Lowering My Rates

I just had a phone call from somebody wanting to "dicker" with my prices. If I lowered my prices, he would recommend me to his friends. After a few minutes, I basically ended up saying:

I am sorry, but I can't afford to go out of business.

This has become my standard answer when I get those requests.

The photography business is very much like the restaurant business. A restaurant needs to know its rent, its labour cost, its food ingredients and and their costs. The restaurant owner/accountant place these costs in the costing software which "spews out" the cost per plate. Then and only then, the manager or the owner decides on the price.

If the cost per plate is $12, the owner will set the price around $24 for that dish. That's a 100% mark-up, fairly usual in the food industry, because Sundays, Mondays, Tuesdays, and Wednesday are dead days with almost no customer. The restaurant has to break even with just the Thursdays, Fridays and Saturdays. Very few restaurants ever make a profit. Liquor, either wine or beer, has a usual mark-up of 250%. Just because the day is slow, the restaurant doesn't slash the price of the dish to $10 in order to get more business:

1. This will attract the "wrong customers". Those are the customers that will put you out of business.
2. When it will be busy again, you won't be able to raise your prices back to where they were.
3. "We lose a little on each sale but we'll make it up on volume", will put you out of business.

I spent a couple of days getting all my costs, so that I could enter them at the National Press Photographers Association in the NPPA Cost of Doing Business Calculator. When you've set your prices, stick to it, I do.