E-Commerce Pricing

Posted on 12/4/2000 by Jim Pickerell | Printable Version | Comments (0)

358

E-COMMERCE PRICING


December 4, 2000

Many image sellers believe a fully e-commerce enabled web site is an absolute necessity

in order to license rights to stock photography in the future.

I would like to take a contrarian position.

  • Many uses should not be automatically priced, only certain smaller uses.Larger uses

    should always be negotiated.

  • The best strategy is to provide automatic prices for the high demand print uses, and all

    digital uses. Prices for infrequently requested uses like billboards, point of purchase,

    posters and greeting cards should only be available through negotiation.

  • Don't oversimplify the automatic price schedule.

  • Uses where releases may be necessary should be negotiated so the seller can

    determine if the proposed use should be allowed. (See Story

    355. )

    Reasons for limiting automatic prices to small uses.

    • It is unlikely that there will be much room for negotiation on these prices.

    • A high percentage of all sales are for these small uses.

    • Relatively small file sizes will be needed for these uses making it unnecessary to

      have large image files immediately available on-line. (Royalty Free seller Rubberball

      says that over 80% of the requests they receive from customers are for file sizes of

      10MB or smaller.)

Stock photo buyers want on-line search and digital delivery. Online pricing is not high

on their priority list. Once the buyer has identified the image picking up the phone

and calling the company handling the rights can be faster and more satisfying than

trying to work through the buying process on their computer.

Many buyers want to be billed rather than paying by credit card. Some want to receive a

single monthly statement rather than separate bills for each individual use. With such

buyers at least one initial telephone call is necessary to carefully qualify the buyer

before allowing uses. With some regular phone calls will also be necessary in order to

collect.

As one on-line user said to The Industry Standard, "Customer service is becomming more

and more important to me. The on-line world is so impersonal. To call and get a

friendly, educated person on the other end of the line, that's great."

Web based businesses will spend an estimated $6.8 billion on customer service in 2000

and it is estimated to reach $20 billion

by 2004.

Many web businesses are discovering that the more they go to fully automatic sales the

more dissatisfied the customer becomes. This requires that the business spend more

money and time developing additional ways of communicating with the customer in order to

quiet their dissatisfaction.

Granted, one of the major areas of dissatisfaction in internet commerce is

unsatisfactory delivery of the product ordered and paid for. The stock photo industry

is unlikely to have this problem because our product is easily delivered on-line. On

the other hand, very few industries have the potential problems with "price" and "rights

purchased" that is inherent to the stock photo industry. Rather than trying to force

this aspect of the transaction into a fully automatic mold, this is where phone

communication can be very useful. Recognize that there will be industries, and certain

types of services, where full e-commerce solutions for all transactions are not suitable.

As Henry R. Autry, CEO of Brigade Solutions points out, "Phone conversations are quick

and provide the human contact that many shoppers consider an essential part of

shopping." Brigade Solutions is a provider of e-mail and chat technology, not a company

one would expect to be promoting old style telephone solutions to selling.

The important thing to recognize as you move to recognize as you mover to automatic

e-commerce transactions is that a huge percentage of your customers may still prefer to

use the phone.

Thus, the fully automatic sales, even when offered, may be a small percent of total

sales.

Pricing Automatic Sales

The prices listed below are for the United States. For sales in other countries

different prices will need to be applied, but the

basic strategy is appropriate.

These prices are primarily are primarily aimed at satisfying the needs of random

visitors who come to the site as a first visit and who will pay for the usage be credit

cards. For clients whose credit has been approved and who will be billed on a monthly

basis a more elaborate price schedule might be devised and even customized to clients

regular type of usage.

There are at least two reasons for such customization. First, the client may have very

unique uses that need to be priced separately from general users. Second, the volume of

sales that the client provides may justify special discounts from the standard pricing.

This is important because the system used for automatic pricing must provided the

capability of customized templates for certain qualified users.

One other most in automatic selling is to attach to every license and prominently

display on-line language that clearly obligates the buyer in the event there is a

misuse. It should say something like, "No model releases or other releases exist for

any Content unless the existence of such release is specified in writing by the Rights

Holder."

PRINT ADVERTISING

These prices are for a single one-time use -- one insertion -- of the photo in any type

of print ad inside a single publication regardless of whether the publication is local,

regional or national.

