New Business Model - Issue 7

Posted on 9/24/2007 by Jim Pickerell | Printable Version | Comments (0)

Issue 7 - The only reason for pricing something below the cost of production is having a reasonable assurance that through multiple use, enough income will be generated to provide a profit.

Many of the things we use every day are priced below the cost of production. A few examples: seats in a football stadium or a car rental. The price of a seat to see a football game, or even the sum total of the amount everyone pays for all the seats in the stadium, will not begin to cover the costs of building that stadium and the other factors that go into that day's entertainment. The price to rent a car for a day doesn't cover the cost of building that car.

But, if you rent a car for a week instead of a day, you pay more because you receive more value. If you buy a season ticket to football games, you'll pay more than for a single ticket because you receive more value.

Why is this important? Because value received should be the basis for pricing image use, just as it is for pricing uses in these other areas of commerce. When a customer asks why you charge them more than you're charging "X" to use a particular image, the answer is that in your judgment, the customer is receiving more economic benefit.

But there is another unknown factor that goes into the pricing of a stock photo that other types of rentals usually don't address.

In the rental of a stadium seat or a car, there is usually a way, through some complex calculations, to determine how much revenue is likely to be generated before the asset is used up. This gets us to the reasonable assurance element of this model. There is no way that I've been able to determine to calculate how many times a given image, or a collection of images, will be licensed over any extended period of time.

It may be possible for a photographer with a reasonably sized collection to predict that because his collection generated "X" last month, it will generate about the same next month. But it is difficult to extend this logic far into the future because the photographer has absolutely no control over the amount of content brought into the marketplace, or at the price point it is brought to market. If the overall world collection is growing at a much faster rate than the photographer's collection, it is likely that his revenue will go down, no matter how good his images are, due to stiffer competition.

Copyright © 2007 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, 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:  


Be the first to comment below.

Post Comment

You must log in to post comments.

Stay Connected

Sign up to receive our FREE weekly email listing new stories posted.

Follow Us

Free Stuff

Recent Stories – Summer 2016
If you’ve been shooting all summer and haven’t had time to keep up with your reading here are links to a few stories you might want to check out as we move into the fall. To begin, be sure to complet...
Read More
Corbis Acquisition by VCG/Getty Images
This story provides links to several stories that relate to the Visual China Group (VCG) acquisition of Corbis and the role Getty Images has been assigned in the transfer of Corbis assets to the Gett...
Read More
Finding The Right Image
Many think search will be solved with better Metadata. While metadata is important, there are limits to how far it can take the customer toward finding the right piece of content. This story provides...
Read More
Where Is The Stock Photo Industry Headed?
For new readers, or those who may have missed some of what I have written over the last few months, the following are a list of stories worth looking at to get a sense of where the industry is headed.
Read More
Photography As A Career
It’s that time of year when high school seniors are waiting for college acceptance letters and thinking about future careers. If you know someone who is thinking about photography as a career you mig...
Read More
2014 Stories You May Have Missed
For many the end of the year is a time to review past experiences and consider whether it makes sense to chart a new course in the year ahead. Stock photography has changed dramatically for professio...
Read More
More Stories In 2014 You May Have Missed
Every so often I put together a list of the most important stories we’ve published in the recent past. If you are engaged in the business of stock photography the links below are to stories that we’v...
Read More
Getty: A Three Month Review
In all the excitement about 35 million FREE images it is worth looking back at some of things that have been happening at Getty Images in the last three months. After watching revenue decline for the...
Read More
State Of Stock Photo Industry: 2013
If you’re looking for an overview of the state of the stock photo industry as of October 2013 the stories listed below are a good place to start. Regular readers of Selling-Stock will have seen all t...
Read More
Education Market Shifts To Digital
If supplying pictures for educational use is a significant part of your business plan you need to be aware of how the market is trending toward digital delivery and how that is likely to affect the p...
Read More

More from Free Stuff