Negotiating and Pricing a Buyout by tomorrow

[chenoa_maxwell]

Hi guys,

Hoping you can help. Creme of Nature, known as the gold standard for cleansing and conditioning

African American women's hair, just approached me to buy two (2) of my images. They would like

to use them for three (3) years and have asked me to come up with two prices. They say they are

NOT using the photos for a national ad campaign and would be primarily using the images for POP

and web, salon brochures etc.

 

I have NO experience in this and i do not want to come off unprofessional, nor do i want to suggest

a price that is too low or too high.

 

Would you be so kind to guide a newbe through. I would so appreciate it!

-Chenoa

[ellis_vener_photography]

'They say they are NOT using the photos for a national ad campaign and would be

primarily using the images for POP and web, salon brochures etc."

 

That is not a buy out -- they are specifying how they will use them and for how long.

 

Still this sounds like this could be possibly a couple of thousand dollars per image.

[mikael_karlsson]

Cheona:

 

If the photos have people in them, make sure you have a signed model release before

proceeding any further.

 

I agree with Ellis, a couple of thousands per image, more if we're talking a lot of retail

outlets, a large number of web sites, ads that will be featured on a large number of ad

sites etc.

[dan_heller]

> If the photos have people in them, make sure you have a signed model release before proceeding any

further.

 

Regarding releases:

To be more precise, your responsibility is to inform them of WHETHER you have a model release or not. It is

*their* responsibility for having one if they needed it. (In this case, they would.) Now, if you can get a release

easier than they can, all the better--go get one signed so you can close the deal and make some money. But if

you can't get a release, give the names of the subjects to the company so they can (if they so choose)

negotiate terms on their own with the subjects. Remember, you're not on the hook for having a release; only

the publisher (licensee) is.

 

Now, as for the price you charge, I strenuously advise never to take anyone's "advice" on a price to charge; it's

all random. Everyone will give a different price. (I'd only do a few hundred dollars based solely on what you

said so far, but that's me.) Besides, the real determining factor is the client: what THEY will pay is the only

thing that matters. If you don't make the sale, you've just hit a dead end and have learned nothing. by your own

admission, you're new, so whatever you charge, you need to learn something. So the real task is not to come

up with a fair or "standard" price--no such thing exists. The real task is to learn how to negotiate: what

questions to ask, how to interpret answers, what to say or not say that leads to cues for what kind of price

ceiling the client is willing to hit. Every client is different--standard prices don't apply. learn to negotiate, not to

have a static price list.

 

And negotiation is not a one-size-fits-all thing either. Everyone's business model is different. And that's where

the rubber hits the road: what are the future opportunities with this client? What are your longer-term business

goals? How important is this particular kind of deal? etc.. Thinking in simply short-term goals (like how much

you get paid) puts you in the frame of mind where you seek out your next dollar on a day-to-day basis.

Neglecting to think in longer-term *strategic* planning will ultimately harm you more than anything.

[mikael_karlsson]

True Dan. Clumsy writing on my part there on the release issue.

[tony_clark]

Run to a bookstore and buy Pricing Photography and read from cover to cover. There

are questions that you need to ask before committing to a price. How prominent will

your images be on the POP? Images on their website only or on their Salon Clients

sites also and as banners? What is the print run on the brochures? I see the potential

Estimate for three Stock images to be nearly five figures and that is with no

Advertising. Be sure to include that you are not including the fees charged for Models

but include their contact information if you have it. Congratulations and good luck.

[dan_heller]

> Run to a bookstore and buy Pricing Photography ...

 

Back in the pre-internet era days, this would be great advice. The very questions

Tony raised, such as "how prominent will your images be?" and others were all very

much strong negotiating tokens back then.

 

But that was then, when negotiation was done done with the assumption that YOU

hold the cards and are willing to give them a price based on those factors. Today,

buyers have the upper hand, and they don't need "your" images as much as before.

