Profit/Loss Calculations For Stock Photography

Posted on 1/2/2015 by Jim Pickerell | Printable Version | Comments (4)

Should the price paid to use a photo cover the cost to produce it? Most stock photographers recognize it is highly unlikely that they will regularly recover the cost of producing an image from a single sale. The profit and loss calculation is much more complicated.

The first thing to recognize is that a high percentage of the images produced and offered for marketing will never sell. For many photographers it is not uncommon to never license 99% of the images they place into the market. Thus, they must earn enough from the ones that do sell to cover the cost of producing the non-sellers.

This might lead some to think that the price to license a single photo should be much higher than what it costs to produce, but if an image can be licensed many times that changes the calculation.

In the RM environment a good selling image may be licensed a handful of times over a period of years. Consider Getty. In 2014 Getty had over 4 million RM images on its site. I estimate they licensed fewer than 500,000 images. Thus, on average in 2014 only one out of every 8 images was licensed even once. Thus, a photographer would need to earn at least enough from every sale to cover the cost of producing 8 images.

Images also have a “useful life” (may sell repeatedly over several years), and that could reduce the amount that needs to be recovered from a single sale. But, given the high volume of new images being pumped into the market useful life is getting shorter and shorter.

On the other hand, in the microstock and subscription environments, it is not uncommon for an image to be licensed hundreds if not thousands of times. On iStock there is one image (3781332) that has been downloaded more than 24,000 times. If an image is licensed many times a microstock photographer can afford to accept much less for each use than the RM photographer and still make a profit, assuming the images cost the same to produce.

In the above case Anouchka’s 2nd most popular image has been licensed 1,300 times, the 10th only 500 times and the 100th, 100 times. She has over 15,000 total images in her collection and over 100,000 total downloads since 2005. Thus, she has an average of roughly 6.66 downloads for every image in her collection, and those downloads have occurred over 10 year period.

Shutterstock has almost 47 million images in its collection and about 125 million downloads in 2014. Thus, on average every image was downloaded 2.66 times in 2015. At an average price of $2.65 per download that would mean that on average every images in the Shutterstock collection earned $7 in 2014. Image creators get about 30% of the gross sale price or an average of about $2.11 per image.

Cost Of Production

The second thing to look at is cost of production. No two images cost the same to produce when all the general overhead factors are considered. Some days - usually more out of luck than good sense - a photographer can produce many better selling images than on others.

Thus, rather than trying to establish a cost for producing each image, a photographer should look at monthly or yearly costs and divide the total number of salable images produced in the time period to determine the average cost for each images. This would give the photographer some idea of the average per license he/she must earn to show a profit. Of course, costs can vary widely month to month if the photographer occasionally engages in some particularly expensive shoots that include travel, models or props. But if the photographer looks at these numbers on an annual basis at least there is some way to estimate the break-even point.

The other big unknown with stock is the number of times any particular image is likely to be licensed. Most photographers want to believe that every image produced is so great that someone will buy it.  Usually that’s not the case. Thus, no matter how creative and talented the stock photographer happens to be, it is necessary for each individual to regularly track his or her over all costs of operation. Then determine the average cost per image available in the market during the time and compare that to the revenue generated by those images.

Recently, I had a discussion with a photographer who was convinced that the more images he produced the more money he would make. He believed that all he needs to do is keep ramping up production while trying as much as possible to keep production costs under control. I couldn’t convince him that given the trends of oversupply and declining prices for use this strategy would eventually lead to disaster.

Producing Photos People Want To Share

What got me thinking about all this was a recent article by Paul Melcher entitled “Buying An Audience”. He said, “What they (photographers) should be selling is not their ability to create expensive content but their talent in making images that people want to see and share. … What the photo industry should understand is that in order to remain relevant, they have to let go of their manufacturers frame of mind and clearly understand the market forces that define their business today.”

Melcher pointed out that buyers have no interest in what it costs to produce a photo. A photo will have a certain value to them depending on how they intend to use it. That’s what they are willing to pay and it may be nowhere near what it cost to produce the image. Moreover, because there are so many similar photos available for virtually nothing, or free, users may not be willing to pay anything to use the photo.
Melcher continued, “Getty Images also understands this market reality. By switching from licensing to free embeds, they are looking to capitalize on the exploding value of audience revenue. What they will be selling soon is no longer single images but large audiences that their images have managed to capture via millions of embeds. A sort of Instagram, but spread out via the Internet.”

I am reminded of a note I received from a Getty photographer recently who in one month received a sales report with 151 Pinterest sales for 1 cent each. At that rate it will take the photographer a long time to recover the costs of producing those images. And that isn’t even the worst news. While Getty has been able to get Pinterest to pay them something for every Getty image found on their site a huge percentage of the images Getty offers as “free embeds” generate no revenue whatsoever.

