Why You Should Do A Cost of Doing Business Calculation...Even Though You Don't Want To
Calculating your cost of doing business isn’t always easy. People come up with all kinds of excuses. And recently, I’ve noticed a trend in excuses when talking to some photographers about setting their rates. It usually goes something like this…
I can’t do my cost of doing business calculation because…..
· I don’t know really know what my expenses are from year to year.
· I don’t know how many photography jobs I’ll get this year.
· I have no idea what my salary should be.
· I can’t charge my clients for things like office supplies and gear they don’t use.
· I already own my gear so I can’t include it in my numbers.
If you can relate to any of the statements above, Laura and I encourage you to calculate your cost of doing business anyway. The numbers you come up with will guide you so you know if you are charging a photography rate that keeps your business sustainable.
We sit down and calculate our cost of doing business every year. We generally base our expenses on the expenses from the previous year. We estimate the number of jobs for the new year based on the average number of jobs from previous years.
Say you calculate all your expenses accurately but the number of photo shoots you can get each per year is quite low. Sometimes photography doesn’t pay the bills and you need to consider bringing in additional income. Laura and I have both worked many different jobs to support ourselves while building up our client base in nonprofit photography. We’ve also worked to diversify our skills so that we can offer services like writing, video, website design and communications strategy to our clients. This allows us to have multiple income streams in our business and it helps us to meet our financial goals. There are very few people in our industry who are only doing photography. It pays to offer more value to your nonprofit clients.
Calculating your cost of doing business is a continual process. We check on our numbers each quarter when preparing quarterly tax payments. If our income is lower than anticipated, it’s a good indicator we need to hustle for more clients or pick up a bridge job to cover the gaps. If we didn’t do our cost of doing business calculation, then we would essentially be winging it.
We believe that when you, the photographer, have a clear picture of your business finances, you better position yourself to ask for a wage that is fair to you and allows you to run a sustainable business. Unfortunately, some photographers avoid calculating their cost of doing business and take whatever rate a nonprofit might offer, even if it’s not enough to cover their business costs much less earn a profit. This creates an expectation within the nonprofit industry that photographers will work for whatever amount of money. It also perpetuates the idea that photographs have little value. That idea is crippling in our industry. We all need to ask for what we know we are worth – and that starts with knowing our own business numbers.
If you’re interested in a deeper dive, take a look at our first online course ever, How to Price Nonprofit Photography. We’re offering some awesome information (we think!) on setting your photography rates, invoicing, charging for your services, copyright and negotiating with clients. Enrollment is open now until Friday, June 7, 2019, at 7 p.m. EDT. The course is only available for purchase during this time. The course will then open to students on Saturday, June 8, 2019.
Of course, you can calculate your cost of doing business without our course by using NPPA’s Cost of Doing Business calculator. The important thing is to understand your business finances. We want you to be confident and successful in your nonprofit photography career!
If you have any questions for us please send us an email at email@example.com. We always love hearing from you. Now, go do your cost of doing business calculation!