Basic Principles For Pricing Stock Photo Uses

Posted on 12/13/2009 by Jim Pickerell | Printable Version | Comments (0)

The following are some principles that apply all types of stock photo sales.

The base numbers on the pricing schedules on this site are average rates for one-time, non-exclusive use of a single image by the smallest of companies, and assuming that the image has no unique factors that would make it more valuable. These numbers are equal to U.S. dollars and are reasonable rates for commercial use of the average professionally produced stock image. Other currencies should adjust accordingly. Photographer should be aware of the existence of similar microstock images that might fulfill the customer's requirements if exclusivity is not an issue for the customer. In such cases the photographer may find it necessary to negotiate a lower fee.

IMAGE UNIQUENESS



For an images that is very common you may want to reduce the price by as much as 20% below the base number quoted. To calculate this price multiply the base number by .8. For an extremely unique image you may want to add up to 50% to the base number. To accomplish this multiply the base number by 1.5.

MINIMUM SIZE



For the purpose of pricing stock photo uses the minimum size is always 1/4 page. Anything smaller is figured at the 1/4 page rate. When the use is a larger size the price is usually a multiple of the 1/4 page rate. These multiples are roughly calculated as follows:
  • 1/2 page is normally an additional 25% of the quarter page
  • 3/4 page is normally an additional 50% of the quarter page
  • Full page is normally an additional 75% of the quarter page

  • SIZES OTHER THAN THOSE LISTED


    Sizes other than those listed in the charts are usually calculated as follows:


  • Double page is 75% more than full page
  • Cover is an additional 50% of full page
  • Wrap Around Cover is double full page
  • Back Cover is 75% of the front cover

  • MULTIPLE INSERTIONS


    Pricing multiple insertions can be complex. It is important to take into account that the price for the first insertion in each unique publication should be higher than additional insertions in the same publication. For instance the following two scenarios should be priced very differently:

    (1) Use of an image in a print ad for 5 insertions in Time Magazine. In this case, each additional insertion is going to be seen by much the same audience - Time subscribers - as opposed to a whole new audience with each insertion. Also, your client is probably getting a discount on ad space by buying 5 insertions in the same publication.
    Pricing: We would charge the full space rate for the first insertion and price each additional insertion (4 in this example) at 10% to 15% of the first insertion. (The greater the number of total insertions the lower the additional percentage should be with 10% being for anything over 25 insertions.) (2) Use of an image in a print ad where the ad is printed one time in each of five magazines which are Time Magazine, Business Week, Newsweek, Field and Stream and Vanity Fair. While there are still five total insertions, the client is reaching a much larger and more diverse audience than was the case when the ad was used five times in the same magazine. In addition, your client will not get any breaks on ad space since they are only buying one insertion in each publication.
    Pricing: We would charge the full space rate for the first insertion and price each additional insertion (4 in this example) at 35% to 50% each. Base the first insertion rate on either the circulation of the largest publication (if they are all similar in size), or the average circulation (if they vary greatly). Based on the above parameters, we would use a simple chart (shown on the following page) to price multiple insertions in multiple publications. In a different example we will make the following assumptions: an image 1/4 page in a print ad with 2 insertions in PUB 1 (circulation 100, 000), 3 insertions in PUB2 (circ. 2 million), 5 insertions in PUB3 (circ. 20,000), and 1 insertion in PUB4 (circ. 650,000).

      Insert 1 Insert 2 Insert 3 Insert 4 Insert 5
    PUB 1 770 116      
    PUB 2 385 116 116    
    PUB 3 385 116 116 116 116
    PUB 4 385        

    Average circulation 692,500 Total for all insertions = $2737

    *Additional insertion (after the first) in all publications should be 10% to 15% of the full price insertion. That is still a great deal! You can also argue that they are getting a total of 11 insertions for less than $250 each.

    It is important to understand how large your image will appear in relation to the newspaper ad. If the image will appear 4”x5" in an ad that is 4”x5", your price should be based on the 1/4-page rate above. However, if the imago will appear 4”x5" as the only image in a full-page newspaper ad, the image may have much more impact in drawing the reader into the ad. In this case, you may want to base your price on the full-page fate above, as your image is really carrying more impact than in the former scenario.

    If a client asks for unlimited insertions in a particular newspaper for a period of time, keep in mind that you would be allowing them to put their ad into that newspaper everyday for that period of time. This can be more valuable than unlimited insertions in a. monthly magazine for the same period of time, where the ad would only be placed once a month.

    Co-op Advertising

    Manufacturers and Retail outlets share the cost of advertising. It is difficult to monitor. One photographer received $3,500 for one year unlimited use of an ad prepared by the manufacturer for retailers to use in their local area.

