| Determining Your Salary
© 2002 Tom Zimberoff
The aggregate assignment fees you earn throughout
any given year should be at least equivalent to the annual salary
of an employee doing the same kind of work for someone else.
Suppose you have a friend named Fred who works for
a graphic design company and earns $35 per hour. Then you should
be making at least that much plus enough extra to cover the overhead
of running your own business, plus a profit on top of that. Otherwise,
you will make considerably less money than Fred. And don’t
forget that Fred has all of his health insurance and other benefits
paid by his employer too.
Because of all the time you are obliged to spend on
administrative, supervisory, marketing, and menial chores that Fred
doesn’t have to do, you need to make more money than he does
to have a net personal income that is roughly the same.
The extra time and money you spend on marketing and
administrative duties are what make it possible for you to keep
your business afloat; you must constantly seek and find new work.
Nobody else is going to do it for you. The same reasoning obviously
applies, even if you pay someone to do it for you; you’ll
require a source of additional revenue for any employees of your
own.
But those kinds of activities do not bring in immediate
cash. Only performing photo shoots does that. Those other kinds
of expenditures are represented by indirect costs. So, consider
that while you are trying to reel in new and better assignments
and not getting paid for your time, Fred is collecting a regular
paycheck.
He doesn’t have to worry about looking for new
sources of revenue day in and day out. The company he works for
pays other employees to do that kind of work. His employer also
makes a profit on the work those employees are paid to do. Therefore,
you should be earning at least what both Fred and the other employee
earn put together, plus some profit on top of that!
Here is an exercise to illustrate how to find a starting
point for both the amount of profit your business needs and to calculate
a reasonable compensation for your freelance photographic services
(an assignment fee). To reiterate, since many people employed at
larger companies work at an hourly wage, their example will be used
for the sake of comparison, even though it is recognized that photographers
do not work by the clock.
Determine Your Assignment Fee
Let’s make up a term called shoot rate. There really is no
such term. But for the sake of this exercise, a shoot rate is what
you might charge per hour, if you could work and survive that way.
It will help you arrive at a ballpark figure that measures what
you earn versus other salaried professionals. It will give you a
starting point to arrive at a competitive margin of profit.
• Take your monthly average of billed expenses (costs passed
along to clients plus a mark-up) and divide by 172 (4.3 weeks x
40 hours).
• Add your fixed, monthly, overhead (business-related only!),
including such items as rent, insurance, automobile, telecommunications,
etc. and divide by 172.
• Add the rate per hour that you think you would be entitled
to as an employee. Use someone you know and respect as a model,
someone who works for a large company. If you wish, use Fred’s
hypothetical $35/hour figure.
• Now, estimate what you think is a reasonable percentage
of profit and add that into the equation. (Avg. Monthly Billed Expenses
x Profit %)
The result looks like this:
| Avg. Mo. Billed Expenses |
| $7,000/172 = |
$ 40.67 |
| Fixed Monthly Overhead |
| $3,750/172 = |
$ 21.80 |
| Comparative Hourly Wage |
| |
$ 35.00 |
| Profit (20%) = |
$ 8.13 |
| Total = |
$ 105.60 |
This exercise indicates that you would have to charge
a hypothetical shoot rate of $105.60 per hour, assuming you could
bill for a full forty hours each week. You would earn the same amount
of take-home pay as your friend who makes $35 per hour at a “regular”
job. (That’s far less than an average attorney might earn,
and only a bit closer to what a building contractor or a plumber
might pull in.)
If you determined that you could bill only thirty
hours per week, you would have to charge more per hour. Using the
table above, that means you would have to charge $140.80 per hour
(40 hours x $105.60 = $4,224 ÷ 30 = $140.80).
The term shoot rate is, as you recall, is a complete
fabrication. It was made up to suit our exercise. Once you’ve
figured out the math, though, you need to look at the competitive
situation in your marketplace. If you find out, for instance, that
another photographer has a shoot rate of $125 per hour, or maybe
an even lower rate of $80 per hour, you will need to readjust your
profit percentage. You must either increase or decrease your own
shoot rate to arrive at a final figure that puts you in a favorable
competitive situation when the buyer compares your bottom line-price
to that of someone else.
It is recommended that you should adjust the profit
percentage and not any of the other items in the equation.
To read more on this topic, please see Mr. Zimberoff's
book.
 Excerpt
reprinted with permission of the author from
Photography: Focus on Profit
By Tom Zimberoff
$35.00, 6 3/4 x 9 7/8; Paperback with PhotoByte® CD-ROM
416 pages, ISBN: 1-58115-059-8
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