You've gotten the email that includes those three famous words: “What's your rate?” These can either be thrilling or dreadful, depending on your level of experience and your comfort level with setting your own value.
We've talked about rates as a photographer and general approaches to price your work. There are many aspects that should go into pricing, such as image licensing, the scope and impact of the work, and more.
When a prospective client asks for your rate, it can mean different things. But ultimately, they want to get to understand your “standard” pricing for a given type of shoot. And for most photo shoots, you might break it down into a day rate or inclusive rate for that type of job.
Understanding that there are many other aspects beyond pricing for time as a photographer, it's a good general rule to have a day rate in mind. This is the valuation and consideration of opportunity cost for your time.
So, how do you set a day rate? Let's dig in.
How Freelancers Charge for Time
Freelancers can charge for their work in a number of ways. These structures can include:
- Hourly
- Project based
- Contract/retainer
While not all income can be directly associated with measurements of time (licensing fees can be completely independent of the work or time required to produce an image, for example), we still have to account for our time and its correlation to value.
After all, we have limited time and time spent on work should be proportionate to income from a business sense.
As photographers, we spend time not just making images, but concepting, art directing, doing pre-production, location scouting, editing, processing and so much more. The aspect of time is also important when it comes to understanding consistency of work and its impact on how you must charge as a freelancer.
When a photographer has a day rate of $1,000 or $10,000, it might sound extremely high to someone who has a salaried day job. After all, someone who has an office job making $75,000 a year is making roughly $300 a day.
However, as a freelancer, you're covering your own equipment, insurance, withholdings for taxes, and every single other expense as a business. The rate you charge for your time has to cover all of these costs as well as ideally give you the ability to save money as well.
Moreover, you don't have the consistency of a 9-5. The frequency of stable work as a salaried employee in a conventional job is what offsets the lower “day rate” compared to what a freelancer must charge to achieve a livable wage.
Typical Day Rates for Photographers
While a cost of business calculator is one method for arriving at a minimum rate, there are other factors to consider, such as market rate for your specialty and region.
Day rates can vary dramatically, depending on the type of client and the need. On the low end, an editorial client might pay close $1000 for print but only $500 for web use, while a commercial client might be happy to pay a $3000 or even $10,000 day rate.
In a larger market city like NYC or LA, it can be common to expect a day rates starting at $1500 for photography. These are higher cost of living areas, so this day rate reflects that. This rate may include limited promotional licensing, but not direct sale commercial licensing, buyout, or other extensive licensing rights. These further rights would generally be further negotiated or a separate licensing fee.
If you're living in a larger market, I feel a good rule of thumb is to value an 8-hour day at $1200 as a starting point. I love A Photo Editor's pricing and negotiations category for referencing rates as well.
Similarly, A Wonderful Machine's pricing and negotiations archive is a goldmine for real world estimates. Many of these estimates include project/creative fees instead of strictly day rates, but this data is nonetheless invaluable for helping formulate an idea of how photographers can structure their rates.
If you want to stop reading right now, charge at least $1200 a day for your time. Want to get into the details? Let's talk cost of business calculators and how they can give you a clear idea of how much you should charge based on your lifestyle, business and income goals.
What is a Cost of Business Calculator?
A cost of business calculator is a tool for determining how much you should charge in order to meet a net income when factoring in cost of living and business expenses.
Why is the cost of business important? Unlike a normal salaried job, where many of the costs of doing a job are covered, if you're a full-time freelancer, you're paying for these costs out of pocket in most instances. Your office, computer, equipment, insurance, utilities and all other costs must be covered.
The value of a cost of business calculator is helps you define all of your expenses. When you factor in your desired net income with a realistic expectation for work as a freelancer, you can get a very clear idea for how much you need to charge for your days in order to meet a sustainable living.
Example Cost of Business Calculators
There are many tools for calculating the cost of business. Here are a few that I like.
NPPA Cost of Business Calculator
The National Press Photographers Association has a great CBC that is dedicated to photojournalists, but can easily be extrapolated to general photography. It's nice because it breaks out what is essentially a day rate, a common standard for many types of photography.
The Freelance Rate Calculator (direct Google Sheets link)
This is a comprehensive spreadsheet that covers general freelancing. Best of all, you can make your own copy of the sheet so you can update it and easily reference it without having to re-input data. I like this sheet as it gives the projected rate you need to charge given a volume of expected work to break even, and then, based on savings/retirement goals, how much you need to charge to achieve that end.
Millo Freelance Rate Calculator
I like the Millo Freelance Rate calculator because it has fields for general project based work in addition to accounting for billable hours/days. In addition, it clearly breaks down savings and retirement figures, which is something that all freelancers should ideally be able to strive toward.
Using a Cost of Business Calculator
Before you use a cost of business calculator, there are few key factors you should consider.
- Annual net income goals
- Estimated time worked targets
- Savings goals
- Retirement goals
- Expected average expenses
- Frequency of work
We'll look at a few of these elements, such as things to think about when setting income goals, savings targets, typical expenses and so forth.
Estimating Typical Expenses
MIT's Living Wage calculator, also gives average costs for common expenses such as food, utilities and so forth based on location. If you don't have historical data for your own expenses, you can use this info to help estimate your own cost of living for calculations.
