80/20 Rule In Stock

Posted on 2/15/1996 by Jim Pickerell | Printable Version | Comments (0)

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80 / 20 Rule in Stock


In many areas of business an 80/20 rule often seems to apply.
Basically, it says that 80% of your sales come from 20% of your products.



In the stock photo industry it has always been true that not more that 1%
to 2% of the images in a general file ever sell. The trick -- of course
-- is to try to figure out which images will make up that 1% or 2%, and
why clients choose those images. If you understand what sells then you can
focus your shooting on subjects in high demand.



The other option -- one most stock agencies seem to be encouraging -- is
to shoot what you do best, what you really love to do, and if no one buys
your images at least you will have the sense that you have been true to
your art.



Print Catalogs



Back in the late 70's and 80's stock agencies started producing print catalogs.
The high cost of production of these products forced agents to pack them
with frequently requested images. In the process agents began to discover
that they could - at least to a degree - identity subjects that were in
high demand and frequently used.



They also discovered that making it easier for image buyers to review selected
images tended to drive up sales of those specific images in relation to
all other images in the files. In the early years of catalog selling it
was not uncommon for nearly every image shown in a catalog to produce some
sales in the first year or so.



Move To Today



Today we find that agencies with the largest catalogs still have less than
1% of their file in their catalogs. Yet it is not uncommon for 60% to 70%
of their gross sales to come from these images. Getting ones images into
a print catalog is not a guarantee of sales, but it does improve the odds.



If we consider all the print catalogs available to art buyers there are
more than 300,000 different images to choose from. But, with increased competition
it has become harder and harder for individual photographers to get their
images into them.



Not all images that make the catalogs sell. Of all the images Stock Connection
represents in Stock Workbook and Direct Stock less than 15% sold one time
in the first year.



Of the 100 images I have in Direct Stock 1, 2 and 3 only one-third have
sold.



The big stock agencies will argue that the reason our percentages are low
is because the people selecting the images (the photographers themselves)
don't have the experience to know what sells. Check the sales from your
agency against our statistics.



Odds Of Making Sales



Thus, in the stock photo industry we don't have an 80/20 rule we have a
1/70 rule. Seventy percent of the sales come from that 1% of images in the
catalogs and 30% of the sales come from the 99% of the images that are left
in the general file.



However, when we look at that 99% of images that are left we discover that
again only about 1% ever sell. So an additional 30% of sales come from another
1% of product.



We have learned that we can select top sellers. Now the question is how
far down the line can we go.



With digital catalogs we may be able to put 2% or 3% of the images into
catalogs instead of that 1%. If we select carefully, and keep good documentation,
we may be able to pick second level winners as well as the best sellers.



If we put middle level sellers into digital catalogs as well as the best
sellers we may be able to get another 20% or more of sales from 2% to 3%
of the remaining images.



90% Of Sales From 4% Of Images



If we can get to a point through digital catalogs where 85% to 90% of total
sales come from 4% or less of the images now in files, the question is raised
as to whether the other 10% of potential sales are really worth the bother.



Given these potentials, some sellers will choose to focus on the 90% and
forget the rest. The early adopters of this strategy may be big winners,
assuming it is possible to select middle level sellers.



To a certain extent the networks are already testing this theory. Their
failure, so far, is probably more of a result of network search speed than
that of having the right images.



Maintaining and researching a large file is very expensive. There will always
be people who occasionally want something other than the selected images.
Traditionally, the people who have wanted the greatest selection are also
the ones who want to pay the lowest fees. Are they going to change their
spending habits and be willing to pay enough to justify the cost of research
and storage?



There is a question as to how long stock agencies will be able to continue
to operate in traditional ways and go after the whole market given the huge
research and storage expenses.



We believe stock agencies are going to have to explore a totally new economic
model, and a totally new structure for doing business. At some point it
is likely not to make sense to spend 50% or 60% of your operating costs
chasing after 10% of the market.


Copyright © 1996 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  

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