Cost of running a legitimate business

When time is bad, cost is ever increasing. It is often to see many businesses close their door due to the "cost" of running a legitimate business.

There are many reasons that one business fail and another flourish at a same time.

When one is in "business" there are a lot of "cost" associated with it.

We have often received many enquiries during the week, and it is not so rare to exchange these conversations....

"How come you are charging a lot more than my previous Studio that I went to?"

We will often ask "why don't you go back to the same studio if you are happy with their offering?"

More often than not, the respond was "Ooh... they've close down" or (singapore version... er, they close down already lar...)

That respond really make us feel sad for several reasons:
1. If there is a business that I like, such as their product offering ( be it food, clothing, etc), I will do as much as possible to support them to make sure they are there when I need to purchase from them again. So it is sad to see they go, and what it means to me is that, I will never get to buy from that business again.

2. The operator of the business who has put a lot of hardwork and attention to run the business will feel really depressed and if I put myself in their shoes, I will probably feel the same way.

So lets analyse the "cost" of running a legitimate business.
1. Operating cost - here is some, but not all of the operating cost.
- Rental/Mortgage repayment
- Utilities (electricity, water, phone)
- Depreciation of the equipments
- Back up equipment cost
- Depreciation of the back up equipments
- Transport
- Misc cost like insurance, etc

2. Time factor - so what is the chargeable time?
For a dependable and a reliable business operator, Time is a big factor.

Here is a typical checklist:

BEFORE the jobs is booked:
- 5-10 minutes per email to read and fully answer each and every query.
- 5 minutes to categorise the work
- 5-10 minutes to ensure all necessary information is given to the prospective clients

total - 15-30 minutes - pre-booking time assuming it is a very typical 2-3 emails leading to the booking of a simple portrait shoot.

For every job that is booked, a typical checklist as follows:
1. 10-15 minutes - checking equipments and make sure all cards are formatted, batteries are charge
2. 15-30 minutes - re-reading the emails from the clients so we can understand the expectations and wish list so we come prepared.
3. 20-40 minutes travelling TO location.
4. 5-15 minutes warm up session
5. 1-2 hours sessions
6. 20-40 minutes travelling BACK
7. 10-15 minutes to re-pack, re-check when we are back
8. 10-30 minutes to download, archive and back up the images

Total = 6 hours per shoot

Post processing of images:
Stage 1: Pre-Selection - 30-60 minutes
Stage 2: Batch Processing - 1 hour
Stage 3: Details processing - 5-6 hours
Stage 4: Artwork processing - 2-3 hours
Stage 5: Batch processing for web res - 20-30 minutes
Stage 6: uploading to online gallery - 30-40 minutes

Total = 12 hours per job on average of 60-80 images

Notify client, processing orders, sending images for printing, delivery via post, etc = 2-3 hours.

Total is 20-22 hours work for a simple portrait shoot. For a typical 8 hours workday, it is effectively 4 days to ensure everything is done correctly and professionally.

This is simply " Time COST" element of the business.

Lets say you put a number to each hour... say $15 per hour, it is about $300-$330. That is the cost of the time minus any other cost. I reckon $15 is way too low to begin with, but guess we need to plug a figure from the air.

Now, with equipment cost, on a very average kit for natural light photography, a photographer will equip him or herself with 2 x DSLR, 2-3 prime lenses, 2x fast zooms.

With today's pro-grade DSLR, one is looking at a minimum of $4k per DSLR, which mean $8000 on DSLR bodies which have a shelf life of 2 years MAX.

a 35mm f1.4, 85mm f1.4 will cost roughly around $2500 each which means $5k, annual servicing cost will be around $400 for the 2 lenses to make sure they are in service all the time.

a typical 24-70 f2.8 and 70-200 f2.8 lens will cost $4000 for both.

So when adding supporting equipment such as flash, memory cards, batteries, its about a bill of $20,000 on equipment.

Now with Computer system COST....
To ensure there is no down time, there is a need for a minimum of 2 similar specs systems should one fail to perform at any given time. Depending on what system a photographer choose to use, they are about $5000 for 2 machines for a medium level machine.

A dependable business should not have any down time at all, unless of course in event of unforeseen circumstances.

With all the back up HDD and Redundancy plan HDD, they are at least $1000-$1500 more.

So computer + back up system will be around $6000-$7000.

So assuming the $30,000 gear will last for 5 years.... each year, $6000 is a figure which is equivalent to ~$500/month.

That is just the cost of the ownership and depreciation of tools of trade.

Then there are cost like, electricity to run it, the maintanence cost, the "unlucky" breakage cost, which is more or less about $1000/ month

With rental, $2000-$5000 per month is fairly common in Singapore - of course if one choose to run the business from home, this will be minimal, and some are still paying the mortgage.

So to sum-up, a typical cost of equipment + rental + maintainance, $3500/month is a very conservative figure.

Lets assume, the cost of advertising is $1000-$1500 a month to get people to "CALL" or "Email".

So a reputable and dependable business is really looking at a cost of about $5000 a month with or without client.

Lets say, a studio is taking 30 jobs per month, the TIME cost of each job is $300, so the cost in timing is $9000.

So $5000 + $9000 =$14,000/30 jobs = ~$470. That is the real "COST" of doing 1 job assuming there is 30 jobs per month for 12 months.

So how much do one really need to charge to "COVER the COST".

After all, everyone is hoping to gain something when they are operating a business. However, many do not really consider the real cost of making sure that the business is profitable.

Next time when reading the price list from a reputable and dependable business, please understand that your support is very vital for their survival.

Last but not least, when a business is making a profit, there is a TAXES to pay as government want a fair share of keeping the country running smoothly... after all they are also running their business to make sure everyone have a business to run.

Therefore, when all the cost factors are being considered, a $40-$65 print for a 8"x12" doesn't seems too dear. After all, a photographer is looking to get paid slightly more than just covering their cost.

So when one is comparing prices, think again, why a studio is charging what they are charging. These reputable and dependable business do a lot of those "behind" the scene work, to ensure they are living up to their reputation. Some might shy away from back up equipment so some cost can be "CUT". With such business, will it be dependable?

Furthermore, photography is an experience and a luxury, so why ruin it with "No experience" and a simple click on every "SAY CHEEZE".... ah... talking about NO SERVICE...

Anyway.... we hope this page (although it is lenghty) do bring some insight and shed some light to our BLOG STALKERS......

Yes, we are hiding a lot of new work until we surpass that before we will post it out... so keep stalking.