Have you ever wondered why the biggest photography companies serving…
by Chris Wunder, Cr.Photog.
When you’re just starting out in team sports photography, you quickly learn that sometimes it’s not the quality of the photos we provide to players and parents that determines who gets the opportunity to service the league. Sooner or later, you’ll be faced with a request to “rebate” a portion of your revenue as a fundraising contribution to the league, association or school in exchange for the privilege of being their exclusive photography provider.
Whatever your opinion is about the ethics of league “commissions”, the reality is that sports
photographers often find it necessary to meet (or beat) the competition’s offer of financial support to the league to secure the business. This is especially true for photographers just entering the sports photography business. This support can take many forms- complimentary team photos for coaches, plaques for sponsors, paid advertising, team sponsorships, or cash rebates for league fundraising.
Cash rebates or commissions (never call them “kickbacks”) might be offered as a fixed amount per package (typically $2-$3) sold, or may be expressed as a percentage of sales (less state and local sales taxes) collected from photo sales (typically 10%-20% of sales) Sometimes the league might expect a combination of these, but remember that the rebate is often negotiable. Just as the league often feels it’s in their best interest to negotiate the best deal for themselves, it’s in your financial best interest to weigh the total cost of these rebates on your bottom line and bargain accordingly.
Many successful sports photographers use a technique called “net pricing” to leverage the value of the commissions requested by leagues and provide a competitive edge to the photographer.
Here’s how it works.
Calculate your overhead cost to provide your service to the league. Try not to forget anything including labor, freight, marketing expenses like flyers, etc. Total this amount and then divide it by your estimated number of buyers you expect for the sport and age group you are photographing. This represents your average overhead expense per player that buys photos. (Hint- many photographers use a 75%-80% buy-rate for team sports serving youths age 12 and under, and lower buy-rates for older players).
Add the overhead cost to the photo finishing cost for each basic package (excluding add-ons) you offer, plus a reasonable profit based on its’ relative retail price. Naturally, you should add more profit to a big package then a small one. This becomes your NET “wholesale” price per package – covering all costs plus your profit.
Once this homework is done, the rest is easy. Whenever you must rebate goods and services to the league to secure the business, divide the total costs associated with this by the number of buyers you estimate. This determines the cost, per buyer that must be added to your package prices to cover this expense, thereby securing your profit margin on each sale. (Chris Wunder’s NET Pricing Excel file along with over 70 other school photography, sports photography and event photography marketing templates is available for purchase. Contact Chris at firstname.lastname@example.org for information).
While not the only method of budgeting league rebates, the Net Pricing Strategy is a good place to start. As you gain experience and a good reputation for quality, value and service, you should be able to build your profit margins gradually, negotiate a more favorable arrangement and perhaps eliminate some of the complimentary items altogether.
Another idea popular in some parts of the country is to provide an alternative “value-added” product the league wants that often replaces something they might buy out of league funds. This might include player trophies or roster books (programs). This idea might allow you to leverage the wholesale to retail price markup to your advantage; providing products high in value for less than what a cash rebate might be.
To see more of Chris Wunder’s educational content check out his School Photography and Event Photography DVD sets