Adding Up The Numbers

Adding Up The Numbers.

So how do the numbers add up for photographing in the schools?

Working for Lifetouch (or other large school photography company)
$10-17 per hour.
The most profitable jobs in these companies are in the sales or district management positions.  Photographers are a commodity.

Photographing Schools for Yourself:

Web Hosting Service:
Monthly fee: $10-75 per month
Percentage of sales: 10-20%

Volume affects these fees.  If you photograph a lots of heads your fees are less,  but your workload is higher.

Merchant fees: 3-4%

Sometimes included in web service fees, but not always.  Volume allows you to buy down your fees, though seasonality affects these numbers as well.

Sales Tax: 8-11%

You are responsible for all accounting and submission to State Boards.
Cost of Goods: 28-35%

School service items (ID Cards, School Record Images, Yearbook and Admin CDs, etc) proofing envelopes, photographic prints, packaging materials, shipping fees.

These costs are also volume sensitive, you pay more the fewer the heads you photograph.

Cost of Doing Business: 35-65%
Office Staff, Production Staff, Customer Service, computers, printers, office supplies, postage meter, graphic designer, marketing staff, public relations person, utilities.  Larger production space to handle volume business.  Bounced check follow up.  Accounting and sales taxes.

A limited number of students are easy to manage within your existing services but if you photograph more than a few schools you will soon find your business is impacted with the volume impact of school photography.  We refer to it as the “teenage syndrome”… too large to manage alone, too small to manage itself.

Additional production/customer service hours:
Priceless distraction from your personal wedding and portrait business.

Cost Totals:

Small Scale: Web Sales:20%+Cost of Goods: 35%+ Cost of Doing Business: 35%= 90% (10% profit to photographer)

Large Scale: Web Sales: 10%+ Cost of Goods: 28%+ Cost of Doing Business: 35%= 73% (27% profit to photographer)

Certified MugsyClicks Photographer

33% of gross revenue on most photography related products.
(after sales tax, shipping and customer discounts- photographer responsible for all photography supplies and assistants).

How do we do it? We spread the cost of goods and business over more photographers and use our numbers to purchase lab services and printing at discounted prices.  The same is true of merchant and banking fees.

Our goal as a company is to allow our photographers to function at the higher end of the revenue generation aspect of business- Sales and image creation and amortize the support services over more of us.

So how much can you make photographing in the schools? For a detailed answer- contact our photographer representative.  To amuse your imagination- guess a sales average and a buy rate for your local school and multiple those numbers by the commission percentage.  Back out some assistant costs, and maybe a doughnut or two, and you have your profit for the day.

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Discussion on Pricing

Discussion on Pricing

So, it’s time for some meat, enough fluffy newsletter stuff. What about pricing? Next to my bed is a basket of books, a novel or two but mostly business books. Pour your heart into it-the Starbucks story by Howard Schulz, Small Giants, Blog Marketing and the Art of Pricing all currently have bookmarks. After over 16 years in business I am still a student looking for teachers, especially when it comes to pricing.

What do all these books have in common? They represent my search for the answer on how to grow and sustain MugsyClicks Photography. Common knowledge in the school photography industry is it is all about price. How cheap can you go, still survive and compete with the “big national”. Some companies do this by restructuring the commission structure basically by retailing prints. Some do it by undercutting, or bottom-feeding, which usually leaves them with a higher gross and a barely survivable net.  This usually works on the schools that the “big national” has identified as not profitable. A few companies, the most successful ones, have worked out a formula that matches price and stretches for as much volume as they can wrestle in the contract season. These contracts tend to switch back and forth between these 2 or 3 companies when that year’s temp hires were disappointing. The bottom-line is that school photography business has become a commodity.

Here’s what Rafi Mohammed Ph.D, director at Simon-Kucher & Partners, in his book “The Art of Pricing” has to say about commodities:

“Mention the word commodity and most people almost reflexively start moaning about “low prices” and “no pricing power.” Commodities are products that are identical in every aspect (characteristics, service, distribution, etc.) to those of your competitors…many competitors experience the unpleasant reality of their products becoming commoditized-they face market environments in which their products are losing pricing power. In this situation, companies selling commoditized products end up having their products prices dictated to them by the rivals who are selling similar goods. If you don’t match the competition, your customers disappear.”

Now that is the school photography industry in all it’s glaring truth. Mohammed goes on to say, ” If your product is becoming commoditized…you have a strategy problem. Pricing cannot remedy this. You have to develop a new strategy (e.g. differentiation) that will distinguish your product and thus free your prices from their dependence on those of your competition.

