With inflation at a 20-year high across the globe, many photographers are seeking advice on how to navigate their studios through these uncertain times. Unfortunately, social media is full of bad, incomplete, or one-size-fits-all solutions that can be dangerous for your business if you don’t take the time to consider all of the factors. In this article, we’ll give you our thoughts on inflation, raising your prices, cutting costs, and other factors to consider.
Should You Raise Your Prices?
On Facebook, I saw an influential photographer post the following: “With inflation at 9%, photographers you NEED to be raising your prices!” The problem with blanket statements like this is that, while it might be true for many (or even most) photographers, it doesn’t necessarily apply to all. Here are a few questions to ask yourself before raising your prices.
What is the predicted financial impact on my business?
As with any major business decision, support your choices with as much data as possible. If you don’t already have it, this is the best time to gain a full, accurate understanding of your financials. Map out your prior year’s revenues and expenses and use those to predict the next 12 months.
For SLR Lounge premium members, see the accounting and financial planning in workshop 1 of the Business Course. No matter how you get there, you need to create a clear picture of where your business is at as of right now. Here are some specific questions/thoughts to consider:
What is your booking capacity and percentage booked in the last 12 months?
Let’s say for example you only want to work with 30 clients a year. Last year, not only were you fully booked, you were turning away leads and potential business. In this case, it’s safe to say that by raising your rates the likely outcome will be positive, more revenue.
But what if I was only booked 50% or even 90% of capacity last year?
If you weren’t fully booked and turning away new leads last year, then it’s safe to say that you are taking a significant risk by raising prices. Yes, you might make more money per client, but higher prices can mean that your booking capacity might drop 20-30% or more.
How many leads do you receive each week?
Again, a great gauge of your position is simply the number of leads you’re receiving each week. For example, if you CONSISTENTLY receive dozens of qualified leads per week, then your risk is lower when raising prices. If you’re generating only a few leads per week, or if your lead generation is inconsistent, then you face a much greater risk.
What are your direct competitors doing?
If your direct competitors are all standing pat on their pricing, then the risk of losing business with price increases is higher. Remember, don’t just look at the photographers down the street. Look at the photographers in the exact same market, catering to the same clientele, working with the same vendors, etc. (Premium members, go back to the in-depth competitor analysis Workshop 1 of the Business Course).
Can you use this as an opportunity?
If your competitors are all increasing their prices, you can choose to do the same or you might even use it as an opportunity to gain market share by not raising your prices. Again, this is all dependent on booking capacity. If you’re well beyond your booking capacity, this won’t be the best idea.
However, if you have room in your schedule for more clients this is an option worth considering. If communicated to the right people in the right way, this could even help you gain favor with certain vendors and business partners.
Our recommendation is that after you’ve asked yourself all of the questions above, decide what you believe to be the best course of action based on your risk tolerance. Keep in mind that you can always offer incentives or even decrease prices. If things aren’t going as planned in 6-12 months, you can potentially come back down to your pre-inflation pricing.
Where Can You Save? A conversation about Shrinkflation
While the majority of the conversation online is centered around raising prices, in reality, there’s a whole other side of the profitability equation, the expenses.
This is where “shrinkflation,” offering less for the same price, comes into play. While the term is generally used in a negative light to refer to big corporations offering “4 nuggets instead of 6,” many businesses cut costs out of necessity. The key is to find areas to save that don’t materially affect the overall product or customer experience.
For example, let’s say you’re a wedding photographer with a base package of $4,000 that includes 8 hours of wedding coverage, 2 photographers, 1 engagement session, and 1 small album. You might then ask yourself these questions:
- Can I deliver the same experience and quality with 7 hours of coverage?
- Do I need to include the engagement session in the base package?
- How much do clients value the album? Does it need to be included in the base package?
- How will my clients feel about being billed for travel outside of X miles?
- Etc
To be clear, we are not recommending that you short-change your clients or cheapen your brand.
We are advising that you should first gain a full understanding of your costs and then analyze each of them to ensure that they are necessary and beneficial for the final customer experience.
Conclusion and Overall Recommendation
We do believe that most established photographers should increase their pricing. The big corporations have led the way already and primed the world for increased prices on everything, including services like photography. However, as we’ve mentioned, you need to make your choices based on a good understanding of your financials and your overall business. This will allow you to come up with a combination of increasing your pricing and decreasing your expenses that doesn’t have a drastic, material negative impact on your overall business.
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