More about pricing

[Greg McNair]

In that "other" forum, I discussed pricing products for MLS (multiple listing service) for realty. One person suggested, per someone's response, that discussions about price standardization were a no-no. I'm not talking about price fixing here folks. I'm talking about understanding the value of our products and pricing them to match a "professional" standard. I'm not saying to charge "X", I'm saying to charge somewhere between "X" and "Z", not "A" and "Z". The folks charging down on the low end are not only hurting themselves, but they are hurting the entire industry. Wedding photographers charge all over the map depending on what they have to offer, and pursuant to their reputation. Some charge $5000 to $10000 per wedding. I've seen others charge less than $1000. Those charging less than $1000 probably aren't long in the business and have little experience.

So why do I bring this up again? I realized this morning while talking to a friend in PA about his ground panoramic business, that we are potentially headed down a road that the pano guys have already paved. And this isn't a good road mind you. Many of you may recall when iPIX-style 360° virtual tour photography hit the scene. It was a revolution in real estate photography and marketing because it took the buyer into the home without ever leaving their seat. Virtual tour hardware and software manufacturers started raking in money from people just like you and I who wanted to be on the cutting edge of technology, offering something few others could afford or had talent to use. But it didn't take a rocket scientist to operate some of the virtual systems, and before you knew it, there were dozens of people in large cities who had set up shop and were competing for business. With so much competition, they could only survive doing one thing...dropping prices. Armed with $1000-$5000+ worth of investment (an iPIX dSLR lens for a Canon will run about $7000), people were scrambling for ways to keep their shutters firing. Not only were they slashing prices on the service, they were adding value to their service by offering extras such as building webpages, etc.

There is a company in Birmingham who does virtual tours. For $150, you get a full virtual tour of a residential listing, a webpage designed around the realtors name with all of the photos hosted, and a full color print flyer with still photos that can be copied and reprinted at any Kinko's. $150. And this guy usually has more work than he can handle. So someone else came into town offering the same thing. For $100. 100 freaking dollars. If he is offering a duplicate service, then how can anyone compete? The first guy is still leading because he has so many repeat customers, but those repeats are cheap realtors who want him to drop prices, so he is having to follow suit by adding value to his product. Now there are at least 4 tour operators in town, all offering the same thing. This guy has been overrun with competition, the market is saturated. Oh, and my friend in PA? The company he contracts with charges the realtor $120 for 10 virtuals and 18 stills per home. $120.

Now you see where realtors can be justified in complaining that our $250/photo prices are outrageous. They're getting full 360° tours and complete webpages for less than half that. And we're pushing a single photo for $250? Granted, our photography is typically unmatched. But you see what we're up against. You better be good, not only at taking spectacular photos, but at selling what you have to offer.

And soon we'll be creating a similar price structure among each other if our only means to compete is to slash prices. History tends to repeat itself if we let it. High tech came along, several people jumped on the bus, and today they find themselves giving their services away just to keep afloat. Are we headed down that road? Remember, it was paved and well-traveled for us already. :)

[DebianDog]

I think $250 is more than fair. 5 houses in the same neighborhood for $1000 :wink:

[askman]

at some point, people won't make enough to make it worthwhile. the question is at what point. The thing that separates pros from amateur is quality and reputation.

when we got married, our wedding pics cost us 2000 bucks in 1999. we got 2 big albums, complete proofs, 5 framed pic. (2 were very large). it also include sitting fee for outdoor shoot casual, outdoor shoot formal, studio and wedding. (2-3 hour outdoor each, and 1 hour inddor as well as wedding) this same guy now charges 5+k for same package and have more work than he can do because he has the reputation.

One reason I dislike MLS/real estate agents is due to fact that they are cheap and looking for cheap.

[MLaBoyteaux]

I'm up against the same thing. I've almost decided not to even bother marketing VR tours because I can't (and won't) compete with $100 virtual tours. I contacted one company because they said they're looking for photographers. They contract out the photography to a local photographer. They provide the address and the photographer schedules the shoot, does 4 panos and 10 or so photographs and uploads them to the company.

They pay a measly FIFTY BUCKS. AND THEY'VE GOT PHOTOGRAPHERS WHO ARE WORKING FOR THIS RATE.

