[Jim Conway]

Diane, In response to - "Shouldn't we all be sensitive to these issues so that we don't price ourselves out of business?" Sorry to jump in but you stopped me cold on this so, for what my two cents is worth.

... Facts! Like a good Lawyer, Doctor or Teacher that knows what they are doing, you are not going to price yourself out of business if you have the skills and talent! You can only price yourself into a higher grade of clients. Would you want a Lawyer that offers to work for you for $5.00 or $10.00 an hour when the good ones charge $400 or more? The better clients will be more likely to avoid you for charging too little! They equate low price with a lack of skill and professionalism and as most of us have learned the hard way, it's a rare case when that proves to be incorrect.

The problem in this profession (as I've stated often) is gross underpricing and not charging on a par with other professions that require like talents.

Jim Conway

[KevinBE]

I decided I'd catch up on this thread and I'm glad I did. A wealth of information is here. I have found that pricing is my weakest point in deciding how to structure my business. I have been winging it so far and still am not comfortable with what I have published. Making decissions on equipment and consumables was easy compared to how much to charge for my work. I don't want to charge too little and I don't want to charge too much. Deciding on just what those 2 limits are has been tough. It's going to take a lot more thought.

[roger_ele]

Diane, Jim said it perfectly, thanks Jim, I could not have said it better.

If you charge too little you will also price yourself our of business. Please understand that by nature I am a tweaker - I will go back and tweak a photo or recopy or copy on film and scan until I am 100% satisfied, and I don't call the customer back and try to charge more than I quoted, so jobs can take more time than what you might think. Some time and energy is often spent making sure it can't be made better. Knowing this about myself I charge accordingly.

I also know that to pay the overhead and take home a salery I need to charge $150 profit per hour. This may sound like a lot, but it is not when I subtract the number of hours each week that are not directly working on jobs: i.e. bookkeeping, marketing, business errands, etc. I work a 60 hour week as it is.

I used to be shy about charging, not being able to pay the bills occasionaly and having customers assume by their actions that I would be at their beck and call (because I was hungry enough to charge so little) slowly taught me as a matter of survival the value of insisting on mutual respect.

By the way, I have referred many customers to the Kodak Copy Station at Raley's accross the street, I don't see those different machines as low priced competition but as an added resource for our customers. I want our customers going their and to us, and I want them to be able to see the diference. I am even glad to help them figure out which ones we should do.

For me, it is not about the money - we don't provide a service to make money, money is a by-product of the service that we provide that allows us to live and be in business. This probably sounds stupid, but people are sensitive to sales - they know the difference - so we stay focused on what is best for the customer. Attitude is everything.

Kevin, there is nothing wrong with winging it! When you are done with a job, look at it and ask yourself what you think it is worth (not how much time you spent, but what it is worth). Make a note and then compare to what you charged. By this awareness I think you will find yourself slowly adjusting your system of pricing to something you are comfortable with. This will help with the too little or too much thing. A good rule of thumb is to charge on the high end of your comfort zone, then give additional stuff (not discounts) to good customers as a thank you.

Some thoughts to chew on...
Regards, Roger

[roger_ele]

Kevin

People don't really care how you arrive at the total, but they do need to feel that the quoting is consistent and that they are being treated fairly. I understand the uncertanty you are feeling, I have been there often. When decisions are hard it usually means there is a lack of information. I highly recommend you give this a try;

Take a job that you did with a before and after, come up with three different ways of charging that all add up to the same total (whatever you think you should get for the job), then show it to anyone you know who is the type of person you would like as a customer and write down their vote and their reasoning. From this you might arrive at a fourth way of doing it. They will give you valuable insight and you won't be left guessing.

When we designed our yellow page ad we asked our customers to vote on the different wordings and the photos used, it was priceless!

Roger

[Jim Conway]

I'll see if I can shine some light on pricing here in a different way. Roger you and I are close in the amount we pick up from a "billable" hour. I'm usually at the $170 to 190 range but that has nothing to do directly with how the jobs are priced - it's an earned average. Like baseball, every job is not a home run!

Think like you have employees, how much would you have to pay them? Consider that even if you have no employees, you can still farm out the work instead of doing it yourself, so pricing a job still involves the same approach . Here's how it works ...

