Photography as Business and the Market for Professional Photography Services

I. Basic Points.

How can a photography business make money? What helps to photography a profitable business, and what are the forces working against a professional photographer? The short answer is that even with good management and solid account-keeping, there are a lot of the features of the market that can spell trouble for even a talented photographer. Thinking carefully about how the market for professional photography works can make it easier to spot opportunities and make decisions about how to pursue an independent professional career.

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Some of the forces come from the vast pool of people who might decide that instead of paying you to take their pictures, they want to compete with you and become professionals in their own right. Also, customers can take reasonable quality photos on their own, so there are some possible jobs that disappear because someone’s sister became a member at and turned into a star. Finally, both of these factors combine to create competition with other professionals that makes it harder to keep in the black. Though this seems a daunting industry to hop into the middle of, there are some things that you can keep in mind to make success more likely.

The first thing to understand is what sub-part of photography market you are in. In one of the Business of Photography threads, Lucian points out that “Photographers run the gamut from specialists to jack of all trades. If you’re just starting out then it is probably best to pick an area (weddings, studio portraits, natural portraits, as an example) and do it well. You won’t get wedding work by showing a terrific landscape. So pick an area that you are good with and concentrate there.” This is a very important point. Each of the areas Lucian described is really a slightly different market. Trying to operate in any market will cost you money in specialized equipment and advertising. The area that you want to work in will influence every important part of your business, from the number and size of possible customers in your area to the number of competitors you face when setting prices and advertising your business. You might even find that, although you prefer to take portraits and weddings, you are the best landscape photographer in your area and there is more money to be made for you in that part of the overall market. Most of what follows will focus on studio and wedding type work, so if your specialty is product shots or travel photographs you’ll want to think about what different considerations apply to your particular plans. For any given kind of photography, a business faces the two big pressures outlined above. Taking a look at each in turn, we can think about why these make it harder to succeed and what can be done about each.

II. How hard is it for someone else to start a business that competes with yours?

The first thing that the Bureau of Labor Statistics “Occupational Outlook Handbook” has to say about working as a photographer is that competition is keen. A lot of photographers are trying to secure business from the same pool of consumers, and this makes it hard for any one photographer to keep prices high enough that they still make money. As Tim noted, “[s]etting up a good, professional studio doesn’t have to be crazy expensive.” This is a blessing and a curse. It does mean that you can set up a basic studio and get started without mortgaging your future. It also means that when you’re up and running someone else can start up fairly cheaply and try to grab clients by charging less or offering services that you don’t. What can you do about this?

The best defense that you can have against this problem is to have lower costs of doing business than others who might choose to start up a competing venture. How can you do that if everyone’s equipment and supplies costs roughly the same amount? First, reduce your advertising costs by cultivating connections with people and former clients who can get you more work. The vast majority of suggestions on the boards for people considering business in photography involve ways of doing this. User kixphotography made two suggestions of ways that you could do this: “certain times of year more babies are born, just as more weddings are happening. This would be good information to find out from your hospitals, registry places, etc. and hit the target hard then. What I do is work off a self-made referral program. I appreciate word of mouth business. To me it is by far some of the most effective, most appreciated. It may not be the fasted traveled however. In each photo package I put together, I always send along a stack of cards with a message reminding them of my referral program. I usually pay my finder about $25 US.” These suggestions both help to create free or cheap advertising for your business, and having relationships like these will make it harder for someone to step in and take a lot of customers from you. User Kara was discussing graphic design work when she wrote that “I charge about 100 an hour for custom work and so forth, but most of my work comes from my boyfriends dealership (Helps when you know the general manager),” but her example is a great illustration of a niche that it would be very hard for another person to take away from her.

Another way to protect your business is to make sure that someone who is thinking of starting up a competing shop knows that they will have a vigorous competitor. This doesn’t mean threatening people or discouraging young photographers. What it means is making sure that someone doesn’t set up a competing business because they simply didn’t realize that there was already someone doing a good job in their particular niche. After all, once someone has set up a competing business the investment that they’ve made will make it almost impossible for them to stop trying to compete with you, even if they aren’t making much money in the process. This kind of exposure won’t keep you from having to compete with the Wal-Mart Portrait Center, but it may be worth bearing in mind depending on your situation. It’s probably better to let the local advanced amateur come to weekend shoots with you than it is to lose weekend customers to her!

A third thing you can try to do is take advantage of “economies of scale.” That means: if you do more business, then sometimes you can do it more cheaply. For instance, if you really do tons of photos you can develop a special relationship with a printer or buy bulk quantities of supplies to drive down the cost of doing business. This makes it harder for someone who is just starting to really cut into your profits, because they can’t take advantage of the same discounts that a larger operation enjoys.

Finally, you may want to consider is what technology you use compared to potential competitors. If you’re taking pictures with a Hasselblad H1D with a 22-megapixel digital back, it’s going to be pretty expensive for someone to start selling big enlargements in a quick turnaround that compete with yours—at least until the price of the big digital back falls. If you are a Photoshop expert who can restore ruined old photos from the 1930’s to perfect looking condition, it will be difficult from someone to quickly pick up that skill and begin competing with you. In a way, it is these special investments and skills that differentiate a professional from a paid amateur. Even Michael Langford’s photography textbooks point out that one advantage of using medium- and large-format equipment is that it looks professional to clients and makes them believe that you must know what you’re doing!

These are all ways of trying to protect your business from losing money because of start-up competitors. In the end, though, people love photography and want to work in the field, and you will find yourself vying with other photographers for customers’ dollars. A really important question, then is how important the differences between photographers to consumers and what you can do to make your business more attractive to consumers with many options.

