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How Did You Establish Your Initial Fees When You Got Started?

Published: 28/04/2020
By: Brandon

Lauren, from Los Angeles, CA writes:

“I was trying to look on this site to see any data/info about rates for Los Angeles? I've been doing photography for 10 years initially with fashion but recently want to get into real estate/interiors. I tried researching online but most prices are for across the US and I think rates are higher in LA. I currently have my lowest rate at $250 but I'm wondering if I should price higher. Also, should I include my rates in my first email when I reach out to realtors or just introduce myself in the first email. Thanks!”

Hi Lauren. Unfortunately, PFRE doesn’t have any formal data store of rates on our site. It would be a nightmare to research, manage, and keep up-to-date--especially on a city-by-city basis. That said, there are typically a couple of variables that most people consider when trying to figure out initial rates. The first one, just to sit down in front of your computer and do some research on your local competitors. The odds are that a number of them will publish their rates on their website. If you find a number of photographers that do this, then you’ll be able to gauge the quality of your work against theirs. From there, if you see a competitor is charging X and you think you’re way better than them and then you see another competitor who’s charging Y but they’re way better than you, then you have a couple of reference points by which to “spitball” your initial pricing.

Even though doing this sort of analysis seems reasonable, please make sure that you do not make this your only form of analysis when establishing your fee schedule. Yes, it’s great to have some indication of what your competitors are doing but at the end of the day, you are the one who has to make a living at this. As such, you have to give some thought as to a number of variables, not the least of which is how much money to you need to cover expenses; how much money do you need to pay yourself to take into account your experience levels; and of course, having a little left over in the form of profit is always a good idea!

To give you a good flavor for processing this, here are a couple of articles written by Garey Gomez over a year ago. I’m pretty confident that these will be helpful to you.

Also, it's generally accepted that one of, if not, the best resource for tackling this topic, among many others important to professional photographers, is Best Business Practices for Photographers, by John Harrington.

In terms of your question related whether you should be including your rates as part of your introductory "reach-out" marketing emails, it’ll be interesting to see how others answer this question but for me, I personally wouldn’t. I just don’t think it’s appropriate in a first contact. My fee is something that I’d want to hold off on talking about until I connected with the client personally. Thanks for writing in, Lauren. Good luck!

7 comments on “How Did You Establish Your Initial Fees When You Got Started?”

  1. Los Angeles is a very big and very diverse city and even more so if you include surrounding cities. With RE photography, margins are often pretty low so taking on work in Manhattan Beach when you live in Alhambra can be a serious amount of drive time that's hard to charge for. Trying to do a home in South Los Angeles in the morning and they get to Glendale just after lunch in normal times can be a short drive or hours stuck in traffic due to an accident or police closure. If you are just going to work in the Brentwood, Westwood, Beverly Hills area, your pricing will be much different than Huntington Park and so will other photographer's rates that you might look at.

    The links to the two previous articles written by Gary are a good overview of the things you need to consider when you formulate your pricing. When I started, I did a very basic 1st order approximation of what I needed to charge based mostly on my time estimates. It turned out to be moderately close but a bit low. The bigger problem was without doing a full analysis, I didn't have a good idea of what was driving my costs. Every time your insurance premiums go up, you need to drop that number in your budget and see how that affects you. Over the course of the year, it's not likely to be too bad, but as I pointed out in the comments of the other articles, it could be significant when it comes to the slow season since it's an expense that is there whether you are getting work or not. REP is a bit seasonal and making sure there is enough in the bank to get through the winter slow down is important. With a real budget, you can look at your accounting and see if you really can afford some new gear late in the season when the bank account my say yes, but the budget says you better really like ramen noodles, a lot.

    It's a good idea to reach out to owners of service companies for a little coaching. Somebody that sells tangible products has to approach how they price things a bit differently. It's pretty obvious they'll be in trouble if they sell for less than the inventory costs or the average margin won't cover the cost to transact the sale. Selling a $.05 gumball for $.25 is a 500% markup, but the $.20 will be nibbled to death by labor, rent, stocking, ordering, etc. You have to count on only a few sales being for one gumball and lots more grossing much more. Pricing service is much more difficult to keep on the straight and narrow. The cash costs wind up being things like gas in the car. Everything else is a tiny percentage of this and that. Every click of the shutter puts the replacement of the shutter or whole camera a bit closer. 20 more miles is that much more rubber worn off of the tires. I'm not saying that it's worth the time to calculate the expected life of your tires vs. distance to each job. I'm illustrating that many of our costs are only paid periodically in large lumps so we can dig a hole without realizing it.

    I'd say to not put pricing on an introductory letter. Instead, get people to visit your web site and see your pricing there along with examples of your work. If an agent has somebody they already use regularly, a lower price may be the least factor. You need to catch an agent when they are looking for somebody. Getting interest on just the basis of pricing won't have you winding up with customers worth having.

