Photography Startup Profit Calculations Made Simple
Disclaimer: This is my personal opinion and experience, and is not to be taken for legal advice. Remember the post on Starting a Photography Business on Budget? If you haven't read it, waltz on over and take a glance between diving in here. To summarize just a little bit though, we said that paying for the costs of starting a photography business with your earnings (which are taxed, so that is included in the figures below) would look something like this: Total Basic Expenses: $464 Basic Expenses Plus Equipment Investment: $864 Basic Expenses Plus Lightroom: $649 Basic Expenses Plus Equipment Investment and Lightroom: $1,062 Recurring Yearly Expenses: $560 Now let's go the extra step and say you want to be profitable as well as covering your overhead costs of operating (which obviously you do). A good business model is typically that your overhead is 30% or lower than your total cost of goods sold. So, we're going to take the numbers above, and figure out how much we need to make for each of them to only be 30% of what we're actually making. So our $348 of operating expenses after taxes was actually $464. Now let's say that's 30% of what we're actually making. So we'll divide by 3 (representing 30%) again, and then multiply that number by 10 to bring in the extra 70% we hope is our profit). Here we go:
464/3 = 154.66 154.6 x 10 = 1,546
And if you want to know exactly what the profit was, just multiple that already divided by 3 number (154.66) by 7. 154.66 x 7 = 1082 So if you make roughly 1,500, you'll be able to not only pay your expenses, but also make a $1000 profit.
Here are the rest of the numbers with the math done for you:
Basic Expenses Plus Equipment Investment: $2880 (70% profit of 2,016) Basic Expenses Plus Lightroom: $2,163 (70% profit of 1,514) Basic Expenses Plus Equipment Investment and Lightroom: $3,540 (70% profit of 2,478) Recurring Yearly Expenses: $1,866 (70% profit of 1,306) So those numbers are what you would want to be aiming to make and have a "profitable" business. Let's look at one more question to look at though: Is would it be worth it for you personally? Let's look at the recurring yearly expenses number of 1,866. Making that you'd cover your overhead and have a 1,306 profit. Let's say you're shooting at $75 per hour shoot. In order to make 1,866 you would have to have 25 shoots (just over two a month, not bad). So those are an hour each, let's say you edit for 3 hours a piece, you spend another hour total in commute there and back from the shoot, and you might spend at hour going back and forth with the client before and after the shoot. That's a total of 6 hours per shoot. 6 hours times 25 shoots is 150 working hours. Your profit is 1,306, so let's divide that by 150 hours. The result is that you're making about 8.70 an hour... Not a whole lot, but at least it's above minimum wage. I'll let you do the math on your own for the other numbers, but just some food for thought. The nice thing is, as you get better, you can continue to price yourself a lot higher and make it more worth your time. Sometimes making less on the front end is a long term investment. It certainly was for me.