Whether you’ve been running a photography business for the last 20 years, or just decided you want to turn your passion for photography into a profitable career, you’ve probably got a similar perspective to other ‘togs’.
You love capturing memories and creating artwork for your clients. The goal is to get so popular that you have a flood of new clients begging to hire you or buy your photo’s. But getting to that level takes a lot of time, experience, and even some luck!
The Business of Photography
If you really want to turn photography into a profitable business so you can provide your family with a very comfortable life, and have plenty of money for all the things you love… holidays, nice houses, cars… all the good stuff! Then you need to treat photography like a business!
This doesn’t mean that you would even submit photo’s that don’t show you true potential. You should only ever give you best work!
It simply means that you should start using a few business skills to help build your business, and make it a little easier to have success in advertising and making as much from the clients you have as possible.
The KEY Ingredient In a Successful Photography Business
It’s called “Lifetime Client Value”, and it’s the dollar amount that each of your clients is worth to you average.
To get this figure you simply add up exactly how much you’ve made all year with photography, and divide that by the number of clients you worked with.
For example, if you made $80,000 and had 100 clients, that would make you “lifetime client value” $800.
You can also split this into different categories and time periods to give you a better idea of where your time is best spent and if you’re improving.
For example, you might find that you made $60,000 of that money from wedding photography which was from only 20 weddings, which means each wedding client is worth $3,000. Meaning that your other 80 clients were only worth $20,000 – coming to $250 each. So unless they were quick portrait shoots, you might want to focus more time on the wedding photography.
You can also calculate these figures in increments such as every 6 months. Doing this you would try to increase the average client value every time, by either getting more clients, raising your prices, or lowering your advertising costs.
What the Lifetime Client Value Tells You
You’re probably thinking, “this sounds good, but it doesn’t seem that useful”
Well, the power comes with how you use this figure for advertising!
If you know that your average client is worth $800 to you, then you can quickly see how profitable each source of advertising is.
For example, if you paid for a quarter page ad in a bridal magazine which cost $2,000, then you know you only need to get 3 new clients to make a profit for that ad.
My advice would be to aim for 10 times your ad spend. So if the ad cost $2,000 you should aim for $20,000 income, a profit of $1,800. However anything above 5 times is good! So if the ad brought in $10,000, a profit of $8,000, that would still be a success.
There are way’s to track EVERY source of new clients. Such as clients from you website, your Facebook page, newspaper ad, magazine ad, yellow pages ad, even the sign on the back of your car! I’ll discuss tracking further in a future article.
How Many Photographers Lose Money
Most photographers never figure out their lifetime client value, and they never track the source of their clients, so they end up losing a lot of money that could have been saved!
For example, if you have a great Yellow Pages ad that cost $500,which gets 50 new clients per year and brings in $40,000. PLUS you have a quarterly magazine ad that cost $6,000 in total, but only brings in 3 clients worth $2,000 – that’s a loss of $4,000 on a magazine ad that doesn’t work…
You wouldn’t know that it doesn’t work though, because you would only see that you’ve making a profit overall. If you tracked it properly you would have known to get a bigger Yellow Pages ad, and stop the magazine ad!
What You Should Do
Figure out your average client value right away so you know exactly what you can afford to spend on advertising. If you’re just starting out then make an estimate of what each client will be worth and then reevaluate after a few months of working.
Increasing your average lifetime client value should be the goal of your business, so don’t skip this step because it sounds a little tricky!