Escalating Price Based On Demand

Posted on 5/10/2018 by Jim Pickerell | Printable Version | Comments (0)

Possibly the biggest flaws in the Blockchain model is allowing photographers to establish one fixed price for their work. As I have pointed out before very few photographers have any understanding of what they should charge for their work. They may know what they would “like” to get if someone uses one of their images, but invariably that will be much higher than all but a very few customers will be willing to pay to use the image.

On the other hand, if they set a low price they may license the image many times, but also end up giving the image away for very little, to many customers who would gladly pay more.

Of the relatively few stock images that have been licensed more than once most will have been  licensed at a variety of different price points depending on who the customer is, the intended usage, the uniqueness of the image and how will it fits the customer’s needs, the amount of time it takes the customer to find the right image, and the number of images needed. No single price will ever be right for every customer.

Thus, establishing a fixed, unchanging price for every usage virtually guarantees that the photographer will lose some, if not many sales. And the photographer will not receive the maximum possible revenue the image could produce. This is particularly true if the photographer establishes the same price for all images in his or her collection.

Is There A Solution?

Some RF companies like still offer the option of a variable price depending on the file size delivered, but most RF companies have given up that practice and gone to one fixed price per images regardless of file size delivered. The customer can vary her costs per image by an upfront purchase of a larger Pack or Subscription allowing a greater number of downloads.

However, there are at least two other solutions that might be employed by blockchain distributors that would provide for some variability in pricing and still make it very easy for the customer to understand the price of any given image at a given time.

Option one would be to allow the photographer to establish whatever price he wishes and change it as often as he likes. When a customer finds the image on a web site there will be one single price to license its use, but the price may differ from that of other images on the site.

Option two would be to participate in an “Escalating Price Strategy” (EPS) operated by the blockchain. The EPS would be a system for raising the price based on demand. With such a system if may be possible to arrive at a “sweet spot” for each image based on demand.

Here’s How It Could Work

Each image added to the collection would starts at a base price. Customers would know that every image that has never been used starts at a certain, common base price. The price is then increased based the number of times the image is licensed. A huge percentage of the images in any large collection are unlikely to ever be licensed while experience tells us that a small percentage may be licensed many times. The problem is that there is no way to anticipate in advance which images will be licensed, and which won’t, until willing customers have a chance to view the collection and decide which images fit their needs.

A licensing schedule for such a procedure might look like this.

  Image Licensed Price A Price B Price C
Level 1 Never Licensed $5.00 $5.00 $5.00
Level 2 Once, but less than 4 times $7.50 $6.00 $10.00
Level 3 3 times, but less than 7 times $10.00 $7.00 $15.00
Level 4 6 times, but less than 10 times $12.50 $8.00 $20.00
Level 5 9 times, but less than 20 times $15.00 $10.00 $30.00
Level 6 19 times, but less than 50 times $20.00 $15.00 $40.00

Each images in the collection starts at a low base Level 1 price. After the first sale the price for future sales is automatically moved to Level 2. That new figure appears beside the image. The image remains at Level 2 until it has been licensed 3 times Then the price shown beside the image is automatically changed to the Level 3 price.

If the image remains at a level above Level 1 for 6 months with no additional sales, then the price is dropped to the next lower level and remains there until it makes another sale. If it makes no new sales for 2 years then it is dropped to level 1, or a new even lower price may be established for images that have been on the site for more than 2 years and are no longer selling..

The blockchain could offer a single pricing template (Price A) or multiple templates for photographers with different viewpoints as to how rapidly prices should be raised.

One reason for picking $5.00 as a starting point is that it is very competitive with the current industry leader pricing. About 33% of Getty’s sales are for prices less than $5.00. However, at the high royalty shares the blockchains are offering photographers will receive much more than they might have received if one of the industry leaders were licensing their images at much higher prices. (If Getty or Shutterstock makes an RF sales for $15 the photographer will receive less than $4.50.)

Many photographers will not want to license their images at prices that are as low as those on my schedule, but they will have the option of establishing any higher fixed price they choose. However, they will not have the option of participating in the automatic escalation process unless they choose one of the standard escalating options offered by the blockchain. While the photographer could adjust prices on single images himself he would need to continually monitor activity on each image in order to adjust prices effectively.

Experience may show that the prices I have recommended, or the range of images at each pricing level, need to be adjusted. Hopefully, it will be possible to eventually raise prices based on the volume of sales in each category. When this happens any changes made to the structure should be very transparent to creators, and probably customers as well.

One issue to be dealt with is how to offer discounts to volume users which has become a very common practice in the industry. The Image Pack system could be adapted so the customer gets a certain dollar value of downloads when purchasing a pack of a given size – say $100, $500 or $1000. The $100 pack might cost $100, the $500 pack might cost $450 and the $1000 pack might cost $900. Multiple images could be purchased with each of these packs up to the total value of the pack.

When an image is licensed the stated value of the image would be deducted from the listed pack value so the customer purchasing a $500 pack would eventually get access to a number of images whose list values totaled $500.

However, when calculating the photographer’s royalty share for an image license, it would be based on the proportional share of the money received by the blockchain. In this way the amount received by the photographer would sometimes be lower than a normal percentage of the list price of the usage because the customer had been given a discount.

Improving Image Search

This system could also greatly improve image search for most customers. Rather than always searching the entire collection customers should be able to search for only images in a certain price level, or in multiple levels.

For example, if a customer has budget constraints and doesn’t want to pay more than $12.50 for an image they could search for only those images in Price A, Levels 1 through 4. But suppose they don’t want to waste time reviewing all the images that have never been used, then they would only be shown images from Levels 2 through 4.

When customers search for images the default return order should be based on a certain percentage of the most popular images (those having sold at least once) along with a certain percentage of the newest uploads (assuming they want to look at images that have never sold). Initially, I would recommend that the breakdown be 50% popular and 50% newest. Whatever it is it should be very transparent to both customers and creators. Customers should also be able to do searches based on just popularity or just newness.

Copyright © 2018 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 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, 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:  


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