Here's an example of their work http://www.mva360.com/viewlisting_1.php?listingid=16390
The quality is horrible.

I discussed this at great length with another photographer yesterday and I think there is still a market for high quality photographs for real estate, we just need to learn how to market our skills and show the value in the premium we charge.

The single biggest obstacle to being successful is effective marketing.

[MarkWebber]

It's clearly a matter of "work hard or work smart". Unfortunately, no matter how we choose to price our time, someone will be willing to devalue themselves. I would rather do 1 or 2 jobs per week for decent rates rather than 20 jobs on the cheap.

Sadly, there is no practical way to enforce common sense. :roll:

[wwellman]

I just took a look at the kind of work that "mva360" does for real estate. If we did work like this we'd be fired never mind being embarrassed to think this is any kind of quality work. Sites like that one reinforce what we already know "We do the best high quality aerial shots or virtual tours without exception". I'd put the AP industry against just about anyone else doing tours (aerial) and we would come out on top.

Walter

[Tonystott]

Yesterday a local realtor told me that it is rumoured a competitor has done a deal to outsource its ground photography for $80 per house (4 views). That realtor suggested I put in a counter offer to her boss at $200 per house, as she doesn't believe $80 could possibly buy quality (she got that right!).

I have countered by offering a day rate of $1,000 (max of 5 sites subject to travel time), with a minimum of $450 for one house, for elevated shots only (usually AP pole).

If that doesn't cut it, well back luck.

Everbody has a car, not many people can drive well... everybody has a camera.....

[Greg McNair]

Tony, that last line is classic. Gonna quote you in the 2nd edition. :)

See, the parallels between AP and VR is quite amazing when you stop to consider it. A VR operator such as Walter or Mark has to sell the buyer on WHY their product costs $300, not $100, by showing examples and comparing it to what they're used to.

Mark knows about the meeting I had last week with a local retail property broker/management firm, and the fruits of that meeting, but the rest of you don't, so I'll tell a quick story. They saw my photos and flipped out. They showed me old photos and what they're used to paying for. Being a professional means not laughing out loud at the conference table, and it means not talking a single bad word about your competition in front of others. But I did say "I am glad you see the value in my product." One of the partners of the firm said "We paid a guy $1700 to shoot some properties for us a couple years ago, and he handed us a disc with about 70 photos on it. Right then, I knew the guy wasn't a professional, or that he didn't do it for a living, because a pro would have only given us a couple or few photos for that rate, not several dozen." So you see, professionals recognize professionals. And they very much understand the phrase "getting what you pay for."

[electro212]

Well Girls there are the money shots and then there are the meat and spuds shots..

last week i did 22 houses with a avg of 3 pics per house @ $50 a house
avg time at each house 10 min. and all within 20 mins of my house
He$$ my lawyer dosen't make that..

yea the virtual tours are out there and they are cheep you just have to know how to play them

Realtors are cheep one was *****en about the price and i told them i would give them 50% of what i made off the tour for 1% of the payoff when they sold it need less to say they passed

And then on the ap side we went to a army base to do shots and it was $450 every time the skids left the ground
so it's a balance and they want us to come back

i think my next job is going to be CEO of Home Depot the only place where you can quit and walk with $225 million

[Greg McNair]

Realtors are cheep one was *****en about the price and i told them i would give them 50% of what i made off the tour for 1% of the payoff when they sold it need less to say they passed

That's awesome! Rock on brother, rock on!

[cainebean]

I had a meeting today with one of my repeat clients about this same issue. I took my prices, a local company, called Mark, and finally talked with Greg about my prices. Compiled all of this and try to find a nice balance...

So I go to the meeting with a price sheet in hand to talk about what the new price will be, how many pictures to expect, and what add on's will cost. We agree the prices are fair then just start chatting. This is the marketing director for a BIG firm that deals with a lot of estates and farms. She asked if I minded hearing her advice. So I told her Yeah I Mind!

Just kidding wanting to make sure your listening....

Her advice, determine what you want to make an hour and then charge per picture or add on service. If I have a plumber come to my house, I know I'm paying $75 per hour on top of parts and the rest....If you get legal help, pay by the hour, etc, etc, etc...

I argued the whole, "How do we know it actually took you 2 hours for 3 panos?", "What can I expect from you for one hour?", Wouldn't it be better to price everything out and just let the agent pick what only they need...

