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Should You Discount Your Rates?

Published: 04/07/2019

Author: Garey Gomez

It comes up often in various online groups, for all genres of photography, and in all types of small businesses in general. Clients ask for discounts all the time and we feel pressure to please them. I have long felt that discounting my rates is a mistake and I thought I'd write about why.

Here are a few guidelines I have set for myself:

  • Never agree to a discount based on a promise of future work. I made this mistake a few times, and I learned from it the hard way. The idea sounds tempting in theory. You have a client who promises to keep you busy, and in exchange for that "guarantee", you give a fair and reasonable discount. Everyone wins, right? Well, not in my experience. In short, the promised future work probably won't come. If it does, it won't be at the volume you anticipated. And if it does come at the volume you anticipated, you will be frustrated that you are working so much for a lower rate! I have spoken about this with other photographers, and the experience seems to be very consistent. I don't do it anymore.
  • Your rates are fair. You did your homework, you setup a rate structure that is competitive in your market for the deliverables you promise to your customers. You can justify your rates (not that you should have to) with the research you've done. Let's not forget that all of your other clients happily pay your full rate, which further proves that your rates are fair. For me and my business, I feel more comfortable standing firm on the rates, confident that the client will be happy when the job is done. It's worth it for them to hire me at my full rate, and there are always photographers willing to work for less, so they have options. It feels GREAT saying, "no" when it's appropriate. You know what? I often get hired anyway after declining the discount. Win!
  • Set a minimum rate, below which you will not work. There are costs that are consistent across every shoot you do, and beyond those costs, you need a healthy profit. For example, you need to charge your batteries, pack your gear, respond to emails and text messages, create and invoice, deliver photos, drive to the shoot (gas/mileage), collect payment, etc. Let's not forget the cost of your specialized equipment, computers, hard drives, and the wear and tear on all those tools. Your minimum rate should take into account those costs, and the time you put into the shoot and editing, as well as the value of the images you deliver, and your profit margins. When you discount, you lose your profit, and that is not a sustainable business model.
  • When I am not paid a fair rate, it affects my enthusiasm for the job. We love what we do, but we have to be honest with ourselves. It's still a for-profit business, and we need to pay the bills! I have a hard time doing my best work when I'm frustrated that I'm not making what I normally make. If I have another shoot lined up after the discounted one, I may find myself wanting to rush to finish so I can get out of there faster. We all know what happens when we rush... Instead of figuring out how to get by while charging less, I get much more excited about figuring out how I can do something better and/or different than my competitors that allows me to charge more. When you stand out from the crowd and do something that the market is excited about, they will tend to pay a little more for it.
  • Your client will expect more discounts going forward! If this feels like a trap, it's probably because it is! You did it once, and all the client did was ask. They will likely keep asking, and will likely be frustrated or disappointed if you say no. It's a tough spot to be in, and in the end, you lose no matter how you decide to handle it.

THE EXCEPTION TO THE RULE: When does it make sense to offer a discount?

It's a relationship business. It's important to be flexible with your clients, and when they have a true need and you feel you can deliver on it, even with some compromise on your part, that's called teamwork. Your clients will love you for it. So what I do in such situations is, I protect my rate. I do not reduce the cost, but instead I will offer to add more value at no additional charge. Some ideas for ways you can add value are;

  • A few additional detail photos at no charge
  • Offering alternative formats to the delivered images at no charge: I like to send Instagram formatted images, where I add white borders to the sides so my careful composition does not get cropped to 1:1. My agents love that!
  • If they want a virtual tour, sell it to them at cost. No expense to you, but they get a monetary discount that they can feel, and you still get your full rate for the shoot.
  • Free rush delivery
  • Do you offer sky replacements for an additional fee? Consider including it at no charge for the main exterior photo.
  • More than one shoot on the same day with the same client? If they are close to each other and they can be scheduled back to back, there's some time savings for you and maybe you are then able to offer a small discount. I have done this a few times, with duplex properties, and in new construction scenarios when there is more than one home side by side that I can shoot back to back. But only if the client asks for it, of course!
  • Do you offer drone photography for an upcharge when you're there for a shoot? If so, offer a smaller quantity of aerial photos than your base package at a discount or at no charge.
  • If all of that fails, and you do not want to say no to the client, you can always offer a lower rate but with fewer deliverables. It's important to protect your rate for the future!

Lastly, and more anecdotally, I have noticed that when I charge more, the quality of my clients improves, and so does my overall experience working with them. They are respectful of my schedule, are engaged and fun to be with at the shoot, and have the house ready when I get there. They pay their invoices promptly--often immediately after I deliver, despite the net 15 terms. They have prepped their clients on what to expect, and in general, they give me the freedom to shoot it as I see fit, which is really fun!

