Since Adobe introduced the Creative Cloud, there has been a lot of discussion in the photography world about the subscription model. Some photographers are against it, others like it, there is not real consensus. Personally, without the subscription model, I would not have been able to buy Lightroom and Photoshop upfront when I still doing photography as a hobby. The subscription model was a great way for me to stop using a pirated version of the software. Now I actually subscribe to the entire suite, and without the subscription, I could not justify buying standalone versions of all the software I use.
In the last year or so, the Canadian Dollar has plunged (it’s about US$0.70 these days). Since Canadians customers are billed in US dollars, my monthly cost has increased from under $60 to over $80 a month. This has generated a lot of complaints from Canadian photographers that say they can’t afford it. I have seen people cancel the subscription because they say their business can’t afford it.
I find this concerning if you are running a business. If photography is just a hobby for you, then I understand that $80 a month is expensive. But if your business cannot sustain an increase of $20 per month in cost, then your business plan is flawed.
Let me explain why I am saying this. As a business, you should be billing your customers based on your costs, whether they are direct (prints, books) or indirect (gear, studio, software). So when you build your pricing, you need to take into account all your costs and add a margin. Which means, a $20 should not matter if your margin is sufficient.
Let’s say you are charging for a print of one of your images. You need to start with the cost of having the print made, which is easy to figure out with your vendor. Then you need to account for your all your other costs: gear, software, insurance, education, studio or workspace, travel, etc. A lot of this stuff will be spent, whether you sell prints or not. It is call overhead. What you need to figure out is how much money your are spending in a year, and how many prints you think you can sell in a year. When you divide your yearly cost by the number of prints, you get the indirect cost per print.
At this point, your price is only paying for what you spend. You also need to pay yourself, which means add a margin on top of your costs. So your price should be built like this:
Price = Cost of materials + Cost of doing business + Margin
This is true for anything you charge for, whether it’s hourly, per project, digital downloads… If you built your pricing properly, an additional cost of $20 per month should never be an issue because you’ve built in a sufficient margin and $20 is negligible.
Now, I understand the frustration that Adobe is billing Canadians in US dollars. I don’t like throwing $200 a year out of the window either, but it’s not really affecting how much money I make. So if these additional $20 a month are putting your business in jeopardy, then it is time to rethink your pricing strategy. I will be writing about how to price your work soon, so stay tuned!