Part timer pricing and CODB
Discussion
Asking for a friends because we can't get our noggins around this! The TL:DR is how on earth do you figure out what to charge as a part timer so you're not losing money?
Say your wedding photography business is coming along well and you want to drop one or two days of your full time job to focus on photography instead.
You also want to introduce a new core business element doing pet photography. You want to dedicate say 25% of your time to this venture, and then in year 2 if it takes off you might need to take more time off work so your pet stuff is now a 50/50 split with weddings, or ditch it completely if it doesn't pay off. Best we don't get into the conversation about whether to specialise or generalise, what it will do to your SEO, etc.!
How do you work out your costs and prices for this scenario? We can work most of the overheads for the obvious stuff like cameras and websites and wedding albums and such. You *know* a lot of customers aren't going to buy your cheapest package, but do you play it safe and build your prices around assuming nobody ever upgrades? How do you factor in replacing your lost income and making sure your new total income is the same as or greater than before? Do you make a target of X weddings a year and adjust prices based on that number, or do you make up prices and then set targets based off that, and how does that even work when you have multiple sets of photography business income streams/overheads? If you have a target of doing X weddings a year, and you adjust your base wedding prices to cover your minimum cost of doing business it pushes the price way up because it doesn't include pets and ad hoc income or that you might need to pay tax at the end of the year because you still earned over the threshold in your main job, so what to do about pricing for different income streams and time split.
There're so many moving parts it's hard to get your head around. Wondering if any part time photographers can share a magic formula that would make it all make sense. If it was just full time photography it would be so much easier!
Additional info:
Core income comes from weddings and pets.
You have some ad hoc photo income, around £1500/yr, from family portraits and seasonal portraits and engagment shoots and property shoots. This isn't core income, but does have it's own overheads (keeping backdrops fresh, leaflet dropping, facebook ads, budgeting for a replacement wide angle lens every few years, etc.)
You use a home studio for some ad hoc work so presumably you can claim for a share of mortgage and utilties when it comes to self-assessment time, but how do you factor it into your cost of doing business. On the one hand you want your wedding business to be self-sustaining, but on the other you can't let ad hoc costs eat into the total income thereby making weddings a loss leader!
You use your own car so probably time to start claiming 0.45p/mile for your business travel, and have the last few years of mileage recorded so you can have an educated guess at what it might be.
Do you claim for some of your phone bill since you're using your personal phone, even though it's unlimited minutes.
I guess a related question is, does anyone know a ballpark price that an accountant would charge to figure all this out for us and provide spreadsheets for recording bookings, income, expenditure, mileage, cost of doing business, year 2 and 3 targets, etc. etc.?
Say your wedding photography business is coming along well and you want to drop one or two days of your full time job to focus on photography instead.
You also want to introduce a new core business element doing pet photography. You want to dedicate say 25% of your time to this venture, and then in year 2 if it takes off you might need to take more time off work so your pet stuff is now a 50/50 split with weddings, or ditch it completely if it doesn't pay off. Best we don't get into the conversation about whether to specialise or generalise, what it will do to your SEO, etc.!
How do you work out your costs and prices for this scenario? We can work most of the overheads for the obvious stuff like cameras and websites and wedding albums and such. You *know* a lot of customers aren't going to buy your cheapest package, but do you play it safe and build your prices around assuming nobody ever upgrades? How do you factor in replacing your lost income and making sure your new total income is the same as or greater than before? Do you make a target of X weddings a year and adjust prices based on that number, or do you make up prices and then set targets based off that, and how does that even work when you have multiple sets of photography business income streams/overheads? If you have a target of doing X weddings a year, and you adjust your base wedding prices to cover your minimum cost of doing business it pushes the price way up because it doesn't include pets and ad hoc income or that you might need to pay tax at the end of the year because you still earned over the threshold in your main job, so what to do about pricing for different income streams and time split.
There're so many moving parts it's hard to get your head around. Wondering if any part time photographers can share a magic formula that would make it all make sense. If it was just full time photography it would be so much easier!
Additional info:
Core income comes from weddings and pets.
You have some ad hoc photo income, around £1500/yr, from family portraits and seasonal portraits and engagment shoots and property shoots. This isn't core income, but does have it's own overheads (keeping backdrops fresh, leaflet dropping, facebook ads, budgeting for a replacement wide angle lens every few years, etc.)
You use a home studio for some ad hoc work so presumably you can claim for a share of mortgage and utilties when it comes to self-assessment time, but how do you factor it into your cost of doing business. On the one hand you want your wedding business to be self-sustaining, but on the other you can't let ad hoc costs eat into the total income thereby making weddings a loss leader!
You use your own car so probably time to start claiming 0.45p/mile for your business travel, and have the last few years of mileage recorded so you can have an educated guess at what it might be.
Do you claim for some of your phone bill since you're using your personal phone, even though it's unlimited minutes.
I guess a related question is, does anyone know a ballpark price that an accountant would charge to figure all this out for us and provide spreadsheets for recording bookings, income, expenditure, mileage, cost of doing business, year 2 and 3 targets, etc. etc.?
I think you're overthinking this. Nothing is predictable so if you try to predict something expect to be disappointed.
If you can do weddings well (by which I mean £1,000+) I wouldn't bother with pets - unless you're no good at weddings and need the money!
I set foot in the wedding photography market rather by accident, and started off a little amateur (but this was reflected in the price). As I got better and more experienced with better kit and good reviews I was able to crank the prices up to about £1200.