With a very few exceptions, the buyer will ignore such negotiating attempts and

simply say, "thanks, but we can get another image for less elsewhere."

 

There are certainly well-established pros who have built certain long-lasting

relationships with clients that allow them to retain somewhat more of an upper hand

in such negotiations, but those individuals are dropping off the map quickly as time

passes.

 

Today's negotiating techniques are not about how the client will use the photos, it's

about longer-term objectives: learning to offer incentives to get them to become

repeat customers, finding out what their price threshold is irrespective of "how they

are going to use the image,. Most importantly, you need to determine for yourself

what other benefits there may be to working with the client. In essence, you're

negotiating with yourself, not them.

 

The photo industry has changed so dramatically and fundamentally since the pre-

internet era, I advise avoiding any book written in the film-era photo industry (or by

photographers who "made it" during that era). Those techniques are dated, and

though some pros continue to use them for certain market segments, or a niche set

of clients, the general (and emerging) photographer should not. Following such

advice will yield as much success as buying a lottery ticket. Sure, you may win

some bids now and then, but it'll be due to random chance, not intelligent

negotiating.

[randy_santos]

I agree that you must detirmine your own price and negotiate a fair rate for the requested use. But, they are requesting use of 2 images, 3 year use, for point of purchase (how many locations?), web use, and print. Obviously they see real value in your images. These images will be used to market and promote a product that will generate much profit. Certainly the use of these two images is worth more than a few hundred dollars as suggested.

 

Don't sell yourself short, I don't know the circumstances as to how they found your image or contacted you but keep in mind that many agencies fish for images on flickr or whatever in hopes of finding someone so thrilled to have their work used that they give it away for practilly nothing. If that's the case there isn't much benefit in establishing a long term relationship with someone who will always consider you the cheap guy.

 

I would detirmine a rate that you are comfortable with and stick to it. If they really want your image they will pay for it. Images are licensed for this type of use everyday for many thousands of dollars. If they are just looking for some sucker to give them an image for practically nothing than all you have lost is being taken advantage of.

 

The best thing is to educate yourself regarding the licensing of images, prices, negotiating, and agreements so you may negotiate intelligently. I do not agree with all the advice above but that is my opinion, The best thing for you is to learn from many sources, understand the market, form your own opinions and most importantly understand, realize the value of your work and charge accordingly.

 

Good Luck!

[tony_clark]

Thank God I don't subscribe to Dan's philosophy. If I did, I would surely be in a

different studio and working a part time job at night. My Clients understand Ad Space,

Usage and quality of work and do not shop at Micro Stock blue light special vendors.

You work at your level and I'm continue to generate more revenue year after year.

[dan_heller]

<blockquote>Thank God I don't subscribe to Dan's philosophy. If I did, I would

surely be in a different studio and working a part time job at night. My Clients

understand Ad Space, Usage and quality of work and do not shop at Micro Stock

blue light special vendors. You work at your level and I'm continue to generate more

revenue year after year.

</blockquote>

<p>

You're completely misunderstanding my point. It's not my <i>philosophy</i> that

pricing has changed and that one needs to understand their clients. It's just a truism.

You stated yourself that your clients "understand ad space, usage and quality,"

which serves precisely what I've been saying: <i>you understand your clients.</i>

And therefore, you price things accordingly. Not all clients are like that, and

expecting them to be is exactly why there are so many photographers who can't

make a living and are working night jobs, as you put it. That you are successful and

continue to generate work year after year is good, but it is not a one-size-fits-all

solution for everyone. You are in a unique kind of business, with an established

reputation, and with a niche clientele that allows you to get the income that you do.

Most photographers don't have any of those things. Most don't even have studios.

Most photographers don't shoot for clients that hire photographers to do specific

shots. Most photographers don't have years of experience shooting and working on

highly orchestrated photo sessions.