III. Are you competing with your customers?

Sometimes photographers seem to forget that they look at a lot more pictures than most people, and that they sometimes look at different things. Slightly soft focus may drive a photographer crazy, but a lot of ordinary people don’t seem to relish that extra-crisp focus that photographers recognize as a mark of skilled craft. Of course it is important that a professional photographer be able to generate truly professional images, but there are other very important considerations.

Lucian wrote in the Business forum that “Someone mentioned people skills. VERY IMPORTANT! This cannot be underestimated. If your personality and mannerisms turn people off then it’ll be macaroni and cheese for a while longer. You need to be able to relate to people and draw their confidence. Sometimes you just need to be sympathetic. A ‘people photographer’ has a lot in common with the local bar tender - a lot of psychology here.” Being conscious of providing pleasant—not just expert—service is one way that you can distinguish yourself from competitors. This can mean that even though somebody does start up a shop that competes with you, your former customers don’t end up switching because they associate you personally with good photos and good service.

Another way of thinking about competition with other photographers is to take the view of a customer and ask, “who needs a pro?” In the discussion on the business forum, there was a lot of awareness of the difficulty of getting people to buy photos at all when they can take them for free. Tim wrote, “I guess it really narrows down to this: why pay for any service that you could potentially do yourself? People hire photographers not only so that you can enjoy the event or whatever you’re having photographed yourself, but also because you know/think that the photographer you hired will take pictures of a higher quality than you could. The same goes for a lot of other businesses. Why do I get Mr. Lube to change my oil when I could do it myself? I’d rather pay $40 for them to do it, then get dirty and spend 30 minutes to an hour doing it myself… it’s convenient, plus I know they’ll probably do a better job than I would…” This is a very important thing to keep in mind when considering any market for photography.

Photographers probably lose a lot of business to “own supply” by consumers. If customers can get a friend to videotape their wedding and reception for free, then that friend with a camcorder might be a threat to photographers wanting to shoot the wedding. Of course, weddings are important events to people, so photographers still routinely end up taking pictures of weddings. If you were charging $20,000 per wedding, though, the camcorder version might start to look much more attractive. Of course, that is an outrageous price, but it is almost certainly true that the higher your prices, the more likely you are to lose business to people who decide to take their own.

In a similar vein, photographers must remind themselves that most people don’t share our addiction. For most events, professional photos are something that folks feel they could simply do without. There are few things that people feel that they simply must have pictures of. First babies, weddings, and that sort of thing are important to people. If you live in a town full of aspiring models, then there will be more people who feel like they really have to have professional photos taken. For any other pictures of people, it will probably be very hard to convince people to pay very much without being pretty creative. These are the two forces most likely to be important in the market for professional photography. How easily a business succeeds will depend massively on how many photographers are trying to serve the customers in the market, and on how many of those customers can be persuaded to use a professional rather than taking their own snapshots. Both of these pressures will influence how photographers compete with one another, adding a final level of considerations for those who participate in the market.

IV. Boundaries of Competition in Photography

Photographers that are in the same market can try to gain customers from their competitors by changing either the price or the perceived quality of their product. If increasing the quality of the product is costly to the photographer, then these two amount to the same thing—trying to give up just the right amount of money in costs to make sure that you secure as many repeat customers as possible. While specific questions of pricing, advertising, and changing quality require answers too involved for inclusion here, the two big pressures in the photography market provide some generic guidelines. Basically, they can help you think about the lowest and highest quality-price combinations that it makes sense to offer.

The lowest price / quality that you can competitively offer will depend on people’s perception of the relationship of quality to price and the costs of doing business. The second of these is easier to count than the first, because it is hard to ignore the stack of receipts for equipment and advertisement purchases that your business accrues. It’s pretty unlikely that anyone will feel tempted to charge less for pictures than it actually costs to take them, so there isn’t much point discussing it. The strange problem is that people may well assume that if you offer an extremely low price, they could probably do just about as well as you on their own. Put differently: if you offer a price too far below what people are accustomed to in the area, they might assume that your service isn’t very professional. People’s belief that they can take decent photos on their own thus probably plays an important role in limiting how vigorously you can compete with other photographers.

What about the highest price / quality pair that you can competitively offer. At first it may seem that offering higher quality is always a good idea, but remember that if it is costly (in equipment or time diverted from paid work) to increase quality then eventually increasing quality will cost more than it is worse. It is also crucial to recall that your customers are not likely to be concerned with the absolute quality of the photos that you offer—they are likely to be concerned about the quality you offer at a given price compared to the quality offered by your competitors. What this will mean in practice is that you must consider how customers think about quality. As a thought experiment, imagine customers putting a rating from one to ten on the quality of your portrait package and service and on the package and service of your competitors. Now divide these numbers by the price charged. Assuming that you’ve guessed about right on the quality numbers, you can raise your price until your quality number divided by the price you select gives the same number as your competitors. One note: if every photographer produces output that consumers view as of similar quality, they should all charge the same prices under this system.

V. Concluding Matter

Thinking carefully about the market for the photography services you want to provide might help you make decisions about whether you would like to enter this industry, or about how to develop an existing business. Unfortunately, the basic features of the market just don’t give specific guidance on all of the small practical decisions that you have to make every day about investing in equipment and setting prices. On the bright side, thinking about your business decisions in terms of the two big problems of what other photographers can do and what customers can do for themselves does help you think of the boundaries of what is reasonable and what is a good idea.

In a final note, I am not a professional photographer myself. I can read the things that actual professionals post on the internet, and I can think about the market, but my experience isn’t first hand. One great way to learn about the forces that are important in any particular photography market is to talk to people who are actually slogging through it in the real world.

If there is any interest, I would be happy to provide some more comments on specific parts of the photography business like pricing or advertising. I hope that this has helped.