The rest of your post is more about accounting and small business. If you declare 'use of home for business' I believe that's a fixed amount and you can take a hit if you sell. Alternatively think of a reasonable percentage of heat/light/phone, eg 15%, and claim that (bearing in mind you may have to justify it to HMRC). But certainly record all costs associated with the business to offset them against profit. Mileage - yes, if you're going to be driving around on business you can charge mileage, as much as you wish if people will pay it. I charged 50p/mile and nobody complained.
You don't need an accountant for this, but a good bookkeeper might be handy.
As for 'not losing money', work out what you take home per day at present. That is how much you will need to make in photography after tax to break even.
So my advice would be to let the business grow organically, and if profits get to the point where you can reduce your day job, you have that option. The slight gotcha is that, like all self-employed people, you'll be on what they like to call these days 'zero hours contract'. IE no work = no money. You might get richer, you might not, because you're only as good as your last job. Your biggest concern should be 'How will I get the work?' - and that's a marketing and sales job.
I have no idea what TL:DR and CODB are. Take photos, make money
If you can do weddings well (by which I mean £1,000+) I wouldn't bother with pets - unless you're no good at weddings and need the money!
I set foot in the wedding photography market rather by accident, and started off a little amateur (but this was reflected in the price). As I got better and more experienced with better kit and good reviews I was able to crank the prices up to about £1200.
The rest of your post is more about accounting and small business. If you declare 'use of home for business' I believe that's a fixed amount and you can take a hit if you sell. Alternatively think of a reasonable percentage of heat/light/phone, eg 15%, and claim that (bearing in mind you may have to justify it to HMRC). But certainly record all costs associated with the business to offset them against profit. Mileage - yes, if you're going to be driving around on business you can charge mileage, as much as you wish if people will pay it. I charged 50p/mile and nobody complained.
You don't need an accountant for this, but a good bookkeeper might be handy.
As for 'not losing money', work out what you take home per day at present. That is how much you will need to make in photography after tax to break even.
So my advice would be to let the business grow organically, and if profits get to the point where you can reduce your day job, you have that option. The slight gotcha is that, like all self-employed people, you'll be on what they like to call these days 'zero hours contract'. IE no work = no money. You might get richer, you might not, because you're only as good as your last job. Your biggest concern should be 'How will I get the work?' - and that's a marketing and sales job.
I have no idea what TL:DR and CODB are. Take photos, make money
Edited by Simpo Two on Wednesday 30th October 18:21
Look at it the other way, what are your costs ?
Lets say you're going to average £800 on kit per year - bodies, lenses, flashes, screens, PC for processing, storage, backup. Maybe some smart clothes for weddings ? Advertising? business cards/website etc
Per job costs - travel, publishing etc
Labour - initial consultation meetings, the actual event, processing time, handover/delivery of the end result.
Tax ?
So lets say you hope to do 8 weddings a year, so per wedding:
£100 on kit
£20 on fuel
£200 for publishing
say 20 hours labour total
If you charged £500 you're earning £9 an hour before tax. Is that enough to make it worthwhile and cover some (or all?) of your other ventures ? Probably not.
Figures are made up, but you get the point.
I guess if you price too high you won't get gigs, too cheap and you'll be innundated with requests.
Lets say you're going to average £800 on kit per year - bodies, lenses, flashes, screens, PC for processing, storage, backup. Maybe some smart clothes for weddings ? Advertising? business cards/website etc
Per job costs - travel, publishing etc
Labour - initial consultation meetings, the actual event, processing time, handover/delivery of the end result.
Tax ?
So lets say you hope to do 8 weddings a year, so per wedding:
£100 on kit
£20 on fuel
£200 for publishing
say 20 hours labour total
If you charged £500 you're earning £9 an hour before tax. Is that enough to make it worthwhile and cover some (or all?) of your other ventures ? Probably not.
Figures are made up, but you get the point.
I guess if you price too high you won't get gigs, too cheap and you'll be innundated with requests.
Crafty_ said:
Tax ?
Good point. As he has a day job which no doubt uses up his income tax allowance he'll have to pay tax at 20% on everything he earns from taking photos, maybe 40%.This is where a 100% self-employed tog has an advantage - until he gets any work, he has £12,500 net income to earn before tax!
I think you're both right - we're overthinking it. It's just when trying to approach things sensibly and think with a business head, and making sure all your costs are covered, it was getting confusing juggling the various income streams.
Simpo Two said:
Good point. As he has a day job which no doubt uses up his income tax allowance he'll have to pay tax at 20% on everything he earns from taking photos, maybe 40%.
This is where a 100% self-employed tog has an advantage - until he gets any work, he has £12,500 net income to earn before tax!
Yep, because there will still be 3 or 4 days spent on the regular job, her allowance goes there. I'm sure with some a good accountant it would be possible to set things up so your photo stuff barely makes any profit so you've no tax to worry about, but again maybe that's overthinking it and also expensive and time-consuming for a 1 or 2 day a week part time job.This is where a 100% self-employed tog has an advantage - until he gets any work, he has £12,500 net income to earn before tax!
Berz said:
Yep, because there will still be 3 or 4 days spent on the regular job, her allowance goes there. I'm sure with some a good accountant it would be possible to set things up so your photo stuff barely makes any profit so you've no tax to worry about, but again maybe that's overthinking it and also expensive and time-consuming for a 1 or 2 day a week part time job.
The accountant's fees might wipe out any saving.As for covering costs, think of it this way:
1) Travel is chargeable so you'll break even or make a small profit.
2) If you need to buy a better lens, or a powerful flashgun, simply consider how many weddings you need for payback. Maybe 2 or 3. After that you're back to 100% profit.
Costs are really very small in the big scheme of things. Once you have all the kit you need, you're charging for your time and skill - and the gross margin on that is infinite
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