If someone comes in with a job that you know the market will not stand for more than $15.00 an hour and you can farm out the work for $8.50, you take the job and add to your income just like you would with a retail product markup. An example would be converting an 8 mm film to a CD or some simple scanning work. Visualize doing nothing but that type of work and you better find a fast easy way to do it or you'll starve! To make money, you'll have to increase your skill level just like you would to get a raise on any job and farm out the simple things.

Now move on to Job Two . It's a really complex retouching job where you know with your experience that you can excel head and shoulders over the competition - you charge "what the traffic will allow". If you know your competition's level of expertise, you'll know what jobs you can "bid" higher and still not lose. You have to gain a feel for the clients and what they want and can afford. As I've said before, my opening line is "Are you looking for Museum Quality work" - They know that isn't going to be like a Big Mac with a two minute turn around! We have a $139.50 minimum and, after a look at our exhibits, I've never had anyone walk out saying we charge too much for what we do! They want to buy from us - it's a matter of trust.

So now Job 3 comes along and the client wants an original restoration on a one of a kind collectors item that is worth $19,000+ (Yes it happens) So assuming your talents are now equal to the task, you take it with a fair price of 10% of the artifact value EVEN IF IT IS ONLY GOING TO TAKE YOU AN HOUR TO FIX IT! The reason is that you also took on the risk!

Now take all of these jobs together, none were price "by the hour" but I come out with an hourly average - and quite frankly when I put it up against my professor daughter, my attorney son or my youngest who is in sales - all making well over $120K. I'm sure I'm still underpricing.

Some people here might be confusing marketing and pricing. Bringing in the business is related to skills and talents and your ability to sell them. Pricing actually ends up being a result of your success at that. To go back to the ball game analogy I started with, one player does not ask for the same pay as all other players. We are not machines in this one size fits all world and that is the difference you have to hammer home to get the paid what you are worth.

Jim Conway

[roger_ele]

Jim

Very well said!

I may be the one here confusing marketing with a price list, I have heard people describe marketing as a broad umbrella to include pr, ads, web site, donation of gift certificates, etc. Since our price list is published and the potential customer may see it before ever talking to us I have included the way it is structured (in my mind) as part of our marketing. Probably it is more acurately just a part of sales ...

Thanks for the wonderful explanations, Roger

[KevinBE]

I don't know about anyone else, but I really appreciate the advice Jim and Roger have offered. A lot more insight than I could have asked for. I've still got a lot more thinking to do about my pricing structure but you guys have given me ample guidelines to use. Now I just have to apply it. One thing I have to consider right now is that I still have a lot more tools to gather for my war chest. I do not consider myself an expert yet but that is my goal.

Thanks again.

[Jim Conway]

Easy to classify Roger - "Marketing" is bringing the prospect or customer to the product . (your advertising ). "Merchandising" is bringing the product to the prospect or customer. (Sample books, exhibits, etc.)

Your "physical" price list may be high class enough to become a part of your marketing program however, my reference was to the prices that you charge . Using that as a marketing tool is not easy to do unless you are going for the bottom feeders with the lowest prices in town or always having your services on a liquidation sale.

Some might disagree but in building a reputation for quality, desire for the service should comes first, the prices then becomes secondary if they like what they see.

And Kevin, thanks - it's good to know that some are benefiting from the discussions - makes it worth the time here.


Jim Conway

[jeaniesa]

I'll second that thanks to Roger & Jim. I've been reading and re-reading every word. What a goldmine of business wisdom! I really appreciate the time you've taken out of your busy schedules for this discussion.

Jeanie

[roger_ele]

Thanks Jeanie & Kevin!

Hanging around here keeps me learning, reminds me of what I don't know, and it is fun to share what I do know (or think I know). I don't know what it is that I don't know, you know?

Thanks, Roger

[1STLITE]

I guess I have a hard time with the price thing myself. I am in many respects a beginner at this. But I am good and I know it. And so does everyone who I have done work for. I know my work is worth ALOT more than I charge. But my issue here is that the area I live in is very small and very poor for the most part. I am so conflicted. On the one hand I want for every person here to be able to afford this renewal of their past. On the other hand, I certinaly would LOVE to be able to get the business of the folks who can actually afford to pay what I should be charging. But if I charge low enough for everyone to afford it then I can never get the amount I SHOULD get. I can't charge Mr. Moneybags more than I charged Ms. Bankrupt just because he can afford it. UGH. I love doing this work, though. And I want to continue doing it. I think otherwise I would just give up...

What's a girl to do?

