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Giving Discounts to Clients Who Give You More Business

Published: 09/04/2018
By: larry

Gary in the Chicago area says:

One of our competitors in the Chicago area is Fotosold. If you look at their website, their prices seem average, if not a touch high.

I’ve been a little under the weather recently and unable to get out taking pictures. One of my favorite agents stopped by the house to visit me and see if anything had changed so that I could work for him. The brokerage he works for has an agreement with Fotosold, so we both decided he should use them for 2 listings that had to be done now.

I was amazed how cheap they’re working for "contracted" brokerages. I watched as he booked a shoot for a 3,600 Sq., ft. house, to include 25 pictures, including a pole shot, a 2-minute video, which he paid an extra $47 so he could be included, for a total price of $190. The other shoot, a basic 15 shot job, was $115.

What's going on here is that Fotosold is contracting with brokerages to do a predetermined number of shoots at a discounted rate. This marketing technique isn't all that common in real estate photography but over the years, I've run into a number of independent real estate photographers that negotiate a contract with an office to shoot all or most of their listings for a 15 or 20 percent discount in price. Fotosold is doing a similar thing with their Loyalty Rewards Program. The more shoots they do for a client, the cheaper the shoot price is, down to a predetermined level. It's a volume discount.

It's not for everyone but it can get you more work than not doing it.

14 comments on “Giving Discounts to Clients Who Give You More Business”

  1. Volume wears out gear, cars and relationships. Not to mention the scheduling nightmares that always emerge. I'll admit, in the long run, it's probably safer than keeping less eggs in one basket. But it's not for me. I want to build relationships and my skill (and eventually be the most expensive, not the least).

  2. I'm not agreeing with Dave's comment. Not wanting more work because it wears out the equipment and requires work, is not a valid business model. Nor does volume means that you are the least expensive. Volume simply means that you have a produce that is in demand. Something that we all want. Getting there can be almost any combination of price, quality, product and service.

    What I am seeing here is pretty standard market competition. You will need to determine if you need to counter it based on your own situation. That determination will need to be based on the quality of their services and products, the quality of your services and products and the demand of the local market. Simply put, if they are offering similar products and service, at a comparable quality level but at a lower price, you need to think about lower your price to match.

    What do you do if you can't match their price? You have a couple of choices: 1) Hope they can't either and that they will need to raise their prices to make a profit. 2) Find a different market. Target those properties that the competition can't. 3) Improve you methods so you can match those prices. 4) Decide it is not worth your time and seek income elsewhere. (Go out of business).

  3. We offer a select number of brokerages discounts, but we create a custom service package that makes sense for all of us. The first requirement is that they have a single package that is used by all the agents, and the properties they list are not above average. We provide a custom package at a discount with a reduced minimum number of photos, along with add-on services like video and aerial. The objective is to create a package that provides value on both sides. I have found that this arrangement can sometimes increase our overall profitability for a client by reducing the time in the field, and since we package add-ons we make sure these packages don't go below our average shoot price. I think this can be very beneficial, but only when used properly.

  4. Seems I get the questions from a Realtor at least once a week. "I do X amount of shoots! What can you do for me on this price?" I try to explain to them that a majority of our real estate clients give us X amount of shoots if not more. I've gotten out of the giving one price to one client and another price to someone else. I still have a few grandfathered discount deals in place, but I also have some of my larger clients that are happy paying full price. The only time I will consider reducing price in the future is if it would be for a brokerage that would pay for the shoots for the agents. Hence, giving me shoots that I wouldn't normally get or that the agents wouldn't normally order pro photos for. That makes sense. The fact is we are a touch higher than our competition in price, but our clients see the value in what we offer and still feel it's affordable.

  5. I think there are basically two business models: 1. Put a lot of work through cheaply and thus by necessity at a low to modest quality or 2. Put through a smaller amount of work at a higher price, by necessity, at a high quality.

    Dropping prices only serves to drive prices down for everyone in whichever market you are in. Everyone suffers except the winners who when they are driven out their competition, then start to raise their prices.

    Personally, both due to my market and my own preferences, I have always chosen the high quality and shoot less that allows me to give every shot custom attention to the high volume/low price other option. But so much depends on the regional market you are working in.

    Perhaps you might want to consider raising your quality, provide more customer service and attention to you individual clients and raise your prices instead. If you want to compete with the price and quality of your competition, then you just have to take the hit and hopefully prove to your clients that you can provide a better service for the price.