In the first six months of the Getty embed program about 60,000 websites embedded some Getty images (we don’t know how many total) and these websites generated almost one billion page views.

These are images that audiences are interested in looking at and sharing, but as far as we know they generated zero revenue for the image producers.

When it comes to Instagram, I don’t believe anyone who posts an image receives any revenue when their images are viewed or shared. Zero times a million, or a billion, is still zero.

Copyright © 2015 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:  


  • Adam Haglund Posted Jan 3, 2015
    Thanks for an interesting post!

    I found this in particular interesting:
    "a photographer who was convinced that the more images he produced the more money he would make. ... I couldn’t convince him that ... this strategy would eventually lead to disaster."

    How come you think that?
    And, from the photographers point of view, will the images be worth less per image the more the photographer produce? If so, why?

    I'm also interested in what you wrote about the images useful life. It are getting shorter, you wrote. Why?
    And, what is the average life span for a stock image do you think? 1 year? 5 years? 10 years?

  • Jaak Nilson Posted Jan 3, 2015
    I had a contact with famous stock photographer. He is successful at Getty. Some time ago he tried to generate a more traffic to his site. Images are available at his site, but he is not selling them directly, but via different agencies.

    He tried for several time a Pinterest and posted there his images. An of course there was not traffic growth to his site.

    All these like Pinterest, Facebook, Twitter and Instagram are good for their owners, but no results for photographers.
    A social media is good for wedding and portrait photographers. Some social media photographers-stars may sell a prints too. For stock, it is all pointless.

  • Shannon Fagan Posted Jan 4, 2015
    Hi Adam and Jim,

    General business theory is that costs of production (i.e., manufacturing) will decrease as the manufacturing run increases. The costs thus of creating 500 images of a given topic genre, should be more expensive on a per image basis than 2500 images of the same. There is an efficiency that kicks in as the run increases; generally in the form of reduction of wasted money for unessential components that were present in the initiation period. For stock images, that could be in the form of the costs for excess crew, models, or wardrobe that are later deemed irrelevant to the production needs as shooting evolves later, and / or overhead costs of gear and planning that get drawn out over longer periods of time of use to create the images.

    On the flip side of this equation is the cannibalization that can occur when similar images (of style, creativity, and subject) compete for attention from a standardized set of buyers. Proctor and Gamble faces this with their many brands of detergent fighting for marketing space on a store shelf, even though the same parent company owns them all. Via differentiation of the image sets, the contributor can mitigate a natural state of sales lost to other images produced by the same photographer/contributor (i.e., to themselves). This differentiation can be in the form of customer segments, whether geographic or price sensitive (and almost always controlled by the manner of the distribution decision through agents by the photographer/contributor). Photographers, by nature of their skill sets acquired, rarely cross creative boundaries of style. In stock imagery, it is advantageous and encouraged to do so, since the differentiation that this allows will ideally allow the same production entity to tap a larger variety of customers' buying habits based on image type (if not necessarily by geographic location or price).

    The image shelf life may be getting shorter as increased supply from new found participants to supply overlap more quickly the preexisting images that were already in distribution. There is no clear measure of this since standards are constantly evolving and are largely based on the nuance of the distribution and shifts in buyer habits. Typically images start a sales life with 1-2 years of a standard "x" amount earned, with the next double of that time (2-4 years) at an estimated half-life of the prior period. This half-life more or less continues for each doubling of time. In this manner, an image that paid "x" in year 1, would pay between 1/2 to 1/4 of "x" by year 4. The question is whether it is actually closer to 1/8 or 1/16 of "x" by year 4; and this is based solely on projection and assumption. Unfortunately the industry only has lagging data from which to determine this. It often depends on who one uses for an analysis comparison. Despite the unknowns, it would be difficult to find a contributor who is not still selling images from ten years ago. The images move through distribution and continue to sell until literal removal by agent or by photographer.

  • Paul Melcher Posted Jan 5, 2015

    This denotes a complete misunderstanding of my entry. What I wrote is that the value of an image for a buyer is in the amount of audience it will bring to them. Whatever final commission a photographer makes is not of their concern.
    If photographers continue pricing their images based on cost to produce, even over a large amount of images, they are both misguided and missing opportunities. Because of this discrepancy between photographers economic needs ( ROI ) and image buyers economic demands ( pricing based on engagement), we experience massive market dichotomy resulting on increased frustration. Instagram $2 billion revenue for 2015 will solely be based on brands paying to capture an audience and not on the cost to produce images. Think about it.

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