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I take great photos but what should I charge for them? Article 3 – Value Added Pricing.

Thursday, April 29th, 2010

Hi all … Here is the last of my 3 articles on Pricing and what you should charge for your great photos.  This articles deals with the concept of value added pricing. This strategy is widely promoted in the B2B (Business to Business) Sale, particularly in the delivery of complex systems. It is based on the principle of fixing your price based on the value it delivers your customer e.g. Let’s say you develop a specialist purchasing software that can save the potential customers company 200,000 a year. At what price do you pitch your solution? 5000, 50000, 100000 what about 200,000 over 3 years? They save 600,000 over 3 years less the 200,000 they pay you, meaning the still have a net saving of 400,000. Could you sell this system at this price? Why not?, is every one not a winner at this price. This method of determining prices needs highly trained sales people and the more complex the solution the more effective it is. So as photographers what can we learn from value added pricing strategies and how can we used value added pricing for a wedding album or indeed a quality portrait?

Well let’s think about this one… what is the value of quality wedding photography? … Precious memories that will not be repeated again … a timeless keepsake reminder of the day a woman dreams about since being a little girl … and if that was not enough probably the only memory spark she will have of one of the most hectic days of her life … Think about it, If you are married how much of your wedding day do you actually remember? If you are like most I have talked to … very little. So in fact your great photos are in fact priceless … I have spoken to many a bride after getting lousy photos taken by unprofessional photographers who still cry when they think about their wedding album keepsake.

While you may not be able to use value added pricing strategy to fix your price at crazy figures you should be able to use the principle of value added pricing to justify why you charge the price a professional album sells for. Why not show the bride the difference between what you supply and an amateur will supply… Show her the value of what you as a professional provide. Use effective questioning to determine her budget and show her how you add value to ensure she has quality lasting memories forever of her dream day which is typically a forgotten haze without the memory spark of quality photography.

I hope you have gotten something from my 3 articles on pricing and I look forward to your comments and suggestions. If there is a sale’s or marketing topic you would like me to address please post a moment here or email me at pvphotoman@photovalue.com.

PV Photoman

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I take Great Photos but what should I charge for them? – Article 2 – Competitor Analysis Pricing and what will the customer pay.

Friday, April 2nd, 2010

Hi All Again. Following my last article answering the above great question… here is the second article on pricing in the series of three. Hopefully at the end of these articles you will have all the possible pricing strategies

So the second pricing strategy is Competitor Analysis Pricing. Competitor Analysis is a tool often used in strategy development particularly with the Strength & Weaknesses dimensions of the SWOT analysis tool. Strengths and Weaknesses are internal business considerations targeted at your internal company. To qualify to be a “Strength” it must be something that you are better than your competition at… For example Ryanair are known to have a much lower cost base than much of their competition and is therefore a definite Strength.  For something to be a weakness again it should be measured against the competition… Right now Willie Walsh the CEO of British Airways probably regards the unionised culture within BA as a weakness when comparing BA to Ryanair. I hope this explains the S&W parts of SWOT. So what has this to do with pricing?

Well often some companies do “Competitor Analysis Pricing” by looking simply at what their competition charge for something and then just matching or indeed beating it. Have you done this? … I have in the past … and what a fatal mistake when done on its own.  Why is it a fatal mistake on its own? Well it takes no account of measuring your actual costs which could result in you selling below cost … Even worse what if your costs were higher than your competitors and you pitched your prices lower? What then … Well you could start a price war against a competitor who can beat you in this price war will eventually put you out of business.

Another strategy often employed is “Asking the customer what they are willing to pay?” Again accepting these prices without knowing your costs or indeed your competitors pricing can cause you to do work at a loss or again significantly undercut a competitor and start an unnecessary price war. I am not saying not to ask the customer what they are willing to pay as this can be a great way to identify their available budget but make sure if you ask them this that you know what you can offer them for this price and still make a profit.

The above of blindly just doing something reminds me of something my Mother used to say when I used to use my Brother as an excuse to justify doing something wrong … My Mother used to say “If my brother jumped off a cliff would I jump off after him” … Guess she didn’t know I was a superhero who could fly … eh!

Next week we will discuss Value – added pricing in the last of these pricing articles.

Bye for now

PV Photoman

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What is ‘perception of value’ all about and how can we Photographers learn from the cosmetic industry?

Tuesday, January 26th, 2010

Ok “perception of Value” lets break this into pieces. What does “perception” mean? Well one of the definitions of perception on your.dictionary.com is “the act of perceiving or the ability to perceive; mental grasp of objects, qualities, etc. by means of the senses; awareness; comprehension” and one of their definitions of value is “estimated or appraised worth or price; valuation”. So when we put these two together we get perceived value meaning someone using their senses to determine its estimated worth to them… Wow… this got me really thinking as how can we learn from this idea of ‘perceived value’ as a profession?

Then I start thinking as to who really does this ‘perception of value’ thing really well? And then I remembered the last time I went shopping and ended up in the cosmetics department of a large store… the beautiful smells … the well presented ladies encouraging you to try their makeup or perfume … the amazingly designed packaging that leaves an impression of luxury. That’s it they are the masters of this “perception of luxury value” and it reminded me of a test done many years ago in the US. The test consisted of the following; side by side on a shelf were the same brand of perfume … one in a nice bottle at $12.99 and the other nicely presented in a beautiful perfume box at $22.99. Which one sold most?…I at the first time of reading this said … sure the $12.99 bottle had to sell more if it’s the same perfume… guess what I was wrong … the nicely packaged bottle outsold the other bottle four to one or by 400%. The cosmetics industry are the masters at presenting their offerings in away to maximise the “perceived value” of their customers.

So what can we learn from this? How many photographers do you know who present their prints as prints only? How many present their work on CD or DVD only? While there is nothing wrong with this i.e. there is always a market for a ‘low cost product’ there is even such in the cosmetics industry … I would encourage you to think carefully before you depart down this way.

If you are doing an event and it does not warrant a wooden or acrylic frame at least put it in a photographic strut mount or folder and brand this mount or folder with your name. This does not add much expense but it will add to the ‘perceived value’ to your customer when you present them your print.

Now for the sales pitch from my sponsor photovalue.com who always offer a FREE blocking service on their gem collection range of photographic folders and strut mounts … but for the months of January and February we are going one better … normally there is a once off set up charge of £40/€40 for the block but even this will be waived if you quote this blog exert. Just email Hannah or Ronan at sales@photovalue.com and quote the reference : “Blog cosmetics”.

Bye for now… If you have any ideas, thoughts or suggestions on any topics you would like me to blog about please leave a comment here or email me at pvphotoman@photovalue.com

Many Thanks

PV Photoman

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