    My experience with my clients is that, unless they are on the bottom end where price is more important than quality, they tend to be loyal, don't like change, like to work with someone they know, trust and can depend on, and it would take a lot to try an outfit where they don't know the photographers they are going to get.

    Of course, there are situations where as long as photos are adequate, for the low commission properties, price will win out. Not much you can do about that except to aim for agents with higher priced properties where the commissions make it worth while to hire a better and thus more expensive photographer.

    I do shoot some low end properties for my regular clients and I have a package price for that shooting less photos, providing 12-15 photos but making sure those images are the same quality as everything else I do so the perception of my work is that quality is maintained and I am doing a favor for my clients in offering a service that covers everything they may need.

    But we all work in different markets with different business models and our own needs often drive what we offer and how much we have to charge and how we can line up our own requirements with those of our clients. What works for one of us may not work for another.

  6. "...3) Improve you methods so you can match those prices...."

    At first I was nodding my head in agreement until I realized that this was advocating for LOWERING the price. Getting better at your profession with the goal of charging less makes no sense to me, at all.

    I did exactly what the OP is asking about, about 10 years ago. I signed a deal with a brokerage to shoot (virtually) all of their listings, and in return I lowered my fee and created some custom "packages" for their agents to choose from. I didn't regret it because I wasn't filling my calendar prior to this and so it got me very busy and I was making more money. I made sure the "Mid Range" package was slightly higher than my regular fee, but they also had an option for a "Small" package that I could shoot quickly but for less money. Mostly, they went for the Mid Range one, so it worked out very well for me, and their most cost-conscious agents could still get the cheap package.
    It lasted a couple of years. I continued to raise my fees to every RE customer who wasn't in that brokerage, and when I was starting to feel bitter about the "volume" customer's shoots, I raised their rate. By the time we parted ways, I was making far more money shooting far fewer listings for agents from other brokerages and I was glad to see them go.

    But it made sense for me, at the time I set it up.

  7. @Scott

    By "improving your methods" I was referring to the time and effort you put into producing a set of photos. By improving your methods you will be able to produce more photos in a given amount of time and with a given amount of effort and at the same quality level. As such, you will be able to lower your price because you will be able to make the difference by shooting more properties.

    For example: Say it take you 2 hours to shot and process a property and by streamlining your shoot you can reduce that time down to 1 hours. You can now shot twice as many properties as before. With a full schedule, you could reduce your prices by 25%, shoot twice as many properties, make 25% more in total all for the same amount of effort.

  8. @Neal McGuire

    While I can see what you are saying in your comment directly above, I disagree with your first comment in reply to Dave. Shooting fewer properties can be a viable business model, because as Scott pointed out, he raised his prices for those agents not of the brokerage with which he had the agreement. The idea behind this is to work a little less and still take the same amount of money (or more) home because you have clients who like your work enough to pay your prices, which by assumption would be higher than most of the competition. But as you said, improvement of methods to speed up shooting and workflow is essential in my opinion, and so is improvement in skill at shooting and post-production. The whole idea behind "raise prices, work less, make more money" doesn't work without the quality being there to justify the higher prices. That all depends on the market in one's area of course.

    In short, raising the quality of one's photos is essential to be able to raise one's prices and get people to actually pay it based on the quality of the work alone. But if I could take 5 shoots a week at $450 each and get people to pay that, I'd do it--rather than have to shoot 10 a week at $165. I'd feel a lot better about turning down work because of a full schedule, because it would change my idea of a full schedule to 20 shoots a month from 40.

  9. I have had a broker's license for 23 years. I initially got it after commercial photo school because I needed to supplement my photo income. Once the RE photography started coming in,I gave up selling houses, and I charged less for RE photography to the agents from my office. I assumed (incorrectly) that I would get great support from my brokerage, and agents from other brokerages wouldn't use me, thinking I would interact with their clients for the purpose of listing and selling real estate.

    I have since stopped the practice. I still have the brokers license, but I have such a wide ranging clientele, covering many brokerages, that I can't afford to let the word get out that I am playing favorites.