Ah, there it is the opportunity… differentiation. Now while Mr. Mohammed goes on to discuss a multi-price structure as a short term prospect he sees the long term prospects as poor. The only way out of a situation like this is to recognize customer’s different valuations and meet those needs. So in photographer language… you can only use complicated print packages so long to trick the client into spending more money. This is especially true in our new digital world where scanning is as easy as a copy machine only much better quality. Not to mention my pet peeve, why are we commoditizing our children? Again, why are we commoditizing our children? Why wouldn’t parents want to spend more money on better photos of their most sustaining legacy? My experience with Mugshots has shown this fact to be true but it is still an uphill battle as it regards a massive re-education program for school administrators. Is this pricing restructure necessary? Absolutely! For many reasons all of them good- most of all for the parents, kids and community-based photographer.

Now that we have properly identified that school photography has become a commodity requiring a new strategy, “…a significant and time-consuming endeavor” it is important to look outward for inspiration. I chose coffee. Enter Howard Schultz. One day while ordering a Mocha (I only drink coffee drinks with chocolate and foam) in a Starbucks in Redding, CA on my way to a school photographer’s summit, I realized, in a much different financial market than my home-base Marin County, I was paying the same $3.45 for my Mocha. Then the next day,while breakfasting with my colleagues, I mentioned I needed to walk down the street for my much needed Mocha and 4 women joined me walking by pots of freshly brewed FREE coffee because they too need foam at the top. Coffee, the commodity, had been transformed into a daily luxury item! The model for transforming our industry was right downstairs, around the corner…Starbucks!

Love them, hate them, Starbucks has been a boom for coffee. No longer a commodity,  it has re-energized an industry in more than caffeine. Read “Pour your Heart Into It” and “The Art of Pricing” and think School Photography. And of course.. contact MugsyClicks so we can use our combined energy to break the price barrier. 

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Why MugsyClicks?

Why MugsyClicks?
You are a great photographer with a savvy business sense. You excel at your craft and take pride in your work. Your clients are loyal and say great things about you. So why on earth would you want to photograph under the MugsyClicks Brand? Why not “Linda Russell’s School Portraits” or “Happy School Photography, by Linda Russell” or how about Linda Russell’s “Cheap and Fast Head-shot Taken At Your Child’s School?

MugsyClicks is designed to offer you a clear product differentiation. Think, Banana Republic, The Gap, and Old Navy- same owners different marketing and pricing. Marketing minds and economic gurus recognize that market diversity gains a strong hold on customer loyalty and ability to up sale. They didn’t define themselves as Economy GAP, GAP and More Refined GAP.

Okay, so instead of using my name I’ll just find my own cute economy name. Worked for Linda, why not me?

Great, come up with a clever name- register it, dba, LLC, hire a talented full time designer (I’m clever, maybe I can do that myself-in my spare time) design a second website, create a marketing campaign-email, printed collateral, design new products, research labs, research hosting. Create unique packaging, product lines. Make alliances with other companies. Educate myself to the school photography industry-what exactly ARE service items? Create a portfolio aimed at those services. Devise price lists, sales materials, envelopes, proof sheets. Posters, reminders- etc.

Time to make a portrait. How do I photograph so fast? What is the best selling crop? Shall I print my own packages? I could save money by doing that myself as well. Which online service shall I use? Which lab can print all the service products my schools require? What do I need to know about yearbook companies? How will I handle all those customer service calls during my busy holiday portrait season? This all seems like a lot of work-

Maybe I will just let Lifetouch, or one of those other big companies, keep this billion dollar market and I will keep doing my thing. OR you could work with Mugsyclicks keep the profitable part and share the expenses with other like-minded photographers.

By being a part of MugsyClicks you are a link in a chain that will change school photography. Every beautiful portrait you create will make it possible for another photographer in a different city to do the same. By working together under the same brand we will be able to help our fellow artists crack the 89% market giant. By networking among ourselves we can support, share and encourage each other photographically, as well as business-wise. By combining our resources we grow faster with better service, exemplary packaging, marketing and buying power.

You could do it yourself.   You can even follow the link above to get Marathon Press’ ABC’s to School Photography and learn from the DVD series.  Listen and watch as Chris Wunder shares with you from his years of experience in the traditional school photography market.

Or you can join us and be a part of a community of innovators.   At MugsyClicks we have created a network of successful photographers pocketing profits, while changing an industry.

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