If you use a service like Turbo Tax or otherwise have access to your tax history, you can look at past tax filings to get a good idea of expenses based on business deductions.
Photographer Specific Expenses
Being a photographer not only requires specific skills, it also requires specialized equipment and hardware. Cameras, lenses, computer, software and more. These are hard costs that you should consider. When you determine your annual costs, think about your upgrade cycle and how often you buy new gear.
Make sure to factor in repairs, new computers, new camera bodies, etc. Average these costs out over your expected upgrade cadence and set a rough expense estimate. Then pad it in case you have unexpected damages or out of warranty repairs, or need to buy or new gear unexpectedly.
Minimum Livable Wages
One good reference is the the Out of Reach report by the National Low Income Housing Coalition. This report details minimum state wage cross-referenced with average rental prices, establishing a housing wage rate.
The calculations for each state are based on the “30 percent rule,” the guideline spending up to 30% of income on rent/mortgage is sustainable, while paying more than that creates a burden to afford necessities such as food, clothing, transportation and medical care.
For another data point, MIT's Living Wage calculator, they state $33.31/hr as a livable wage in NYC for a single adult. You can use this resource to source your suggested cost of living data based on location.
The 30 percent rule can be a good guide for your own savings goals as a freelancer as you use a cost of business calculator. These target rates from the NLIHC are for housing specifically, as well as for full time work. Extrapolate the data and your own situation to carefully account for housing and other costs to determine your own income goals and thus rates.
References for setting your net income and rate
With these business calculators, determining a net income above your expenses is an essential step. Otherwise, you're simply breaking even. The inconsistency of freelance works makes this a risky and essentially unsustainable.
Net income is what allows you both “non-essential” spending (vacations, entertainment, little treats, etc) as well as savings and/or retirement (though in some calculators this is broken out as a separate line item).
The savings rate in the US hovers around 3% on average. Saving anything is good. Simply put, the more you save, the more you can strive towards retirement, goals of home ownership and so forth. Setting aside 10-20% of your gross income going to savings, retirement and investments is a great goal.
In practical terms, investing $500-1000 a month will set you up to be a millionaire. Jeremy Schneider's Personal Finance Club account on Instagram is a great resource for financial literacy. Jeremy breaks down things retirement planning and seemingly scary things like investing in index funds in very approachable ways.
Person Finance Club regularly gives examples of how investing $500 a month can make a huge difference in your ability to comfortably retire.
If you're a freelancer who doesn't have a 401k like many 9-5 workers, it's essential that you not just save for your future, but invest. You can use compound interest calculators to estimate a return on an initial contribution can make when investment in standard index funds.
Savings and retirement for freelancers is a whole topic that deserves its own article, but the takeaway here is that saving $500 or even more over very long timelines can enable a huge level of financial security for future.
Tips for using a Cost of Business Calculator
Err on the side of caution:
Over estimate expenses, under estimate days worked, and overall err on the side of caution. While a cost of business calculator can help you arrive at a day rate, it is also a means of understanding the big picture for your annual expenses and what you need to earn to live sustainably.
If you spend less and earn more, you're golden. But go in with a pessimistic mindset so you can understand the worst case scenario as well.
Run multiple calculations:
Model boon years and bust years to see what the range of possibilities can hold for your business. Min/max your expenses and see how leanly or fatly you can live.
In addition, adjust your desired net income and other parameters to see how that affects your work and earnings potential. Often, changing just one or two variables can dramatically change the calculations.
You can easily see what happens when you double your net income, or if you wanted to halve the number of days you work. Think about what's sustainable from both a personal work schedule and what your market will sustain.
Run a cost of business analysis every year:
A tool like this a cost of business calculator is only as good as the data. Run the numbers at least every year, or when your costs change. Changes in health care expenses, rent, increasing service fees, and any other factors should be cause for updating your calculations. Then raise your rates accordingly every year.
Use the rate figures with a buffer:
Even with the best laid plans and projections, business can fluctuate in unexpected or unanticipated ways. Consider increase rates even after all calculations so that you have more of a safety buffer if business is leaner than you expect.
With the change in costs and lifestyle expenses, a buffer to the estimated rates will help you achieve your goals more safely.
What about part-time or hobbyists?
What about part-time freelancers or hobbyist photographers? I'm glad you asked. A cost of business calculator is still critically important as a tool, because it allows us to extrapolate part time work to full time work. When averaged, you can still get a clear idea of a living wage for your work and the minimums to charge, regardless of status or actual days worked.
The importance of part-time freelancers or hobbyists charging professional rates is so that we do not undercut the market. Maintaining a living wage ensures that professional photography is a viable career and helps our community ensure a better future by sustaining or raising our value.
If you have a day job where you don't need to charge for photography to live, you have the luxury of charging more, not less, and standing with professional photographers. Doing so helps us fight for our value and ability to make a living wage from our craft.
End Notes
When you get asked, “What's your rate,” it's a complex question. A reasonable answer is, “It depends.” It depends on many factors, including the time, specific use, licensing and countless other factors.
When breaking down costs for your time, cost of business calculators can be a great tool for getting a good ideal of what you need to charge as a professional.
Hopefully this article has given you ideas for how to approach using these tools, as well as the benefit for how your fees can support a sustainable business as a freelancer.
