What To Do When Competitors Discount Prices

Posted on 8/16/2019 by Jim Pickerell | Printable Version | Comments (0)

An editorial stock agent tells me that he is trying to hold the line, or increase, the prices he charges for images because his providers tell him that their costs are increasing. Meanwhile, a competitor who is offering dramatically lower prices in an attempt to win customers has entered the market. As a result, the agent's providers are seeing poorer sales.

He asks for advice as to what he should do? I’ll give some answers, but I also want to invite my readers to chime in with any thoughts they might have, or strategies that have worked for them.

Unfortunately, in this market we are seeing huge and growing oversupply relative to demand. Lots of new photographers trying to break into the market which makes it very difficult to maintain existing prices. Raising them to cover costs is almost impossible.

Getty tried holding the line on prices in the period of roughly 2009 to 2012 and they couldn’t make it work. They were forced to start lowering their prices in order to hang onto customers. Now, their average prices are about 10% of what they were in 2006.

The first thing to do is accept that you’re going to see some loss of customers and try to cut your agency costs as much as you can. Also, warn your providers of what’s coming and encourage them to do everything they can to cut their costs. I realize you’re probably already doing this.

Second, try to help your providers make more efficient use of their time. Show them exactly what images are selling so they can begin to focus their efforts on producing more of the type of imagery that is actually in demand and not waste time covering events, or producing images that no one seems to want to buy.

This may be hard to do because the people whose images are selling won’t want competitors to know what works for them because then their competitors may produce similar images and the original seller may lose future sales of the image that sold first. On the other hand, hopefully the photographer who made the original sale will learn enough from knowing what others are selling to adjust his work habits and be more productive overall.

Also, explain to your providers that in the final analysis it probably isn’t advantageous to try to match the competitor’s prices to make more sales. Chances are that you won’t make enough additional sales to offset the lower prices. That’s certainly what happened with Getty. They are now licensing about 6 times as many Creative images as they did in 2006, but the gross revenue for the sum total of these licenses is only about half of what it was in 2006. And they are paying a lower royalty now. And they have about 16 times as many images in their collection as they had in 2006.

More images doesn’t necessarily generate more revenue. It is having the right images.

Copyright © 2019 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 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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