<p>

That you try to ascribe that "your philosophy works across the photo business

spectrum" is what's caused more harm than good to most emerging photographers.

The truism that I stated -- and to which you said is my "philosophy" -- that people

need to understand their own skillsets, their own market segments, the pricing and

service expectations for those segments... that's the stuff that gets photographers

to start thinking intelligently for themselves, to plan their business organization

properly, to understand there's not a "secret" to pricing in the photo business.

<p>

The book that was recommended, <i>Pricing Photography</i>, is the sort of book

that worked back in the film-era/pre-internet days, when the percentage of

photographers like you wa much higher, and the ability to get photos from other

sources was virtually nil. But today, photographers like you (Tony) are far more the

exception than the rule, and though you understand your clients well and succeed

with your pricing model, it is not a model that applies to a very broad range of

photographers. And <i>certainly</i> not a photographer with little experience, no

name-brand reputation, no steady stream of buyers, but who happens to get a call

from the blue about licensing photos. This person will surely be given inapplicable

advice by that book, since his career is not anywhere near ready for that sort of

pricing analysis, nor is it clear that he's eventually headed in that direction.

<p>

dan

[tony_clark]

It's as though you are advocating a downward spiral in pricing when the cost of

everything is going the opposite direction. How can we, as photographers hope to

keep up with the cost of living or even stay in business if the buyer or selling follows

your advice? You have no idea where I fall in the spectrum of photographers, you

assume that I am a brand name. I draw my pricing from many sources and see that

my edition of "Pricing Photography" was from 2002. There are references to digital

fee's, the internet and DAM, so I don't think that it is out of touch with the state of

our Industry.

 

Perhaps if we try to help everyone in our Industry understand how to price

intelligently, we can help raise the rates and at least keep up with inflation. Are you

trying to compete with GWC and take what you can get or be professional and price

to make an actual living? In your formula, I see us as lemmings ready to simply

take what the lowest fee the buyer is ready to offer without any negotiation. Let's

hear what your pricing strategy consists of and how you account for taxes, overhead

and expansion. Is your business model, "take whatever they offer"?

[argv]

> It's as though you are advocating a downward spiral in pricing

 

Not at all -- I'm only saying that different photography businesses use different business models, and hence, different pricing structures. People who focus on narrow niches and product difficult production shots typically charge quite a bit of money for their work and usually get their fees because the clients needs are very specific and those images can't be obtained from any other source. By contrast, a generalist who shoots basic landmarks in tourist cities usually produces images that are already in an abundant supply, so he has to rely on a volume-sales type business model with rock bottom pricing to compete against the consumers and semi-pros who do the same thing.

 

In the middle of these two extremes is an infinite number of other models that may involve more or less "orchestration" to get a shot, or access, or networking contacts--each of these are offset by the supply-side (what other images are available by from other sources), and the demand-side (whether, and to what degree, there's a market for them).

 

My pointing out that the market is complex with each of these various factors does not "advocate" anything insofar as higher or lower prices. In fact, when I'm hired to consult with individual photographers to help them with their next phase of development, it's almost always the case that they've been underpricing their work for what the market can/will bear. But, this is also paired with a weak marketing approach, which accounts for why their visibility is reduced, which usually translates to a perception of lower prices.

 

My objection to the "Pricing Photography" book is that it doesn't take into account any of these real-world factors--that it treats the concept of pricing as a one-size-fits-all type of formula: that you determine the price based on static factors like photo size, distribution, number of "uses", repeat uses, and so on. This approach does not work for most photographers anymore.

 

> How can we, as photographers hope to keep up with the cost of living...

 

"we" are not a union, "we" can't support one another by acting in unison. "we photographers" make up a very tiny slice of the population of people that contributes photo imagery to the global supply of licensed images. Of course, this wasn't always true--before the internet and digital photography, it really was the case that only pro photographers fed the imaging supply line, and that line was also controlled by photo agencies. This controlling of supply meant that pricing was not only stable, but photographers could act precisely as you're advocating now. And you're not alone; most pro-level photographers are still under the impression that those days are still with us, and that diminishing prices is more the result of photographers "caving in" to pricing demands, rather than their holding their ground. none of this is actually true, and photographers who try to work in that context fail more than those who don't.