    Saying your lowest pricing is $250 and asking if you should charge more isn't providing any information to base an answer. What are you charging $250 to deliver? 20 minutes on location and 5 images? 2 hours on site, up to 30 finished images, aerial photos and video and a 3 minute video tour with narration and a sound track, a custom website and a flyer template? What is it costing you to do a job? What's fixed and what's dependent on the complexity of the job? It takes me a certain amount of time to prep my gear and load the car to go to a job. I charge a minimum based on the distance to the job. I've looked up average distance to the cities around me and formulated a travel cost. I don't travel 50 miles for free any more than I would travel from California to New York without charging for my time. I call some of that travel time an "opportunity cost". Taking a job further out may mean I can only get to two jobs that day instead of my maximum of 3-4. It doesn't matter if I have a full schedule or not, I need to account for the fact that I lose a slot that I'll never get back. I can discount that back if the client books 2 or more jobs in the same area or on the same route since I might get that time slot back that way. The idea is you may want to have a low price to a small amount of service that still works out to the same hourly income for less work. I offer very low rates for the city I am in. I would rather only have to drive 5 minutes to a job and be able to come home for lunch and start photos ingesting into Lightroom while I go back out to do the next home. It also gives me one more possible appointment slot. So, if you have a price that's $15/image to make 10 images and $10/image to make 20 images, you make more money per image on the smaller jobs if you have a good backend workflow. Chances are that agents will want the 20 image deal, but you still have a rock bottom price to get people interested. It's a service business so figure out things you can offer that don't cost you tremendous amounts of time/money, but have value to your customer. Making up a flyer from a template you've created or licensed when you were slow for $10 that only takes you 10 minutes is $60 as an addon with no hard cost (ok, electricity). Drone shots? Extra charge or included in a more expensive package deal. Additional images on an ala carte basis after a base package. Deluxe service where you spend some time planning the images with an eye to where the sun will be and spend a entire day on location making the images when the light is perfect for each composition. That gives you time to work the composition and do some detailed staging to create the best image possible. Time is luxury and people that want yours should pay for it. People go for having the mechanic or car dealer do a 161 point inspection of their car which really means they spend a few seconds looking at this and that, but do very little real work. They're selling piece of mind and people with no mechanical skills get somebody that has a better chance of spotting something they'd never see. I can look at my own car. If an agent were interested in getting seriously into photography, they might be able to do every little thing themselves. Things that you find trivial and can do in under a minute might be a total mystery to somebody that looked at Photoshop once and freaked out. There's your higher price. Sell that knowledge ala carte (sky/TV replacement. Fireplace, etc) or bundle them into a deluxe package where you can get double or more of the hourly rate you get for making the photos in the first place.

  2. For already established photographers just getting into shooting real estate whatever you think is fair pricing right out of the gate, know that you should be charging more. IMO the worst thing you can do right off is try to undercut the competition, having just entered the profession and already a contender in the race to the bottom. You'd be better off being one of the higher priced options in your area with stellar customer service. The agents you want to work with care about that stuff...the bottom feeders, not so much.

  3. I operate in the DC metropolitan area. One of my competitors (tour company) came out with a new package. $549 for photos and video. Photos are HDR and videos are nothing, and I mean nothing, special at all. I can charge $300 for the same service and quality, do just 2 appointments per day and have a gross daily revenue after paying the editor, $540. I know the tour companies contractors do 4 of these per day. In my opinion, if your main competitors are tour companies and you offer the same quality, pricing is easy. They are easy to undercut and still make good money.

  4. I would encourage you to map out your cost of doing business or cost per shoot.

    Monthly software/cloud storage
    Average gas expense
    Editing cost
    Estimate for camera maintenance
    Small item expenses (flash batteries, shoe covers, etc)

    Establish how many shoots you think you can expect/accommodate, do the simple math and figure out the CoDB. Then decide how much you want to pay yourself.

    From there you can establish your rates. Depending on your radius, you have to configure travel time and if that's a part of your billable time.

    This is a little easier if you've been in the industry for a bit and have a history of expenses. I encourage anyone reading this to keep a detailed spreadsheet of all expenses, year over year, so that you can start to see how much your business actually costs. It seems a little tedious in the moment, but when you have data to reflect on it's super helpful.

  5. @Darren,

    "I encourage anyone reading this to keep a detailed spreadsheet of all expenses,"

    I agree that using a spreadsheet is tedious. It's better to choose an accounting program that will export to a spreadsheet readable file. Preferably not just Excel. It can be handy to be able to export things in comma or tab deliminated formats (csv, tsv). Those are very basic and widely supported. Some accounting programs will even allow a custom export that can be saved after it's been set up so it's easy to run periodically.

