In another tip, I mentioned that the photographer’s consultant Mary Virginia Swanson said the photographers she knew who were doing the best right now were the ones who had negotiated the best deals in the past, deals that had the clients coming back to photographers for extended uses.
I’ve always found I’m strongest in negotiations when I understand the process of the negotiation and have a real belief in what I’m negotiating for. I’d like to share my thoughts about negotiation and encourage you to extend them to your own work.
Anchor Your PriceUnderstand yourself and what you need and why you need it and your negotiations will be more successful. Success is not always about reaching an agreement. An agreement that doesn’t meet your needs is not a win. By understanding what your needs are, your position in your negotiations will be much stronger.
I approach all negotiations with the belief that the other party and I are first trying to establish a price range, and we will negotiate to find out where in that range we are both comfortable. When the other party offers you a price they are establishing the bottom of the range. “We only have $400 in the budget,” means they will not pay you less than $400. The “We only have” part is to try to anchor you to their amount, to make you believe that what they are saying is true, and you should accept it.
Now it is your turn. You need to set the top of the range, and to make the reasoning for your price so convincing that you will anchor them to your price. You may not get what you ask for, but the more convincing you are of why you are asking for the amount you are, the more likely you will settle closer to your price than to theirs. Be sure to set the top of the range high enough to have room to negotiate. If you ask them for the amount you expect to get, you are setting the top to negotiating range there. You will only get that amount if they don’t negotiate. Any negotiation will get you less than your expected amount. Leave yourself room!
It’s important also to put yourself in the position of the photo buyer. Try to understand their position. I read something once a photo buyer said that I think is often true, “I’m not so concerned about the amount, I just don’t want to pay more than anyone else is paying for the same use.” It is your job to convince the buyer that your image has a unique value compared to the competition, Microstock or the images they might find from other sources. The fotoQuote Pro Coach is loaded with information on doing this.
“Because”Next, I’m going to throw in some magic, a magic word to be specific. The word is “because.” Many times, if you use the word “because” opposition will fade away. Try it any time you can. What you say doesn’t even need to be logical, just use the word “because.”
In the days when I handled all the software support and order taking myself I occasionally had problems with a few photographers who were having a bad day. I had the habit of being careful about getting names right and I’d ask the customer to repeat their name, or I would repeat the spelling back to them, just to be sure I got it right. This made some customers impatient with me until I started saying, “let me repeat that because I’m left-handed.” The response was always, “Sure, sorry.” The “because” worked, even though it didn’t really make sense. This story is absolutely true.
You need a great “because” when you set your upper range. You’re saying, “I won’t charge you more than this amount for this job, with these parameters, and I need this amount because…”
The best “because” is to understand what it costs you to be in business, to understand what you need for each shooting day to break even.
Know How Much You Need To Make A ProfitI feel the best way to understand where I’m at in a photo negotiation is to accurately know how much I need to make per year to break even, to just pay the bills. I divide that amount by the number of days I expect to work and use that amount as my daily creative fee per job. Going below this amount for this fee is not negotiable. If I charge less, it won’t pay the bills. I understand this, I’ve seen it, and I believe it. It puts me in a strong position to be convincing. Many of you are already doing this. The trick in using this method in the negotiation is to think of this amount as the minimum you must have as a creative fee per day. Go below this amount and you won’t be paying your bills. Believe it!
So much for the overhead. Now for the fun part. Your profit!
Next, I use fotoQuote to calculate the usages that the client requests. Here I need to be creative based on what I think the client can bear, and how I gauge the competition. It might be the full fotoQuote stock usage or a percentage of each usage.
The usage part of the billing is your profit. If you think of it this way, will you want to give away your profit (usage) to a Rupert Murdoch, or a bunch of corporate lawyers? I doubt it. They don’t need the money, you do. You’ll fight for every use of your images. Every time your client is using something that you created to put more money into their pocket, you’ll want to profit as well.
So here’s the trick. When you see “creative fee,” think, “overhead.” When you see “usage,” think, “profits.” The next time a client sends you a contract demanding “all rights,” think, “all of my profits.” This should put you in the right frame of mind to negotiate.
If your client resists the creative fee/usage concept, first, try to explain to them how it is their best interest to pay only for what they need at this point. If they absolutely refuse to go along with it, still use this method to calculate the fee for your own understanding as creative fee/usage so you know where you stand, then add them together once you are convinced that you are covering your expenses and making a profit. This is the mindset you might want to have when you go into a negotiation. Know where you stand to the point you can say, “I need this because…” and be believed.
Calculate Your OverheadTo calculate your overhead you can use the Schedule C from your last year’s tax return (this is the business profit and loss part of a U.S. taxpayer’s tax return) to find out how much it costs you to be in business.
Also, there is a handy calculator at NPPA that you can use to help calculate your Cost of Doing Business (CDB). Click here for NPPA’s CDB Calculator.
This subject is expanded in the Assignment Coach of fotoQuote Pro under the topic: Day Rate, Per Shot Fee, Creative Fee.
Prepare yourself and believe in yourself.I also suggest that you become familiar with your business and good photographic business practices. I had John Harrington’s first edition of “Best Business Practices for Photographers.” I read there was so much new information in the latest edition that I just bought it, and it’s true. This book will help you understand yourself in relation to your business. This understanding will give you a great amount of power in your negotiations, and there are examples of responding powerfully to client’s requests.
John doesn’t know I’m plugging his book. I’m doing it because for many of us, and I include myself, it’s a great reference source on doing the business of photography.
For more information about John Harrington, check out his blog.