are you charging the right prices?
Pricing is a huge part of your business. So why do so many birth professionals shy away when it comes to the topic of pricing? Birth is not a get rich quick kind of job, but if we are not charging the right prices it becomes nothing more than a hobby.
How do you set your prices? So many photographers select prices based on kind of random numbers. Maybe it sounded like a good number or maybe you know someone who charges that amount. This is not the best way to set yourself up for success in your business. You need to make sure your prices are realistic, profitable, and appropriate.
How to price
THERE ARE SIX MAIN FACTORS THAT SHOULD INFLUENCE YOUR PRICING.
1. The quality of your work and your finished product.
2. Your perceived value in the marketplace and the perceived value of your products/services
3. How confident you are as a birth photographer
4. What your competitors are charging and what the market will bear
5. Your cost-of-goods
The basic factors of quality, perceived value, and confidence are intangible factors.They are subjective. These are the basics of what you consider when coming up with what you are worth. (Read our Blog 5 Reasons to Charge What You Are Worthwww.betterbirthbusiness.com/babes-blog/5-reasons-to-charge-what-you-are-worth.)
Competitive pricing is important to note, but not the only determining factor. You don't want to just set your price at your competitors. Be aware of what other people are charging in your area for similar services. If you throw out your own price points without understanding your local market you could miss the mark and clients may consider you to charge an unrealistic price.
One of the often over looked price factors is cost-of-goods. This includes not only any physical items that go into your work, but also your time. So many birth professionals do not factor in how much time they spend doing things for a client as a factor of cost. How long did you drive to and from the birth? How many times did you meet with the client before the birth? How long were you at the birth? How long did you prepare material for education? Did you take photos and edit them? Often times all of these things adds up to 30 hours or more.
Most birth businesses do not have a large overhead cost expenses if they don't have their own office. It is the beauty of free lance birth work. Small expenses can add up if you don't account for them in your pricing. Will there be fees to park at the hospital? Did you need to hire a sitter for the duration of the birth? If you hire a sitter for $20 an hour and you are only charging an average of $20 and hour it would be like going to a birth for free. These are considered variable costs and only occur per birth.
Fixed costs on the other hand would occur if you book a client or not. This includes utilities, taxes, equipment, education, software, and so on.
Lets do a small break down real quick.
$60,000 annual wage
÷ 50 working week
÷ 40 hours per week
÷ 60 minutes per hour
= $.050 per minute
If our per-minute wage is $0.50, and you put a total of 30 hours in a birth, then your labor and hard costs for the birth come to $900. It is hard to base our prices off an fairly unregulated profession as we will use photography standards as our model. If we operate under the pricing model from the Professional Photographers of America than 35% of our revenue should be variable costs. The remaining 65% is eaten up by fixed costs and business profit.
In this scenario you multiply your cost of $900 by 2.85, which gives you a finial product price of a birth shoot at $2565.
Let's stop there for a minute. Many of you may be saying that $2565 is outrageous and you couldn't book clients at that rate in your area. That's ok. You've just hit on the other "influencing factors"
These are important discussions to have. Maybe with these three influencing factors you come to the conclusion that somewhere in the $1500 range is more appropriate and realistic for your price, and that's okay. You would need to price other similar products like placenta encapsulation at a higher mark up or offer a higher price point package to balance the lower mark up on the birth itself.
This is where you get to figure this out for your business. First, calculate what your per-minute wage is (annual salary ÷ 50 weeks ÷ 40 hours per week ÷ 60 minutes per hour).
What do you desire or need your annual salary to be? Some only need a part time income while others need to bring in a full time income. The average american salary is around $50,000. Don't sell yourself short here. Aim for what you want and what you need, not what you think others would find reasonable. If you think $100,000 a year is what you need and want than plug that number in. Granted you may need to add additional streams of income in order to make it work based on perceived value and competition. But know that it is not impossible.
next, determine your labor costs by recording (or guessing if your new) how much time goes into production of the finished product then multiply that time by your per-minute wage. Determine material costs by adding in hard costs associated with the product. Add these two costs together to get the total cost of your product.
Multiply your total costs by your mark-up of 2.85.
Adjust your price if necessary to be in line with your quality, confidence, perceived value and local market area.
This may seem like a tedious process, but it is crucial to the long-term success of your birth business. Repeat this process for each and every one of your products and services.
If you are looking for other streams of revenue check out our post on 15 Streams of Revenue for Your Birth Business.