Economics of photography
Introduction:
with the introduction of digital photography and the resultant levelling of the playing field where photographers are no longer separated by how well they can develop and print film and touch up prints, the increased competition and lowered cost expectation of consumers has had a dramatic impact on the ability of professional photographers to run a profitable business.
while the cost of film has been largely eradicated from the scene, it has been replaced with the much higher up front costs of professional quality digital cameras and their much shorter life spans of only a few years compared to 20-50 years of their film counterparts.
this little treatise is from an outsiders point of view (ie. me, an amateur) and is designed to be a starting point to help those whose ambitions lie in photography as a career. I don't take any responsibility for its accuracy. Approximate costs are as for Australia in 2006 and currency is in Australian dollars.
Up front costs to set up:
photography equipment:
digital SLR and accessories:
eg. the Canon 5D for most professional work - $A5000 for body only
a backup body eg. Canon 350D $A1300
lenses - allow at least $A5000
memory cards eg. Sandisk Extreme III 2Gb cards $A250 ea x 3
allow $A1000 for a good flash and accessories
tripod and tripod head:
eg. pro quality - $A800
computer / digital processing equipment and software:
laptop computer:
allow $A3000
image editing software such as Adobe Photoshop CS2 - allow $A1500
studio equipment:
allow $A2500 for good basic setup (don't bother with cheaper Chinese imports)
flash meter:
eg. Minolta Flash V - $A600
studio background system and lighting accessories:
Manfrotto background system - allow $A800
light stands
lighting coloured gels
reflectors - allow $A200 (eg. white polystyrene boards x2 (2400x1200x35mm) about $70 each)
perspex floor sheets
optional ceiling support system
optional remote trigger system
studio props:
chairs, bench, the list can become endless depending on what you wish to shoot.
miscellaneous:
optional wind machine
optional smoke generator
optional colour temperature meter - $A800
power boards and extension cords
ladders, step ladders
bond on studio rental
Ongoing costs:
studio costs:
studio rental $A500-1500 per week - allow minimum $25,000pa
repainting of studio - often 2-3 times per year - allow $4000/yr
electricity/gas for heating, air conditioning, etc
studio repairs
advertising:
web site - hosting and domain name registration $200 per year
Yellow Pages advertisement
exhibition fees and exhibition prints
insurance:
equipment insurance allow $A1000 per year
public liability insurance allow $A1000 per year
business registration and accounting costs - allow $A800 per year
photographic ongoing costs:
servicing and repairs - allow 10% pa of total equipment costs
equipment depreciation - assume need to replace digital camera bodies & computer, software every 3 years and 5 years for other items
model and makeup artist hire and incidentals such as travel, etc.
staff costs - you may need an assistant or cleaner or secretary if you get really busy.
interest on initial outlay costs at 10% pa (even if you don't need to get a loan, it is still an opportunity cost).
Summary:
Let's assume:
you restrict your up front costs to $25,000 (although $A30,000 may be much more reasonable)
studio costs can be kept down to $A30,000 pa and insurance/accounting to $A2500 pa
servicing and repairs at 10% of $A25,000 = $A2500 pa
depreciation half over 3yrs and the other half over 5yrs = $A6500 pa
interest on initial outlay at 10%pa = $A2500 pa
you thus have:
a fixed cost base of $A70,000 pa irrespective of how many paying shoots you manage to do (if you can manage 5 shoots per week for 48 weeks per year, then each shoot will have a fixed cost component of $A300)
a variable cost associated with each shoot such as model hire/makeup fees/DVDs/disposables such as background paper.
thus if an average shoot is for 3 hours and you do 240 per year, then total costs per shoot may be something like this:
fixed cost studio lights and studio rental $250
fixed cost photographic equipment $50
model hire $240 ($150-400)
makeup fee $100 ($90-150)
incidentals such as travel, food, drinks, disposables, test prints, etc $60
total costs $600 per shoot, then you need to get your wages of say $A60000pa/240shoots = $250 per shoot, so you need to get income of at least $A850 per shoot on average to break even, and do this 5 times EVERY week!
Now you can see why professional photographers insist on holding the copyright as they need every bit of income they can get to cover these costs. Not many people make it rich from being studio or location photographers (although you are perhaps more likely to do so if you are a paparazzi photographer and lucky enough to get the right pic at the right time).
Of course, for some photographers, their equipment costs will be much higher (eg. Hasselblad H2 medium format digital at $A40000 or so), while others will let their costs blow out until their business is bankrupt.
many photographers will just hire a studio and studio lights at say $400 per session, and this is more cost effective perhaps for those don't do regular shoots, but of course their fixed cost per shoot is much higher as they do less shoots per year.
the annual cost of renting your own studio and owning studio lights is about $A32,000 per year, so you could hire out a studio and its lights about 80 times a year before you end up paying more than annually renting one.
for us amateurs, we are probably better off setting up our garage as a studio, even though it does not look as professional and causes you to compromise on space and comfort.
Selling your photos via internet microstock websites:
if you have good quality, saleable photos, you could consider uploading them to microstock websites such as Shutterstock and Dreamstime which allow subscribers to download the images in various resolutions and use them royalty free for limited applications.
if your images are good and you tag them well for optimising searches, you can earn $0.30 to $2.00 per image per month - won't make you rich but may help justify your equipment purchases :)
once you become a member of the website, check out the top 100 searches and this will give you an idea what to shoot and how to tag your photos.