How do you handle discounts? What are some personal polices you have set for your business?

Garey Gomez is an architectural photographer based in Atlanta, Georgia. He is a three-time PFRE Photographer of the Month, and the creator of the Mastering Real Estate Photography tutorial series.

14 comments on “Should You Discount Your Rates?”

  1. Those starting out should read Gary's statement, copy it and place it next to their work station, put a copy in their go bag and refer to it every time someone asks for a discount. It will save them a lot of grief, frustration and make them more successful.

  2. I was recently asked to provide a bulk discount. It was 3 different locations, at 3 different times in 3 different dates. It was hard to not laugh when I said no.

  3. Just learned the lesson in your 1st paragraph related to the promise of future work. Great article - thanks!!

    When I do give discounts, I always reflect that as "Discounts and Perks" on the invoice. But after reading this, I'm less likely to give discounts going forward.

  4. Please do not diminish your own value on purpose.

    I was advised against discounts and did it anyway some years ago, learned the hard way.

    Now, I firmly understand and have this policy:
    No discounts ever for anyone. Ever.

    Reason is I provide a service which I have priced to match the market and expectations of myself and my clients. It is a fair price. That is all that needs to be said.

    I plan to do the same top quality job for my client next time that I did for them last time, so no reason for change in price.

    The few times I gave anything away, it did not build loyalty, it did not build relationship, it did not lead to more work. It just earned me less money.

    If you have clients that ask more than once about the concept or phrase that includes the word discount, please drop them. Not one of my good clients has asked for discount.

    I also charge for travel, credit card payment and too close to book cancellation. No push-back on any of those either.

    That is because people in business for themselves, like about 100% of my clients, understand completely that there is no such thing as a cost that should be considered part of the cost of doing business, as though if I ignore it somehow the cost vanishes. Huh?? Who do you think pays the cost of doing business? The clients. There is no other money involved. Everything is charged to the clients.

    Please do not diminish your own value on purpose for some mis-guided supposed reward later. There is no reward later.

    (My $.02 worth, which when marked up and charged to my client is $.03.)

  5. We discount rates for large commitments, but we are talking about the hundreds and thousands of shoots per year in order to get there. The challenge with this for everyone is that you agree on a rate, and the client under delivers their volume.

    We will be shifting away from a true discount model and something that augments the monthly billings to our clients. So, in a month where "Client X" orders a single shoot, they pay retail. In a busy month, where they meet the volume that we based a rate on, they effectively receive the discount.

    That only works where there are concentrations of work and if you can "manage" it as a program.

    I agree wholeheartidly with the reactions to discounts on this thread. It's ultimately a race to the bottom, and in the long run --- after we suffer, the real loser becomes the consumer, who now has very few GOOD OR GREAT options, and is dealing with the HDR chop shoppes and undercutters with bad imagery.

    only do it when you can ENSURE the benefit is going both ways, do it rarely, and only do it for volume that significantly changes your business and grows your topline.

  6. I have a few high-volume realtors who have been with me from the start and while I've raised my rates every year, their increase has been slightly less. They're loyal to me and make up a big chunk of my business, so I think it's worth giving them a small break. It's good PR, too... making them feel special (and they are).

  7. I don't see anything wrong about offering discounts where they benefit me. Multiple properties in the same area on the same day, I save on mileage and drive time. If it's a vacant house with a lock box code that can be scheduled at my convenience (within a day), that's helps fill up days.

    I have even started offering prepaid discounts to established customers. I only allow established customers to do this so I know we already have a good relationship as I the pre-payment is not refundable. I don't want to get into a fight over a balance even if I'm pretty sure I'd win if it were to go to court. I will apply a discount to jobs that are paid from the deposit at one rate for a cash or check payment and a lower rate if they want to pay with a debit or credit card. What I can do is pay for insurance on an annual or semi-annual basis which will avoid fees/interest. I can invest in equipment without putting it on a credit card. I can pay off a credit card and save money on interest. I am also locking that customer in for their next 10 or so jobs. Since they've sunk the money, they may not think twice about having me photograph a home that they wouldn't have had me do previously. It also reinforces the association of photos with me. "I need photos..... Ken"

    A discount is a good way to pay a commission for referrals. I find it easier to knock some money off of a customer's next job rather than hand them cash. I will pay out cash, but the discount will be slightly better. It's a tax thing.

