Ever since I first got into the photo biz as a studio manager (back in the last century), lowballing has been a problem. Usually, this is not done intentionally but rather out of fear and not knowing the actual value of the work.
Here’s a little data point that might help you understand value better: a general rule of thumb that companies use when budgeting their marketing and advertising projects is 10% creative costs; 90% placement/media.
You read that right 10% of the budget goes to creative costs, 90% to buying the placement/media.
Now “creative costs” are inclusive of things like talent; but I suspect that, even with that, many of you are undercharging. Some of you are way undercharging.
What are companies marketing/advertising budgets? Well, the consensus is that companies should budget at least 5% of their gross revenue (that is their sales–what they bring in before any costs or deductions), but some say it should be more like 7-10% for a small business. I read one article recently that said 15%! Here is a good breakdown of actual numbers from Small Business Trends. When you look at those numbers, and those are for small businesses, are you charging enough for your work?
Look, your clients are almost never going to tell you the truth about what their budgets are and how much others charge. The latter, especially. When I was a rep, I had some poor fool tell me that Photographer X estimated 10% of what my guy was asking…not knowing that I also repped Photographer X who wasn’t even asked to estimate on the project. Whoops! So I counsel doing your own homework.
If you take the time to learn what your clients are actually spending (and learn the language for all the various marketing channels, etc., so you sound like you know what you are talking about, too), you will be able to increase your rates with more confidence.
Finally, never be concerned about what you hear others are charging–it’s likely untrue and, if it is true, matching those numbers is a sure way to fail. Next time you do an estimate, do your research and present a higher rate. If the client balks, don’t over-explain–just say that you are confident that your total numbers are well under the 10% of the budget rule-of-thumb number they have for that marketing project.