 

This is a classic case of the economic theory of The Prisoner's Dilemma: those who "cooperate" with one another will ultimately lose to those who don't. Details about this economic condition as it applies to photography is here:

 

http://www.danheller.com/blog/posts/photographers-dilemma-cooperate-or-not.html

 

In short, it comes down to the basic #1 truism about the photo business: more people have photography as a hobby than as a profession, and they are part of the economic circle. You can't play the photo business as a "group," you have to build your career and all aspects about it entirely independently of what others do.

 

dan

[tony_clark]

"You can't play the photo business as a "group," you have to build your career and

all aspects about it entirely independently of what others do."

 

Actually, we can share our knowledge and help others to establish some type of

consistency in pricing. Go to any Stock Agency website and run their calculator and

that will give you an idea of pricing Stock. If you're pricing custom images than know

your COB and read all the information you can about the subject. If your Clients

don't want to pay the price then find better Clients. If you can't generate enough

revenue then perhaps this isn't the business for you. My "truism" is create beautiful

images, deliver them on time and be a pleasure to work with. If you don't see it as a

Photo Community and acting like a "lone wolf" than you are probably just "taking"

and I don't have anything nice to say to you.

[argv]

> Actually, we can share our knowledge and help others to establish some type of consistency in pricing.

 

That would be true if you cold rely on cooperation by enough people.

The more "defectors" there are, the less likely this approach works.

This theory is taught in all college-level Economics 101 classes.

The famous experiment that demonstrates this is called The Prisoner's

Dilemma, which I cited in my prior post. In any system where people

who must rely on one another to "cooperate" for the greater good, those

who do not cooperate will always succeed at the expense of the others.

What's more, they *will* do this, even if it would bring down the entire

group later. The only way to prevent them from doing so is by creating

an legal entity -- ie., a "union" -- that requires members to act in

unison by law.

 

This principle of economics has been proven over and over again, and

is also the basis from which John Forbes Nash derived his famed "Nash

Equilibrium", which earned him a Nobel Prize for Economics. (The movie

"A Beautiful Mind" was about Nash.)

 

Because people will ultimately act in their own self-economic-interests,

any business model that relies on others to either help or cooperate with

you is one that will ultimately fail.

 

And besides, photography wouldn't apply anyway, even if there was

consistency in how people run their businesses. We're not like assembly

line workers where we all do the same work, and hence, can/should charge

the same money for the same output, or "unit produced."

 

> Go to any Stock Agency website and run their calculator and that will give you an idea of pricing Stock.

 

This is probably the worst thing you can do, largely because of how the

industry is run. Stock agencies represent the lowest rung of pricing of

all sources for photo assets, with most of them inching towards a

microstock kind of model. 35% of all stock is licensed from agencies,

whereas the remainder is mostly from individual shooters, whether stock

is their main revenue model or not. Stats and other data on this can be

found on the "blogs" section of my website.

 

> If you can't generate enough revenue then perhaps this isn't the business for you.

 

This is absolutely true. 99% of people who want to get into the photo

business have very unrealistic expectations of what they can make.

 

> My "truism" is create beautiful images, deliver them on time and be a pleasure to work with.

 

This is a great model for a "personal" business, where you are a human

face on the other side of a lens. This is what garners you money because

you have a skill in personal relationships. Many people don't have that.

People like me do far better doing volumes of work as an anonymous person,

much like a stock agency. No one buys from me because of customer service

or "beautiful images." Everyone's different, and this is why one needs

to understand their own skills -- as well as what they lack -- and build

a business (and its corresponding pricing structure) based on that.

 

dan