Pricing can be tricky.
Pricing is often a stumbling block for people and I often see posts in forums asking what should I charge. The truth is no one can answer that for you they don't know what you need to thrive. So listen up or read on and let me guide you to finding your number.
A love of Math?
Firstly, I wanted to throw a disclaimer out there. I am not a financial advisor, I don't have financial qualifications, I'm not an accountant, I'm not a tax person. So please keep that in mind and consult a professional if you need help with your finances.
Having said that, I love numbers. I enjoy playing with percentages and seeing the difference 2 extra clients can make, the difference charging X amount more makes, I'm one of these people that actually likes math. I understand this something that not all people enjoy. But when you're in business, you have got to know your numbers.
The Money Divide
So we're going to talk about pricing for profit and what that actually looks like in today's episode. In business, we are splitting our revenue into three different piles. Now I happen to put my piles into equal values because I feel it just makes life simpler.
- A third of the money that I make goes to the taxman HMRC and goes to National Insurance, that third is gone. I don't get to see that.
- A third of the money that I make is my business revenue. It's for expenses, equipment, hire, repairs, laptops, petrol, all of those kinds of things that it costs to do business
- And the last third, that's my money. That is what's going in my pocket, for every £10 I charge £3.33 goes in my pocket. So when you are looking at your charges, remember if you're charging £10, you're getting £3.33.
So don’t charge just £10 in my book that is definitely not pricing for profit. Now you cannot go straight out of the gate from zero to premium pricing. You might have to start at a lower price point and this is going to reflect your experience level. So when you're just starting out, you may well have to keep a side hustle day job going alongside your wedding business.
Learning your Trade
You need to build up your reputation before you can get to the point where you can price for profit and be fair in that pricing. Let me tell you a story. I have spoken about Jasmine star before on an episode. She is the founder of Social Curator. She was awarded some of the highest accolades known to wedding photographers in the US but she spent her whole first year of business third and second shooting for nothing.
That's right. She wanted to be a photographer so badly that she decided that she was just going to go out there and work. And she worked her butt off. She wanted to get the experience and the training. So she put in the work, she watched, she listened, she acted. She had a part-time job in our local church three days a week, her husband was bringing home an income. And she worked until it came to a point where she had the confidence to start doing weddings on her own.
Now I feel this is something that we are truly lacking in the UK, there seems to be an entitlement from people. I don't know where it's come from, that you can't work for free and you should always get paid for what you do and that's just not true. You do not need financial compensation for everything you do.
When you look at it, it's an exchange, if you're going to second shoot for somebody and you're not getting paid, what you are getting is the experience of working a wedding day, you're getting to watch an experienced person and how they conduct a wedding day. You're getting to see how they work, you're getting to pick up tips and hints, you're going to get time with that person on the way to or from the venue, you're going to be able to ask them questions.
If you're a photographer, for instance, you're going to have access to playing with those images that you take so that you can get to know your style and what you want from your brand. So this is invaluable TRAINING. Yes, you might not be getting money, but the exchange is there. You're giving something and you are getting something back and that is what newbies in the wedding industry need to understand.
We need new people coming into the business for sure but we need them to come in with a level of respect for the vendors that are already there that have put in that work. You cannot just pick up a camera and say, now I'm a wedding photographer. You can't just bake cakes in your spare time and be a wedding cake maker. It doesn't happen like that. It shouldn't happen like that. That is why the Society of Professional wedding vendors came about because we want to stop that being the go-to way of getting into the wedding business.
We want to go back to a time where people will actually learn the trade before they start charging for their services. So that was probably me on my little high horse a bit there. I do get very passionate about these things. I don't think somebody's wedding day is somewhere where you should be jumping into your first experiences with a camera or any other piece of equipment that you would use for a wedding day.
How much do you need?