    CoDB per job is important. I periodically track how long I'm on location including load-in, walk-thru and load out and how long it takes me to edit the job. I divide the time by the number of photos I'm delivering to give me an average time per photo over a whole job. I could get more stuck in and track time for each particular photo, but I haven't convinced myself that getting to that level of detail is going to help. If I start getting jobs that are just the more involved shots such as the kitchen and other main living areas, I will need to do the work. I know that the basic bedrooms and bathroom are just a minute or two depending mostly on paint color, furniture arrangement and if I'm doing a window pull. In my area, Google Maps driving directions and time estimates are very close so I just use them to formulate my travel price to an area/city.

    Some things are hard to track and it comes down to some guess work to get started. I use rechargeable batteries (eneloop mainly) and so far they hold up for ages. Part of that is I have a bunch and have a system to cycle through them evenly so I'm not just using the same set over and over with my spares doing nothing but sitting in a case. In a budget, it could be a good idea to figure on replacing 50% of them each year to be very conservative. Camera batteries last about 2 years before they don't hold enough charge. I do my own sensor cleaning when needed so I'm not sending the body back in to Canon unless it needs a repair.

    You can make a "slowly consumed" spreadsheet and look at what costs in wear and tear are accumulating on each job. Good car tires can last 60,000 miles so dividing the cost of a new set plus regular rotation and you have a tire cost per mile. If the average shutter life of your camera is 200,000 actuations, you can divide the cost of having the shutter replaced by 200k to get a cost per click. If you are shooting HDR, those shutter clicks can add up fast. If you are figuring that by the time the shutter needs replacing you are just going to buy a new body, estimate what you will spend on the new body and use that. Now we are talking about tedious calculations. It could be useful to do this for a few things to get a feel for what's important and if it's just easier to lump everything into a single catch-all cost that you tack on to your per job CoDB. Contractors do the same thing. It's too much time to track every roll of electrical tape used on a job, so they count it by the ten pack and add 20% to the purchase price when they make an estimate. It's not something that shows up as a line item, it's an off-quote number. Materials left over from one job are the cushion against the times when they under-estimate another job.

    I'd post my spreadsheet for figuring out my CoDB/job and CoDB "static business costs", but they'd need a bunch updating as they are formatted to bring in data from my accounting program (Account Edge) and wouldn't make sense to somebody that isn't set up the same way. Maybe a few of us can make a comprehensive list of 1st and 2nd order CoDB items and knock out a spreadsheet to share. This question comes up frequently and it's more important than which lens to buy first. If you aren't making a profit, you aren't going to get to lens number 2.

  6. Once upon a time I was a Realtor who hired one of the companies in my area to photograph my listings. When I first hired them I had already been on PFRE, the Flickr group, YouTube and everything else to try and figure out how to do this myself. I then decided it would be too much trouble. So I hired a local company.

    I was not impressed when the photog showed up, pulled a camera out of the trunk and walked in an shot the whole thing hand-held. No flash. No brackets. No tripod....no nothing. I wasn't their typical uneducated customer and I knew that they were not even trying to bring their A-game.

    Eventually they dropped the ball on me and that freaked me out because I didn't like having to worry about consistency. So I decided to get the gear and thought to myself, "Ya know what...I might as well do up an LLC and make some money on the side."

    So how to price though?

    My thoughts went as follows...

    "If these guys can get $185 for a typical house shooting single-shot handheld ambient...I certainly can get $250 a house shooting flash/ambient composite. Maybe more. Maybe $500 a house!"

    Then I thought....

    "Ya know...at $250 a house on average for photos-only...that would mean three houses a day would be $750. Times that by 6 days a week and you come up with $4500. Multiply that by 4 and you get $18,000. I could live quite happily on $18,000 a month."

    That's how it began. I didn't know at the time but choosing a price point over the $200 "line in the sand" kinda.... "doomed" me to having much slower growth than what I heard about on the groups. The referral fairy just wasn't really into blessing me...and I couldn't figure it out. I was super-nice to everyone. Delivered higher quality than the competition. Over-the-top customer service. How come I wasn't so busy that I had to hire three sub-contractor photographers 10 months into this game?

    I figured it out later. If I went and looked up most of the people singing the referral fairy song (they do a good job and their business seems to double every six months by word of mouth only)...they seemed to be charging $150 a house. Or less. I was only priced $100 more and $100 in any niche of commercial photography "shouldn't" be a big deal...but in this niche? It IS a big deal.

    That $100 more represents about 65% additional in price. That's not something most people just shrug off.

    So there ya have it. I chose a higher price point and it caused my business to grow more slowly than I anticipated. The silver lining is that I never lowered my prices as now that I worked through the dark days of the first few startup years and have a base of loyal customers willing to pay a bit more for higher quality....I'm glad I made that decision. I can't imagine doing this at a price point 65% less.

    Oh wait. Yes I can. I would just shoot 5-shot brackets and ship to an editor and my policy on quality would be "At $150 lady...you get what you get....don't throw a fit." That's not how I roll though. So I'm happy where I'm at on the price and the workflow side of things.

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