Last time we covered Cost Based pricing which considers pricing only from your point of view. This time we’ll take a look at the Competitive pricing method which looks outward at the marketplace around you.
Again, this method is as it sounds. Price point is based on the many competitors out there selling the same, or similar, products as you are. This seems simple enough, right? Sometimes it is and you are able to find others who are selling nearly the same images and in the same channels (online, art fairs, street stands, galleries…). When this happens, it’s great and you know exactly what your target price should be.
For example, let’s say you sell your work at art fairs and you focus primarily on city architecture. Let’s also assume that you’ve been to other fairs where you’ve seen photographers selling their architectural 5×7” images at 2 for $15 and their 8×10” images at $20 for 1 or 2 for $30. This now gives you a great comparison and you realize if you price your images for more, you’re competitor may grab all the sales but if you price for less you may miss out on additional profits. So you price on parity with your competition and sell at the same price.
But, as is often the case, you are probably not selling the exact same thing as those around you. Let’s face it, you’re a photographer and you have your own artistic vision so your images won’t be quite the same as others. But, and this is a big one, you are competing for the same customers as other photographers out there. So you need to be aware of what your competition is doing.
If they are not the same then how do you use the competition as a measure for pricing? Don’t panic, as I mentioned above you have the same customers and they’re the ones driving the prices. The reason prices have settled at certain levels is because many have been there before you and, over time, these are the prices that customers are willing to purchase photographs at.
So if we look at the same example from above and you are now a nature photographer in that same art fair, you can look no further than the architectural guy to find your pricing for the similar sized images since you have the same pool of customers to draw from.
It’s not an exact science and sometimes you may have to do some research to find something similar. You may even find different people charging different prices for the same thing, in this case you will have to take the ones you feel are most relevant to your work and price within the range that is created by these other competitors. Also, just because you’re competitors price at a certain level doesn’t mean that you need to follow suit. You are primarily using your competition to develop your prices.
There are a couple of downsides to pricing with this method though. The first one is your cost. Even though everyone else may be priced similarly, if you don’t have the cost structure to support that, you may be losing money on every sale. The second is, if you are pricing solely on the competition you aren’t giving yourself the opportunity to differentiate your work. Just because you shoot similar subject matter as someone else doesn’t mean it has the same value.
And that’s what we’ll cover next time, Value Based pricing. Again, I hope you found this useful in thinking about pricing your work.