I ended up talking with her for 1.5 hours on nothing more than my pricing methods. It was nice being able to speak freely with one of my clients. What I'm going to do from here is chase my tail once again...

Bottom line in real estate, IMHO, I think you have to decide which group of agents you want to market to. You can either go for the average agent that sells MAYBE a few houses a year and become the Wal Mart of real estate photography or go for the top sellers only in your area...They can afford to pay us like we should, they understand the difference between good and bad marketing when it comes to using their own dime...

[Greg McNair]

Goes right back to what I was telling you earlier Caine about offering too much product for the price can be just as bad as selling a single photo for cheap. You'll end up working a long time taking more than a couple dozen photos, or you'll work quickly getting just what they need, and clearing more per hour. Craig is efficient enough with his work that he's rocking and rolling through several shoots a week and doing just fine. But the longer you take, the less you'll clear. In my mind, I'm worth at least $250/hr, and that is how I price much of my work, especially regarding fullscale. The faster I get my work done, the cheaper the rental, the more I make.

The trip I'm making to Mobile on Monday works out to twice that for a 4 hour day. Figure 1.5hrs heli flight time for the trip down, 1/2hr meeting with the client, 1/2hr on-scene taking the photos, 1.5hr return trip home, and I'm done. Now if I really want to get technical, I'll have a half hour trip to and from the heliport, and an hour at my computer processing images. But let me be perfectly honest. I'm getting ~4hrs of flight time in a 500e. So what it comes down to is $2000/hr for my actual "work."

If only I had these projects as often in a week as you guys will have with $100 panos... :)

[electro212]

Hey Caine

When it comes to walmart i'll take some of that action anyday their a smart bunch of folks
i'd love to sell them cheerie"OS" cause they move them by the ton. have you ever seen the show on msnbc where the do their profile?? do know how many pop tarts these freeks sell?? :WOW :WOW :lolol

Pricing is all ways going the be a pain.
i use to think that realtors were the answer but they are only part of the puzzle i have had a few that would buy in to the ap shot but the other part is this has a life span in their eyes and once it's sold it's just paper in the file.

like greg said i would love to have high end jobs like i get VT and so would i. but i need jobs to fill the gaps and if the numbers make it worth doing it's a no brainer. jusy like some people on here have other incomes to span the gap as well

so lets all have a group :hug: and sing that song

[Greg McNair]

Oh don't get me started on Wal Mart. Read this article Craig: http://www.fastcompany.com/online/77/walmart.html You'll never see a jar of Vlasic pickles the same way again. I know I don't.

[cainebean]

I'm not saying there is anything wrong with the Wal Mart pricing method. If you can turn the numbers and still feel your getting what you want from doing the job, by all means do it.

But I think saying I'll do the inside, outside, and a few aerials for say $400 to the high rollers is one thing, but say the same thing to Wal Mart crew and your not going to get the same response. Again, I'm just using Wal Mart as a low price/high volume dealer...

All stuff aside though, I pay Wal Mart at least 2 times a month!

[Tonystott]

best advice I gleaned from here is to go in with a number based on a set amount of work, and if the client tries to nickel and dime you by cutting the price, just ask which parts of the work they want to leave out to meet the lower price.....

[MarkWebber]

and if the client tries to nickel and dime you by cutting the price, just ask which parts of the work they want to leave out to meet the lower price.....

Excellent idea, Tony. I'll fly over nearly any site for $100..."Oh, you wanted photos too?" :wink:

[Greg McNair]

I'll fly over nearly any site for $100..."Oh, you wanted photos too?"

Mark, the more responses I see from you, the more I like you. Down here in the South, we'd say "you're good people"

[CoastalTom]

OK, I'll jump in here to :)

Ultimately we are being paid for our time, our talent and our investment. The worth of those first two items is extremely subjective. In most cases, there is no comparable sales analysis for our work like there is in pricing a house for sale. We're usually the only game in town so to speak. Yep, there are some similarities as to what the full scale aircraft can provide but not enough to compare apples to apples. It's more of what the local market will bear and how dependant we are upon that income.

Has anyone ever used a real estate agent to sell home and tried to negotiate sales commission based upon how long it will take to make the sale? I had one house that sold the same day the agent put up the sign and one that took nine months to sell. Those are the breaks.