So that aside, let's get on to the pricing. So how do you price yourself for profit? The first thing you need to do is look at your outgoings each month. So what are your basic costs rent, gas mortgage, petrol, tax, insurance, etc. Let's say for ease, it's £1000 a month. So you times that by 12, so your annual financial requirement would be £12,000. Now, you might be thinking Oh, great, 12 weddings, £1000, I'm sorted. But that's a mistake. Remember, you're only getting a third of that income. So if you need 12,000, you need to be making just shy of £40,000 a year to cover your standard expenditure.
What do you do?
The second thing you need to do is look at what you do for your money. For example, a cake vendor could likely do more weddings in a year than a photographer as the cake is made prior to the wedding, and then their job is done. Whereas a photographer they might do an engagement shoot, the wedding, the editing, showing the photos, create the products, there's a lot of time involved before, during and after. Whereas for other vendors, it's all done before. So as a solo entrepreneur, you might be able to do potentially 52 wedding cakes in one year, but a photographer would be hard pushed to do 52 weddings in a year.
This is if you're just working on your own and provide the same level of standard as that cake maker you need to consider that in your pricing as well. If say you are a cake maker, you may charge say £400 for a three-tier wedding cake, a photographer might charge £1200 for wedding photos. There is a big difference there but it doesn't mean that the photographer is more experienced than the cake maker. It's just to do with the amount of time and energy that it takes to create what you're providing.
Now I know cakes can get very intricate, and people can spend longer than a week decorating a wedding cake. Again, it needs to be reflected in your pricing. I'm just giving you some rough ideas here. I'm just using them as examples.
What's the average pricing in your area?
Another thing to look at is the average prices in your area. So you don't want to undercut everybody in your area because you know, that just drags everybody down. It then becomes a race to the bottom. And that's not going to be pricing for profit for anybody. You don't want to put yourself way above everybody else either because although you won't need as many weddings, you might be pricing yourself out of the market. Then nobody's going to be booking you, you need to look at the prices in your area and see where you would fit.
So if the average pricing in your area for photography was £1200 for a day, then where do you think fall based on your experience? Are you 10 years into your photography experience, which means that you could probably go above £1200 for a wedding day, are you just starting out, which means that you need to be pricing yourself lower than that £1200.
Pricing yourself higher and lower doesn't mean undercutting. It doesn't mean that you should be going out there putting wedding photos on a CD for £400. That isn't doing you any favours, because you are certainly not going to be profitable, but it's not going to be doing the industry any favours either. So we need to price ourselves sensibly and fairly.
Wrapping up Pricing for Profit
So there you have it there are three things to consider when pricing for profit. How much do you need, how much work do you have to put into each event and what the average cost is in your area, it may be that you need to consider doing other work alongside your wedding work to start with, be that a day job or other work inside that trade.
So if you are a cake maker, making cakes for birthdays if you're a photographer doing portrait family photography, if you do discos doing parties and events outside of weddings building these up around your wedding niche to support and help to increase your finances.
You may have a partner that can carry your home finances while you're building your wedding business. Either way, look to increase your prices every three to five weddings until you reach your target per wedding price. Now I have created a pricing calculator for you. You know, I said I love numbers. So you can play with your numbers until you find what you're comfortable with.
Increasing the Profit
What you need to do is look at where you want your pricing to be. So, if you worked out that £12,000 a year was the initial financial basic level you need, what would you like to have? What would give you the freedom to do other things around your initial essential expenses? Maybe you need an extra £5-7000 on top of that £12,000 so you can go on holiday, so you can enjoy Christmas, so that you can spoil your kids on their birthdays, something like that.
Work out what you would like to have each year and then break that down into how many weddings you want to do a year and that is going to be your target. That's where you want to get your pricing too. Now you have to take all the other things into consideration like I've said and you cannot price yourself out of your market and you don't want to undercut anybody but that is your target pricing. Whether you need to add in other work or not alongside your wedding work to get to that target is going to be down to you and the individual business that you run.
Don't forget, go and access the calculator, have a play. So you don't have to do the math. It'll do it all for you. You just have to plug in the numbers. Thank you for joining me this week if you haven't yet subscribed to the podcast then please do so where you're listening and take a moment to leave an iTunes review. I would be really grateful and I will be here same time, same place next week. Bye for now.