 0.8 – 1.5% of the listing price. When there are referral fees, you can be in minimum wage territory. So the benefit of paying a photographer is worth only pennies to them personally and may indeed be unaffordable. The few agents that are making bundles with minimal effort I have less sympathy for, but the average agent is being squeezed hard.

    As a newbie to real estate photography, I have had a a couple of sellers hire me directly to do the photography. Agents can promote the photography and then offer to pay the seller back at closing. Meanwhile, the arrangement between myself and the seller is that they can use the photos even if the listing expires and they change agents.

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