    MULTIPLE SPECIFIED USES

    Normally, when the buyer wants to make several different types of use of the same image such as a brochure, a postcard and a poster each use will be priced separately, and quoted as a separate item. A small discount of 10% to 20% on the total combined figure may be appropriate, if the combined usage is large.

    MULTIPLE UNSPECIFIED USES

    Some buyers request an image for an initial usage, and then want to be free to use the image in a variety of other, unspecified ways. This is always dangerous for the seller, but sometimes necessary.
    In such cases, keep the license as short as possible and avoid buyouts. The license can be renewed after the initial term, but the owner of the images should have the right to reopen negotiations, review how much use has actually been made, and renegotiate a new fee. 6 months 2 times the highest possible advertising price
    12 months 3 times the highest possible advertising price
    18 months 4 times the highest possible advertising price
    Multi-year prices should increase on a proportional basis if the use continues at the same level. (In this case there are no limitations on the seller to license usages to other buyers during the same period.)

    MULTIPLE IMAGES IN ONE SALE


    When you sell several pictures at one time, resist the tendency to average out the cost. Price each image and each usage differently. The bottom line may be the same but it is important to constantly reinforce the principle that different images have different values. Consider the long-range effect if the client comes to believe that the quarter page price is the same for all images, no matter how difficult they were to produce, or how unique they happen to be.

    You establish a "commodity price" mentality for your images when you price the following at the same level for a given size and circulations: an average available-light street scene, a group of model-released business executives, an elaborate special effects shot that required days to set up in the studio, and a foreshortened shot that required a 600mm lens to produce.

    Take time to explain. Take time to itemize the invoice. A few minutes of client education now may result in additional dollars in the future. Remember, a negotiation is not just for this image. It is part of a long process of educating clients. It is establishing policies and principles for the future.

    EXCLUSIVES

    A client may want to make sure that the image they are licensing will not be used by one of their competitors while it appears in their literature or ads. If so, they would need exclusive rights which would mean that you would have to refuse a sale of that image to anyone (sometimes just in a particular industry) for a period of time. This is not necessarily a total buyout, but the price will be higher to account for possible lost sales you may incur.

    While the premise on which the stock photo industry is built is the need for one-time, non-exclusive rights to photos, most sellers are willing to negotiate an exclusive rights deal if the buyer is willing to cover the anticipated loss of income as a result of not being able to make the image available to other buyers.

    BUYOUT

    A buyout means that the client will have the ability to use the image in anyway they choose (unlimited use) in perpetuity (forever), and we are not able to sell the image to any other client ever again (exclusive).

    Sellers are regularly getting $15,000 to $20,000 for unlimited use of an image in advertising for one year. In perpetuity is forever so it is worth a lot more. On the other hand major advertising clients who are planning major long range use o f an image that will become identified with their product may need these rights.

    In most cases, the needs of the client can be met with unlimited and exclusive usage for a defined period. Buyouts are usually unnecessary. See page 300 for more information on buyouts.

    MINIMUM PRICE

    We used to recommend a minimum charge of at least $200 for any rights-managed use of a single photo in the smallest size. Given the cost of being in business, and the likely number of sales per year of the most efficient operation, there are few, if any, individuals or organizations that can make enough to pay for their time invested if they do not charge at least $200 for a single usage. Prices for specific usages range up from this point.

    That recommendation seems ridiculous today because many agencies are making a majority of their sales for prices below – and often significantly below – this number. The photographer only gets a percentage (often less than 50%) of what the agency gets for such a sale. For most photographers only a very small percentage of the sales their agencies make for them are for fees of $200 or higher.

    Lower fees might be acceptable if the number of units being licensed was increasing dramatically. But, that’s not what is happening in the rights-managed arena. For most the number of sales is declining due to volume and competition. So how can the photographer charge $200 if the agencies are charging so much less?

    In some cases the customer will really need the image and the prices we have quoted are fair even if they seem high by some standards. The best position for the photographer to take is that he can’t be responsible for what others charge and the way they operate their businesses, but that based on the number of images he can license in a year, and his costs of doing business, charging these fees are the only way he can stay in business.

    RE-USE AND REVISION

    When publishers want to re-use a picture several years after the original use, they often send the photographer a notice asking that they invoice for 75% of the original fee. In fact, it should be 75% of the current fee, which will probably be somewhat higher. The 75% is for one additional press run of the same size or an additional one-year of usage. If the situation is for multi-years each additional year should be 75% of the first year fee.

    CONSULTATIONS


    In the event that you want to discuss the specifics of a particular use Jim Pickerell is available for telephone consultations at 301-251-0720. The fee for such consultations is $2.50 per minute. Most only take a few minutes.


    Copyright © 2009 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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