Portions of this column were originally written for the February 2006 edition of News Photographer Magazine.
Mark Loundy is a media producer and consultant based in San Jose, California. Full bio.
The opinions in this article are those of the author alone and do not necessarily represent the official views of the National Press Photographers Association.
By Mark Loundy
"To say less of yourself than is true is stupidity, not modesty. To pay yourself less than you are worth is cowardice and pusillanimity."
OK, I've made sure that I'm covering my cost of doing business. - Equipment depreciation, travel expenses, insurance, even Internet access, are all covered. I can relax now.
Doh! I forgot to pay myself.
If you don't include your own pay in your CODB, you're missing the whole point. "Pay yourself first" as the old saying goes. You are your primary expense. All those other costs are your "overhead."
When you figure your CODB, make sure that you include a reasonable salary for yourself. You can't just pay yourself what's "left over" after other expenses. Start with how much you want to make personally. Then budget your costs around that. If you don't have enough to make your own payroll, you'll have to either increase revenue or cut costs.
One of the best ways to increase revenue is by budgeting enough for marketing. The Small Business Administration suggests that new businesses devote as much as 10% of their expected gross revenue to marketing. Some pros suggest as much as 20% for a new business. The SBA website has a simple roadmap to help formulate a marketing plan. It includes things like targeting customers, tracking the competition and developing a pricing strategy.
Developing new products is another way to add to your revenue stream. If you're an editorial generalist, try to find a niche market that you can dominate. You can usually command higher rates if you can provide something nobody else can. (See July 2004 Common Cents.)
Sometimes you also have to mix-in a bit of cost cutting.
You may have more fat than you realized in your budget. Do you really need international insurance coverage? Can you trim your equipment budget? If you eliminate it, that money can go into your pocket rather than to one of your vendors.
Remember, even if you love what you're doing, you're in it for the money.
Please let me know of any particularly good, bad or ugly dealings that you have had with clients recently. I will use the client's name, but I won't use your name if you don't want me to. Anonymous submissions will not be considered. Please include contact information for yourself and for the client.Leftovers
Advertising licensing rates are a lot higher. It doesn't hurt to include a "Not for Advertising Use" notice in agreements, just to avoid misunderstandings with PR clients.
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