[Janet Petty]

Reply to STLITE. Mississippi huh? I empathize wholeheartedly. I live in northcentral Arkansas. We have many of the same problems you mentioned in your post. Charging is not my forte either. Here is the solution I have adopted, albeit faulty. I calculated what it costs me in material, averaged it over x amount of jobs. (Such as I can print x amount of pictures on one ink container and that costs x amount. Each page costs x amount and so forth.) Then I added minimum wage per hour for the total restoration package cost. I know that isn't much, but in the poverty stricken south, it is more than enough for most. Those who are demanding or ugly or expect it for free, I charge MORE. If I tell them the "Pros" have a higher rate and show them those prices as listed on the internet and such, they usually go for my business. Economics, economics, economics! What's a girl to do?

[roger_ele]

istlite,

The community we live in is doing much better so I may not be the right one to answer, but I have a nagging feeeling here, but it is late at night and I am pooped ... so stay with me.

You need some sort of system that gives you the perception of having the value that you have, with a way of giving the discounts that you want to give - because you want to do the work and not alienate the majority of your customers. so, I am just brainstorming but maybe something like this ...

- Charge the rates you want to charge
- Have a special 'hard times and hustlin' (or whatever else you might want to call it) rate which comes with some limitations, like a longer turn around as you work between full paying jobs, and possibly no finished prints - delivered on CD only as this has a lower cost to you. Or maybe a rough fix as quality is in the details - we spend eighty percent of our time on the last 20 percent of the work ... Or maybe only take one job at a time and spread it out a little so that the people that want it cheap feel like you understand their situation and you are worth more, but are doing them a favor. In any case always quote longer than what it takes you and give them regular updates.

I think what I am trying to say is that if you want to have a higher value you need to demand respect - in a nice way.

If you get in the habit of assuming that all of your customers are having severe financial hardships then the ones that would be comfortable payng your full price will slip in at the lower price and you will never know .... ;( ... or they may go elsewhere in search of someone who charges more because it is too cheap. Sorry to scare you but this is as true a risk as not getting the business from those that have a hard time affording it.

I just took in a big job today in which I gave a big discount for quantity. The 100 original, scan, globaly optimize and save to CD. We charge for scanning and output separately - so we had the leverage - the customer got a great deal and we are well paid for our time, If you are curious - and maybe you might like a couple of our ideas, our price list is here > http://www.eleakis.com/Copy/copy_price_082004.htm

Good Luck,
Roger

[Mike]

When I quote a price it is for a "normal" turn around time. Now that time will change depending on the size and complexity of the job but is usually something like a few days to a week or whatever.

When I am talking to customers I question them about the amount of photos they might have and if the family has more etc etc. I suggest to them that they all get together, decide which photos to do, how many copies they need (usually one per family), then bring them all in at one time, there is a savings in bulk. There is also a savings if they are not in a hurry, for then the job becomes what I call a gap filler, which means I will work on it when everything else is done, but as soon as another job comes in, the gap filler goes back on the shelf. I do promise them that the job will be done by a certain date, but that date might be 6 months or so down the road.

Had one really large job (300 orginals) that took about 14 months to do that way. I still made money, they saved some, everyone was happy!

To do this you need to have an absolute bottom price that you will not go below. We explain the cost difference between the regular cost and this one by emphasising the amount (it has to be a big job) and the time they will have to wait for the finished product.

So far it has worked for us.

Mike

[kbeatrice]

I'm just starting my photo restoration business, but based on past experience in the business world, it's really important to value your work and time appropriately. Many people underestimate themselves and wonder why they aren't making enough/more money. A great book on this subject is:

Secrets of Six-Figure Women: Surprising Strategies to Up Your Earnings and Change Your Life by Barbara Stanny

This great book isn't just for women, but for everyone who wants to make a decent living! There's many great stories about people who own their own business but wonder why they're not making the money they thought they would. In many cases people weren't charging enough for their services when the market would bear much more. Once they changed their pricing they were making much more money and doing less work!

Also, the perception that the really talented people are worth more is very true. People are willing to pay for quality. If you charge below market prices people will wonder why. Is your quality not good? Are you desperate? Even if you are desperate, it's important not to appear that way.

Lastly, many times customers that argue over prices are the ones who will end up not being profitable customers for you. Successful businesses don't keep doing business with customers that they're losing money on.

Just my 2 cents for today!

Karen