The price is based on size and circulation. All other uses must be negotiated

Size   

1/4 Page   

1/2 Page   

Circulation   

     

     

under 5,000   

360   

475   

5,000-10,000   

400   

530   

10,000-20,000   

440   

585   

20,000-50,000   

520   

690   

50,000-100,000   

605   

805   

over 100,000   

negotiate   

negotiate   

BROCHURES

These prices are for a single one-time use -- one insertion -- of the photo in any type of advertising or

promotional brochure regardless of whether it is produced by a public company, a private

organization or a non-profit organization. The price is based on size and circulation.

These prices also apply to catalogs, direct mail inserts, flyers, promo cards, sell

sheets or folders. Other uses must be negotiated. (You may not be able to get the 1/4 page

prices for spot uses, but rather than providing a separate set of lower figures for spot use I

would prefer to negotiate these prices on a case by case basis.)

Size   

1/4 Page   

1/2 Page   

Circulation   

     

     

under 5,000   

345   

430   

5,000-10,000   

375   

470   

10,000-20,000   

410   

510   

20,000-50,000   

460   

575   

50,000-100,000

525

655

100,000-250,000

605

755

over 250,000

negotiate

negotiate

NEWSPAPER ADVERTISING

These prices are for a single one-time use -- one insertion -- of the photo in any type of print ad in a

single newspaper regardless of whether the publication is local, regional or national.

The price is based on size and circulation. All other uses must be negotiated

Size

1/4 Page

1/2 Page

Circulation

  

  

under 50,000

350

455

50,000-100,000

405

525

100,000-250,000

465

605

250,000-500,000

535

695

500,000-1 million

615

800

over 1 million

negotiate

negotiate

WEB

There are a wide variety of ways that images can be used on the web. Thus, any effort to simplify pricing for the

web runs the risk of giving away a lot of very valuable uses for much too low a price. On the other hand we must

recognize that the competition is offering unlimited web use, of any type for a single fixed price. We also

recognize that the file size needed for any use on the web is very small and thus it is impossible to segregate web

uses based on file sizes alone.

The following are some of the different web uses our agency has encountered. The image is used in a brochure and

also on the web. It is used on the Home Page and repeated on many inside pages. There are different values if it

is used by an educational organization compared with a small business or a major corporation. It is used in a banner

by a major insurance company, but only for 30 days and also used 1/2 screen on several secondary pages. The image

is used in packaging and also used on the home page of a web site for one year.

The image used by Fortune 500 company (major traffic site) for one year and other image used by the same type of

company but on a password protected site with limited viewership. We've had an image used by major advertising

agency to promote their business. Another image used by a major car manufacturer. One image was used in a corporate

annual report and was also posted on-line.

The image is used within a montage. An image is used on a VISA card which is promoted on-line. What's the value of the

on-line part of the usage? An image used in an on-line promotion for Lipton/Wishbone salad dressing, but it will only

appear on the site one day a week for six months. Is this six months of use or 26 days?

An image appears in a PDF version of a catalog that will be available through a web site. An image is used on an

on-line button. The image is used as a spot icon on many pages, or as a ghosted background. Thus, it is obvious that

in any "web pricing structure" a variety of different types of usage must be dealt with.

Considerations

The prices below are for publication on a single page on a single site. Use of the same picture on multiple pages on

a site, or in any type of collateral print use, must be negotiated.

There are four different factors are considered.

  • First, is the page Personal, Editorial or Commercial.

  • Second, is this a Secondary page on the site, a page thatLeads a Section, or the Primary Home Page.

  • Third, duration is considered.

  • Fourth, size on the screen.

Personal

Sites created by any type of business organization, association, non-profit organization or educational organization

do not qualify as personal. No product or service can be offered either for a fee, or as a free gift, on a personal

web site.

I recommend a single rate $75 for a personal web page for a 1 year license. (PhotoDisc is selling this use for

$29.95 and EyeWire is selling web use for $39.00)

Education & Commercial

The prices below in the Editorial and Commercial/Advertising categories are based on the the following conditions:

  • Image Size -- The prices below are for images used 1/4 screen or smaller. Any larger usage must be negotiated.

    The vast majority of web uses are 1/4 screen or smaller.

  • Single Page -- These prices are for publication on a single page in a single location. It the image is on multiple

    pages the usage must be negotiated.

  • Section Leaders -- Many sites are divided into many sections. The first page of each of these sections is a much

    more important placement than other secondary pages within the section. We designate these pages as "Leading"

    pages. They are not as important as the primary home page which is like the cover on a magazine. Think of these

    leading pages as "chapter openers" of a book.

  • Banners -- All banners fall in the commercial rate category.

