Ten years ago, wedding photographers Cal and Al started their own business. Their style is extremely similar and they often photograph for each other. Both use the same equipment, their photos look the same, yet Cal is charging twice the rates Al can command. Why? Because Cal increased rates every year while Al was afraid to do the same.
Ten years down the road, Cal is booking expensive weddings while Al is still offering deep discounts to book price sensitive brides who nickel and dime him.
“In the first years, it was terrible” said Cal. “I decided to raise my prices every year. The sad part was that I would never book a referral couple. Having started shooting for free, it was not tough booking a $500 wedding, but we all know it is impossible to survive at such abysmal prices in NYC. Once my prices increased to more normal levels, no referral couple booked me. That lasted for 2-3 years and now I have no such issue.”
The challenge was how to convince a couple whose friend paid $500 two years ago that his services were now worth $3,000. It is a well-known fact that people of similar means gravitate towards each other. In other words, if your close friends make $100k, there is a very high probability that you make a similar amount.
Invariably, a price conscious bride, referred another friend who was also looking for a good deal.
If you cut your prices, you alienate former and future couples. Only the bride who is getting that juicy 50% off will be happy, but she will tell everyone about that. Your old clients will be outraged to hear they overpaid for your professional services!
You will be inundated with calls for refunds or nasty emails if the words go out that you “overcharged” your clients. After all, wedding photographers sell their services as an “investment” that will be worth more in a few years. Can you imagine how you would feel buying a house who is worth 50% in only a few years after you moved in?
The negative publicity will be so bad that you will not receive any referrals from former couples. Even worse, even in a city like New York, the wedding photography is a small world where established professionals know each other and no reputable company wants to be associated with a vendor with a bad reputation just in case it rubs off. That is a phenomenon called a negative image by association.
Also, most of your customers will ask themselves. If you dropped prices during the last downturn, why cannot you do it now?
While you might think dropping your price is temporary, think again! When was the last time you willingly paid extra for the same product and service? Your brides will boast on forums about the amazing deal they got, and many new inquiries will aim to obtain the same price.
The best course of action is to keep your prices untouched, even though that might be hurting you at times. However, over the long run it will be well worth it. Trust us!
If you remember your Economics 101, there is a concept called price elasticity that states that a lower price will generally drive an increase in volume purchased. That definitely applies for commodities such as grain or gas…but not in wedding photography. Wedding photography is not a commodity because if it were, everybody would charge virtually the same price.
The same above mentioned photographer Cal told us that one year his prices were a bit too high, and he decided to give clients a bit of a break to book more weddings. As such, he offered a 20% discount as he wanted to shoot more. The result? He photographed the same number of weddings as the previous year at 80% of the price.
You need to photograph 25% more weddings to compensate for a 20% price drop.
When you drop rates, your costs remain the same, and your profit margin suffers a terrible decline. The pricing expert Rafi Mohammed, in his book “The 1% Windfall How Successful Companies use Price to Profit to Grow” the author demonstrates that in most industries, a 1% drop in price drives a 13% drop in profitability. As wedding photography is a higher margin business, we would argue that 1% price drop drives at least a 20% decline in profit margins.
While your profits suffer and you might survive the decline for a short period, in the long run, price discounts spell trouble.
You won’t be able to compete in an already over saturated marketplace. You won’t be able to advertise, buy good equipment and offer the same level of quality.
You will never see Apple, Tesla, and other iconic brands slash their prices drastically. Why? Their image will be tarnished and it will take them years to recover. If you want to build a successful company, think like you already run one.
Price discounts are a slippery slope. You start offering promos and soon after, the promo price becomes your new norm. Clients expect that and never buy full price services. Rather, they will wait for the next promotion. Like a drug addict, you will get satisfaction (new business) only when you get the next “discount fix.”
If you have been offering discounts for a long period, you are addicted to it and need to go through a detox period. We know that will hurt like crazy, but over the long run it is the only viable solution.
In 2020 Valentino dresses are deeply discounted, sometimes by up to 70%. Now, while in the short term the premium brand will boost sales volume (not revenue and profit but the units sold), that has a disastrous effect in the long run. After all, who is crazy to pay a whopping $40,000 when the same dress can drop in the future to $12,000?
Even worse, many affluent people buy premium brands exactly because only a few can afford them. After all, if one wants to look unique, she will pay extra for that, but expect very few others to afford that product.
That is why in the future a premium brand might lose its clients who will never buy it again, as now everyone can afford it.
If you could buy a Van Gogh painting for $1,000 will you still consider him a great painter? Absolutely not! The magic of high prices is that very few people can afford them, and they are an integral part of the brand identity.
I bet if you see a brand new iPhone for $100 you will not buy it as there might be something wrong with it.
Cognitive dissonance is a state of having contradictory feelings. This is what happens when a bride visits your website. Your work is stellar, you have plenty of weddings posted on your website, but your prices are too low. On the one hand, the bride feels good about the images, but your cheap rates worry her. Are you in financial trouble? What if you go under and won’t document her wedding?
When couples experience mixed feelings, the natural result is that they decide not to buy. How many times you just postponed a purchasing decision because “something did not feel right?”
Sometimes you simply have to offer a lower price. For example, you don;t have money to pay your rent and have to book a client or you go under. IF that is the case, it will be silly not to do everything in your power to survive a terrible downturn such as that caused by COVID-19.
Here is what you need to do: Use discount channels to promote your services. I am thinking of advertising your services on Craigslist for example.
Also, build price fences so that old and future clients are not alienated. Make sure you make it clear the price is a limited time promotion that will not be extended. To protect you further, you can even ask your clients to sign a Non Disclosure Agreement whereby they can not share the price with anybody.
Alternatively, launch a new brand such as Econo Wedding Photographers and shoot cheap weddings using that brand. Ideally, you send one of your second shooters so you are never associated with the discount brand.
Offer a better value but don’t cut prices! Instead of cutting prices, offer your clients more hours on their wedding day: a free engagement shoot, a free post wedding photo shoot or a maternity shoot. Even more, you could offer a $100 credit towards the purchase of a new product or service (album, maternity or family photo shoot, etc.) Those are high-value items that cost you very little but can help you book the next clients.
The reference price is the lowest price your couples paid for your services. By maintaining the reference price unchanged, you are preserving your margins and providing more value by offering the services we mentioned above. After all, the brides ask…” how much did you pay for your wedding photographer?” and not what items were included in the package. Nobody remembers the add-ons, but everybody remembers the reference prices.
By offering a 10% for each new bride referred, you can in effect offer a price reduction and grow your business. So next time your bride is asking you for a 30% discount, ask her to refer you three friends and if you book them, she has a deal!
Wedding photography is a marathon and not a sprint. The companies who think long term will be the ones surviving and emerging stronger from downturns.