I feel it goes back to the worth of the final product to the buyer. They really don't care about how long it took me to shoot nor about any obstacles I had to overcome. It's like the old story where a company was having trouble with a steam boiler. They finally had to call in an old, experienced, retired former employee (those are now called consultants :mrgreen: ) He told them he could fix the problem for $10K. They reluctantly agreed to his price. He then picked up a hammer, banged the boiler one time and it began working. He handed them his invoice. The company manager was a bit appalled at paying $10K for one hammer blow. The wise old consultant said "you're not paying me for the hammer blow but for knowing where to place the shot."

[Greg McNair]

Good story Tommy. That goes in the next book too. :)

[MLaBoyteaux]

I'm copying this from another forum http://dgrin.com/showthread.php?t=19381 because I think it has some relevance.

How much should I charge for XYZ?
How many times has that come up in your mind at one point or another? It seems like a vexing problem. Most people are used to, and familiar with, consumer product pricing, a widget has a certain value, and is sold for a certain price that is determined by someone in a dark office in a galaxy far far away. But what happens when you step outside this zone and want to sell your time, talent, or intellectual property?

The answer is very simple, there is no set price for such things. You are the master of your own pricing domain here. You call the shots. You set the price.

So how much do you want to make? Come on now, you have a number. Don't be shy, write it down, I would happily do XYZ for $X.

Now, if someone came to you and said, "hey, would you do/sell/license your XYZ for $X?" would you say yes? At what point would you say no? Write down the "no" price. What you now have is your zone of negotiation.

If the prospective customer balks at the initial price (they don't want to spend $X, they want to spend $Y), and you are willing (for one reason or another) to negotiate, then modify what it is you are offering (simplify, fewer, less time, more restrictions, etc) and charge less for it. Keep negotiating until you both find a happy (or at least satisfactory) medium.

If you can't come to an agreement, then part ways and wish the person success in finding what they want. One of the greatest joy maintainers/ stress reducers is learning to say no when you don't want to do something.

After a time of doing this, you will get a feel for how much you *know* you need to charge in order to remain profitable/interested/productive in what you are doing. As with most things in life, experience is the key to ultimate success.

I guess it boils down to whether or not you're going to do AP exclusively and wait around for the next lucrative job, or you're going to be willing to take on other less paying jobs to generate some income. Either it's worth it to you to take on lower paying assignments, or it's not.

What I like about the article is the qoute One of the greatest joy maintainers/ stress reducers is learning to say no when you don't want to do something.

[Hyde]

i suppose i will jump in here as well.

i do high-def full screen virtual tours professionally and many of my clients see the value in what i do and the difference with regards to what they are used to.

my pricing is generally:

High-Definition Virtual Tours
(QuickTime panos, HTML coding, Photoshop time)
$300 per pano ($200 if 10 or more)

Low-Level AP
(11x17 print, simple Photoshop, rest of photos from shoot as 4x6 proofs)
Residential (per finished image): $300
Commercial (per finished image): $400 ($300 if 10 or more)

Photoshop Time
(removal of obstructions, restoration of lawns, etc)
Residential: $30/hr
Commercial: $50/hr

now, there have been people that complained about the VR pricing because of the same reasons you've all listed. every time this happens i show them several of these cheap and craptacular 1 and 2 shot panos made with iPix and other mirror-systems, and then show them mine. there is simply no comparison.

i am a professional. would anyone pay a wedding photographer $1000-$2000 who shows up with a disposable or point and shoot camera? or who's prints look like they were made at the picture printing kiosk at WalMart? no.

our prices are still too low with regards to what other 'professional' photographers out there are making. wedding, high school senior pictures, etc. these guys are raking it in and we are all struggling because the industry we cater to is CHEAP.

i believe my prices are in line based on my equipment, experience, and end result. i will never sell the kind of VR stuff i do for less than $200 each. i am not competing with the one-shot systems or the hack AP hobbyists out there.

[Cryofix]

Your sales skills and professionalism will make you the money you are looking for, if it is not making the money you ask then you need to hone one, other, or both.

You must have a creative means to avoid the initial shock of pricing, if you can hold a customers attention long enough to get a good clean pitch out then they should open their pockets, if you can not keep their attention then you need to come up with different angles to do so.