Editorial - For uses 1/4 screen or less

  

Seconday

Leading

Home

less 1 month

135

170

270

1 to 6 months

175

220

350

6 mos. to year

216

270

432

1 yr. to 2 yrs

270

337

540

more than 2 yrs

negotiate

negotiate

negotiate

Commercial/Advertising - For uses 1/4 screen or less

  

Seconday

Leading

Home

Banner

less 1 month

375

450

525

600

1 to 6 months

450

540

630

720

6 mos. to year

525

630

735

840

1 yr. to 2 yrs

600

720

840

960

more than 2 yrs

negotiate

negotiate

negotiate

negotiate

The following are factors to consider for negotiation when the usage is larger than 1/4 page. For uses up to 1/2

page uses multiply the rate above by 1.3. For uses between 1/2 and full page multiply by 1.6.

CD-ROM

These prices are for a single one-time electronic use of the photo

in a compilation of text, images, graphics, video, etc. with read only memory. A

distinction is made as to whether the disc is for educational purposes, or whether it is

for a commercial or promotional product. All other uses must be negotiated. The license

is for 2 years reproduction of discs. A new license is required after two years even if all

copies originally licensed have not been produced. All other uses must be negotiated.

  

Educational

Promotional

under 20,000

150

300

20,001-40,000

180

560

40,001-80,000

215

430

80,001-120,000

255

510

over 120,000

negotiate

negotiate

ELECTRONIC KIOSK

These prices are for a single one-time use of the photo in a kiosk or other device that

permits viewing, but no downloading or printing of the image. Price is based on the

number of device locations. The license is for one year usage.

1 to 5

250

5 to 20

300

20 to 50

400

50 to 100

525

100 to 200

600

over 200

negotiate

TELEVISION - Editorial Use

This is for editorial use on TV only. All commercial or advertising uses on TV must be

negotiated. A distinction in price is made between Educational TV and Commercial TV.

If the image appears two or more times in the same segment each appearance is counted as

a showing. If the same piece is repeated at several different times during the day or

other time period each repeat is counted as a showing. (In a negotiated situation the

length of time (number of seconds) the image is on the screen might be a factor to

consider, but as a practical matter this time will in most cases be two or three

seconds.) All other TV uses must be negotiated

  

educational

commercial

one showing

250

325

2 - 5 showings

300

390

6 - 10 showings

360

470

11 - 20 showings

430

560

More than 20 showings

negotiate

negotiate

PROJECTION (Power Point)

These prices are for use of a photo in any projection or power point presentation. The

price is based on the number of times the presentation is shown to various audiences.

Slight modifications can be made to the presentation and they will be counted as

additional showings rather than a totally new presentation.

All other uses must be negotiated

1 - 5 showings

150

6 - 10 showings

200

More than 10 showings

negotiate

MAGAZINE - Editorial

These prices are for a single one-time editorial use of the photo in one magazine

regardless of whether the publication is local, regional, trade or national. The price

is based on size and circulation. All other uses must be negotiated

Size

Spot

1/4 Page

1/2 Page

Circulation

  

  

  

under 20,000

220

245

355

20,000-50,000

245

275

400

50,000-100,000

275

305

445

100,000-250,000

305

340

495

250,000-500,000

340

380

550

500,000-1 million

380

425

615

over 1 million

negotiate

negotiate

negotiate

NEWSPAPER - Editorial

These prices are for a single one-time editorial use -- one insertion -- of the photo in any newspaper

regardless of whether the publication is local, regional or national. The price is

based on size and circulation. All other uses must be negotiated

Size

1/4 Page

1/2 Page

Circulation

  

  

under 50,000

150

190

50,000-100,000

190

240

100,000-250,000

225

280

250,000-500,000

260

320

500,000-1 million

300

350

over 1 million

negotiate

negotiate

BOOKS

These prices are for a single one-time use of the photo in any textbook, tradebook or

encyclopedia. A teachers manual is a separate book. Prices are based on the total

circulation in all languages. Additional fees are not charged for separate languages.

The price is based on size and circulation. Larger uses and chapter openers must be

negotiated. All other uses, including reprints, must be negotiated.

Size

1/4 Page

1/2 Page

Circulation

  

  

under 10,000

175

205

10,000-20,000

200

235

20,000-40,000

220

260

40,000-70,000

255

300

70,000-100,000

320

375

100,000-150,000

385

450

over 150,000

negotiate

negotiate


Copyright © 2000 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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