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.


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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 301-251-0720, 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.  

Comments

  • 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.

    http://www.jaaknilson.ee

  • 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
    Jim,

    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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