I have been in some sort of sales/customer service business all of my life and here is some things I have learned along the way that will help me sell myself:

Be polite! manners manners manners, this extends beyond the the simple hello and thank you's, people can hear your mannerism in your voice so your entire conversations has to be based on being polite even when you have to get assertive continue to do it in a polite way and you will succeed.

This info came from the other forums, it is close to the original quote "I would rather do 1 $25,000 job than do 250 $100 jobs" Your time is money and our investment is critical, do not sell yourself short, if you land 1 person to get an AP done at $300 or $400 then you milk them, and provide incentives to them to continue to use your service and provide WORD OF MOUTH advertising, for the AP field this is the most important thing you can achieve, once the "Good" word spreads around you will get your price.

the old saying "Rome was not built in a day", have patience, if your business plans requires you to make massive money right away off sell out sales then re-think your business plan.

One last one, never step on the people that help you to the top, because all of those same people will be there when you fall.

I actually started my business with he idea I was going to use my T-Rex and a point and shoot to make me a lot of money, then I quickly realized people were not going to pay for something that looked like a toy, I have now moved up to a more professional outlook, larger heli, more impressive look and feel and an SLR, when I arrive at a shoot, and pull out my equipment people will know why its costing them $300-$400 a shoot.

my 2 or 3 cents =)

[larrytoelle]

Howdy,

I've been following this thread with some interest and would like to comment.

First however, I should say that I've lurked on HeliFreak for quite a while as I have on other forums. I normally hangout on Rotory and have communicated with several of you in other venues ... so I'm not a total stranger ... or at least I hope not. R/C helicopters are a serious hobby for me and I see AP as an extension of that hobby.

AP is something that I've played with for a while ... so I'm somewhat familiar with the technology ... but have never seriously looked at it as a business until recently. This thread (topic), I find, is worth serious consideration for anyone in any business ... not only AP.

As an old retired goat, my perspective is perhaps different than a younger man's perspective and it might provide some interest for those of you contemplating AP as a first-time self-employment opportunity. If you're not currently self-employed, then perhaps this will encourage you to become so ... if not in AP ... then something else. There is nothing more rewarding than being your own boss, creating your own opportunities and pursuing your own ambitions. Personally, I was educated as an EE ... BSEE University of Maryland ... took nearly 12 years to get that degree ... but it finally arrived. In the meantime I apprenticed with the US of Army and Univac as a systems engineer. Eventually, I got into the software end of things ... developed a product and struck out on my own. Over the years, I've created several products and the companies that brought them to the market. Some successfully, others not.

Pricing, whether product, personal service or business service, is perhaps the most difficult and anxious part of the experience ... but it need not nor should not be.

We have to take a serious look at our service capability or product and our potential market in a sober analytical way, removing our personal expectations and ambitions from the equation. Our customers are not going to give a damn about our success or failure ... they will not share your business expectation, nor will they be enthusiastic about what we do or plan to do. Their only concern will be ... will the product or service you're offering get them what they want or need and will the cost be something that they can afford? Secondarily, the customer will compare your product or service with others available and make a "value" judgment. It's really that simple ... this ain't rocket science.

So, let's ask ourselves ... are we going to fulfill a need or are we going to satisfy a want. Needs are not wants ... so which is it that we're looking to service? Does our prospective customer really need our pictures? If so, why? Does our prospective customer merely "want" our pictures? If so, why? The two, need or want, require different pricing analyses. Of course, it's possible that our prospect is looking to both ... a need and a want ... but for analysis, we need to separate the two.

Needs are usually easier to make a business on ... or that's my experience anyway. If we can convince our prospective customer that he really "needs" what we're offering ... the only thing we will worry with after that ... is ... what will it cost? If we're unable to convince him that he "needs" what we have ... then we must create a "want" and satisfy the want or desire. "Wants" are more difficult to transact in my opinion, but they also can be the most profitable.

So far, we've been discussing real estate customers ... so let's start there.

The prospective real estate broker, presumably the owner of the business, is looking to both attract customers to his current "for sale" homes as well as seeking homeowners who are looking to sell. A realtor makes his bucks on both the sale of a home, and on the listing of a home. In the MLS world, the listing broker splits fees with the selling broker. A broker will be looking at both selling and listing opportunities and the outside services that fulfill his "need" to create those opportunities.

