Wednesday, December 26, 2012

Nickels and Dimes

No one likes to be nickel-and-dimed.  It is understood that the price you pay for a product or a service pays for all the paper clips and toner.  If you feel that you need to charge for business expenses including administrative items, you need to review your pricing structure.

I had a CPA that would charge me for emails and phone calls to schedule meetings and even for the 5 minutes it took to assign a resource to my account for a tax review (0.08 hours).  This sort of practice made me wonder why I didn't have a line item for my part of his rent, electric bill, and water usage. 

These items are overhead.  The price of doing business.  I talk a lot about the psychology of doing business online and I would be remiss if I didn't talk about charging fees.  When you charge for overhead, you give your clients the power to second guess your choices.  Every line item on your invoice is a choice for your clients.  If they don't agree with the charge for administrative tasks or the amount of time you've billed for drafting an email, it's the client's right to dispute the price.  

Consider the following two prices for professional photography:

  • Professional Photo-shoot
    • E-mail - $25
    • Pre-session Prep - $25
    • Studio Fee - $50
    • Equipment Fee - $25
    • Photography Fee - $150
    • Image Sorting - $40
    • Image Backups - $25
    • Photo Editing - $250
    • Photo Processing - $35
    • 5 8x10 Prints - $50
    • Total - $675
  • All Inclusive Professional Photo-shoot
    • 1 - 1 1/2 hour Photo Session - $675

In the second option, "All Inclusive Professional Photo-shoot," you look at the photographer's previous work and decide if it is worth $675 for professional photos.  In the first option, you see that it's over $400 for photo sorting and editing.  Being the Photoshop enthusiast that you are, you begin to wonder if its worth $400 for someone else to edit and print the photos.  Couldn't you save $400 if the photographer just gave you the memory card after the shoot?

Breaking down your fees and charging for each item delivered makes it harder for your clients to judge the value of your work and harder for you to make the sale.