  10. @ Neal -- the problem is, there is a limit on how much efficiency you can achieve, and that limit isn't very far away. Your car can only go so fast, getting you from one appointment to the next, and sprinting through a house opens you up to the possibility that you're going to stomp on the pet hamster or even kick the baby by accident in a sweaty scramble to "finish" in 20 minutes.
    I'd also mention that while it may be that some agents actually *want* you to go fast (which says a lot about how much value they place on photography), there's a point where they don't recognize the benefit of the extra 10 minutes you're shaving off of each shoot.

    So what happens when you simply can't go any faster? You can't get your price any lower, and you can't squeeze more shoots into a day without paying big kickbacks to the sheriff's office (to avoid speeding tickets). You're stuck.

    Meanwhile, your competition is focusing on a quality product, for which they can charge a premium -- many multiples of what you're charging. It's clear that there is no ceiling on how much you can charge....IF your product is good enough, and your brand is strong enough. There are photographers who charge $2000/listing, just for stills. I assure you -- being "in and out" in under an hour is NOT one of the selling points of those photographers.

    John Rawls proposed using a "veil of ignorance" to determine the morality of political decisions (imagine you don't know what social strata you will occupy, and then devise public policy). You can do something similar for devising your business plan -- pretend you don't know where you're going to end up. Do you race to the bottom, or race to the top?

  11. @Scott - My last post needs to be read as only a elaboration of my prior comment and include that the competition is producing photos at a similar quality level.

    I include 4 different options that cover most scenarios. Shooting high end home at a premium price is include in option 2 (Find a different market. Target those properties that the competition can’t.)

    However, that may not be the best option in all cases. What if you competition is also targeting high end homes, but charging less for the same quality. Do you keep charging more and hope your clients stick with you because they like to pay more? You can try to increase your quality, but there is a limit on that also.

    Competing with other business will always involve a price component, always involve a quality component, and always involve a product component. You need to determine the unique mix of those three the best suit your market while meeting your profit needs.

  12. I wore out a couple of pencils figuring out what I wanted to take home each year (and also what I needed to make on an hourly basis) and what my costs were to do a job. The discounts I offer reflect what saves me money and/or allows me to book more work on a given day. I'm not sure how I would respond to an offer to shoot exclusively for one brokerage but I do know that it's not likely that I'd discount my pricing to be named to make all of the images for one office. I'd work with an office to help the agents coordinate days where I would be working in one area so everybody could get a discount. I have a large, clumped density service area so the travel between jobs can mean only being able to do 2-3 jobs in one day rather than 3-4 if I'm having to drive a lot. Using a discount as an incentive to book work that's all nearby can mean being able to take one or two more bookings on a given day.

    I heartily recommend not having only a few customers be the majority of your income. If it looks like a good deal to be exclusive for one office or to give a discount on all jobs for an office, see if you can get some guarantees in writing for a minimum number of jobs. You can also structure your pricing so the office gets an increasing discount on each job based on a rolling window. If they have booked you XX number of times in the last 30 days, they get XX% discount on the next job. This way, if they don't use you as much as they were promising, they don't get the discount or as much of a one. Work out the worst case scenario where the customer does give you enough business that they get the biggest discount so you don't find yourself working your tail off for too little money. There is no sense in getting twice as many jobs for half of the money per job.

    I can't count how many times I've had customers tell me they are going to be giving me so much business I won't be able to sleep if I give them a fat discount right up front. I think that I fell for that once or twice years and years ago and then never again.

  13. @Neal McGuire - It's terribly disappointing to learn that I've been operating on what's "not a valid business model" as you say. I must be skating on thin ice and pure luck: My first full year shooting homes I cleared almost $80,000 - I'm not bragging about that - rather kicking myself hard for countless mistakes I made along the way. Bad ones, including blowing out a lot of potentially good clients and taking a grand total of 4 days off. Year two I tightened it up a bit and came sooooo damn close to touching $100k. This year, knock on wood, looks like an easy punch through that (and I'm definitely taking a few more more days off, really!) My commercial clients are currently paying an $1800 day rate and best yet - I have never, not once, solicited business from *anyone* since my 3rd month in business.

    I think there's really a lot of "valid business models" out there...

  14. @Dave, The business model in your first and second comments don't match. In your first comment you mentioned keeping volume low and worrying about wear on equipment. In the second, you are talking about shooting all the time with only a few days off. What you describe in your second comment, clearly works.

    I'm glad to hear you are doing well and that your hard work pays off.

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