When "selling" a home, he'll be seeking ways to make the homes more attractive to his buyers and looking for ways to attract buyers to his business. What sort of photos can you offer that will make the home more attractive to prospective buyers? Also, what sort of photos will attract buyers to his business? Is it possible to create photos that will do both? Do the services you offer fulfill this need? And, does the prospect understand fully that the need exists? You may be surprised at how many brokers have not even considered their "needs."

Assuming we've established the need and are capable of providing the photos that fulfill that need ... the only other issue to making the transaction is price. Here, we must understand what other sources are available to our broker to fulfill his need. Are there other AP people in this market? ... if so ... what are they offering and at what price? Are other ground based photographers servicing this broker? ... if so ... what are they offering and at what price? Are their other airborne photographers servicing this broker? ... if so ... what are they offering and at what price? Is the broker himself capable of taking photographs? ... if so ... what is he capable of and at what cost? Many of the brokers that I've dealt with think of themselves as quite handy with a camera ... and don't think anyone else can do appreciably better. True? or not?

Let's take the above and split it down further and list them in order of impact, beginning with:

Other APers -- Can we be competitive with them in both price and service? If you've got a lowballing APer in your market area, it's going to be a challenge to compete with him ... not impossible ... but challenging. You may be able to convince the prospect that your equipment is better, if it is ... that you're more experienced, if you are ... that your service is superior, if it is ... etc. But, if you can't find a compelling reasons why the broker should use your service first, then all you're going to do is create business for your low-balling competitor ... generally not a good idea.

Also, it's generally not a good idea to sell your service/product on "price only." If you're forced to low-ball your own effort, then also find other compelling reasons for your product/service. Not doing so, will only invite a price-war ... and everyone loses in one of those ... unless of course, you're able to outlast your competition. One last thought on this ... competition, as long as its fair and not a price war ... is a good thing. Competitors tend to help each other develop and expand a market ... even though they may never speak or deal with one another ... it (competition) truly can be to everyone's benefit.

Ground based photographers -- Many of these folks have been around for a long time, have long standing business relationships, and provide excellent product. Demonstrating that AP is somehow superior to, or an augment to their services will require salesmanship. A broker may feel an obligation to go through their pro for all of their photo needs, in which case, you're going to need to find a way to "not compete" but be an adjunct to their current way of doing business. Carefully and tactfully attempt to understand the existing relationship ... pricing, service and other relationships. Contact the photographer, and establish a relationship with him/her. Affirm that they understand your unique role in photography, your extraordinary services, etc. Do it in a non-threatening way and offer to work with the photographer. Personally, I might want to offer the photographer a consulting fee when you shoot for his customer. Use him to get to your customer and to help service his and your customer better. Also, you might want to consider treating the photographer as your customer ... give him a trade discount for work you do for him. Let him sell your business for you ... encourage him to expand his own business with your unique services.

Other airborne photographers -- An AP photographer has several distinct advantages over other airborne operators and only a few disadvantages. Costs are obvious. Nearness (below 500 feet) is another. If a broker is already using airborne photography, I'd guess he'll be very open to your proposals ... he'll already understand the unique opportunities of AP. Pricing against these folks however, is not so obvious. Know what your airborne operators are offering and at what price ... in an ideal market ... this is really your price point. You don't have to be a lot less expensive ... just enough to make business sense.

Broker/Photographer -- This guy is going to be a tough nut to crack. He's got his ego involved, his equipment investment, his "tried and true" method of doing business, and he "knows what a photograph is worth" ... or thinks he does anyway. Here is the guy that has been in business for himself for God knows how long ... earns his bucks competing with other brokers and truly believes there's nothing new under the sun. Photos ... he'll tell you ... are just a necessary evil to his business and he's not going to spend big bucks for something that he can do for himself ... and better than you. Afterall ... he knows his business and you don't.

Don't let this guy intimidate or scare you off ... he's your customer for life, if you can work with him and get him on your side. You are his best friend ... although he doesn't know it yet.

This post got a bit lengthy ... so I'll stop and see whether or not I should continue ... and if you're interested in an old man's perspective?

LT

[MLaBoyteaux]

:noteworthy Please, by all means, continue! :noteworthy