    I never grant a discount just for the asking. If an agent doesn't have the money and they're in town, I might be able to offer just a small suite of images at what they can pay. I'll him and haw a bit to emphasize it's not something I'd normally do but they caught me at a weak moment. I might offer a mini-package if I'm already going to be in an area. The agent will just have to be able to work with my schedule. I might offer to include a couple of aerial photos as a new-customer perk with a full price job. I'm all for getting my foot in the door with a new client. The bottom line is to use discounts tactically. If they save you money, why not? If you can offer a discount to get a new customer that still leaves you with pretty close to what you like to bring in on an hourly basis, that can work. You just need to really put your foot down if the agent calls with the next job and tries to chivy you down based on the special rate you offered before. It's good to keep track so you can counter with "Yes, but that price was based on you doing ........ and that isn't the case this time". "If you can book three jobs on the same day again, I'd be happy to give you that discount".

    Some of the above is going to be valid if you aren't already booked solid for a week or more at a time. Stores don't have sales on very popular items as they will sell regardless. It might be time to raise prices if you have to turn jobs away, not lower them.

  8. @ken brown - I respect your approach and like the way you think!

    One word of warning: Think thrice on the prepaids. When my company acquired CirclePix, we learned that there was a massive liability on the prepaid shoots. Not so much a problem on the straight financial end of things, but more a situation where the prepaids were not well defined enough, and did not have an expiry: So I am dealing with agents in 2019 looking for products that I abolished in 2015! ("360 tours")

  9. We don't believe in discounting but we do believe in rewarding clients who repeatedly use our services.
    One way we do this is to have a pre-pay option: Buy 3 basic packages at a time for 15% less than the retail price, plus take an additional 15% off the add-ons (twilight, etc).
    Since we charge more than the average real estate photographer, we are able to do this and not affect the quality of the work we provide.
    As to warnings about liabilities - we have a use it or lose it policy. Use it within 60 days or lose it. That way our liability is a lot lower on the work that needs to be provided.
    With the pre-pay we also guarantee 24-48 hour booking and 24-72 hour processing (depends on the level and amount of work that has to be done - 90% of work is next day).

  10. @Vince, Not a problem for me. I am an independent and not likely to sell my business. Only established clients that do a fair amount of business with me can prepay and will use up the deposit in a couple of months. My arrangement is for any and all services I provide at the time the service is booked. I don't require or specify if the prepay is for a particular thing such as 360's, aerials, floorplans, etc.

    @Suzanne, You are a lot more accommodating than I am. I expect a discount for pre-payment to be for roughly 10 jobs and I don't discount as deep. I don't have an expiration date which is why I would not allow a new or occasional customer to participate. I've structured it to reward my better customers that will be using up the credit in no more than a couple of months if their bookings remain about the same. It could also be applicable to an entire office or team of agents. Instead of billing an office periodically, they can pay ahead and save some money along with not having to deal with making sure payments go out on time to avoid late charges. I don't guarantee faster turnaround or priority booking, but I could in the future for higher buy-in clients. I don't want to get too leveraged. Having a few customers pre-pay is great for my reasons above, but past a certain point and I have to be careful about my budgets or I might use up all of those funds and not be left with gas money to do the work. Having money coming in regularly makes it very easy to budget.

    I can see that if it becomes a larger part of my business, I will want to talk with an attorney to draft a formal agreement. My informal agreement stipulates that pre-payments are not refundable. I would be open to letting somebody sell their credit balance to cash out if they were to leave the business suddenly. The upside for me is that I'd possibly get a new client and for some period, they'd be getting a very good deal assuming they purchased the credit at a discount.

  11. The approach to discounting that I prefer is to provide additional services, added to whatever the "base" package might be that the client is considering. It's also an opportunity to introduce the client to a new service level.

    Fundamentally, we are in a service business. Discounting services is a risky business. Having trouble remembering last time a doctor, lawyer, or even real estate agent, offered me a discount.

    A large dollar volume client that is contractually committed and thus reduces overhead per job deserves to be incentivized by sharing the benefit of lower overhead with them. The formula that I've seen used in the past is to look at the profit improvement in a pro-formal income analysis based on volume over the contract period, then share the profit improvement 60-40 (or whatever) with the client.

    Ironically, even though that's usually a large company model. It can work for a single practitioner with larger volume clients.

  12. Some excellent points in this article, and I particularly agree with the first point about not discounting on the promise of future work. I believe it was John Harrington who proposed an excellent solution to this in one of his books. A potential client approached him and assured him that he would be their go-to for all their numerous assignments, and in the same breath requested a significant discount for that promise. His response was to offer them to book their first four shoots at his rate, at which point the fifth similar shoot would be free of charge, giving them a significant overall discounted rate. After all, since they were going to work with him so often, that should make sense, right? For some reason that didn't appeal to them—presumably as it obligated them to actually keep their promise of so much future work in order to receive the discount. It also begs the question of whom they were previously working with for those assignments and whether the person they worked with on those assignments was given a similar promise of ongoing work.

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