Turning Pro - Understand your Business costs

***Dave*** · 23-01-2006, 09:59

I was going to post this at the end of PeteMCs latest thread, but thought this would be better on its own.

Most of us dream of being able to make a living out of our hobbies. Let's say you have the skill, drive & create the opportunities to make this happen. You now need to understand what your Business costs will be for the year, including your salary. This will give you a minimum amount of revenue you must achieve.

From my Mgmt/finance experience in Corporate IT land, the real cost to a company of an employee is double their salary. This is with large economies of scale, so for a 1 man band this could be more or less. I'll try & list what costs will be incurred by your business (others can add if I've missed anything)

Premises
Rental costs
Mortgage costs if buying
Rates
Utility bills
Telephone / Broadband
Insurance
Furniture
Maintenance
- the above is still applicable if you use just 1 room in a house (take a % from house costs)
Studio / location rental (*)

Equipment
All Camera equipment & Accessories
PC equipment, printers & Accesories
Consumables (batteries, printer ink, paper)
Hiring of equipment (*)
Software
Maintenence
Support (eg. PC support)
Insurance

Transport
Vehicle, including maintenance, insurance, TAX
Shoot transport costs - Petrol, Parking / Taxis, trains, planes etc (*)

Offsite Accomodation
Hotels / B&B's etc. (*)
Meals (*)

Marketing / Advertising
Magazines, Radio, TV etc
Internet - Web site Design
Web hosting
Entertaining (*)
etc..

Employee Salary / Benefits
Salary
NI
Pension
Sick pay
Holidays
Training

Other
Accountant
Admin
Hiring of models for shoots (*)
Agencies

(*) - These are likely to be non core costs - eg. only applicable to specific shoots

Note certain items above such as hardware/software purchases can be spread over several years via loans etc.

I know it looks a bit daunting & some people would say all the above is not necessary, but there is a big difference between running a successful business (however small) & being a successful Photographer. One cannot work without the other & from my experience it's very hard to juggle both hats.

Your salary is just 1 part of overall costs. Therefore when pricing jobs for the week ahead, you not only have to cover 37 hrs pay of the Photographer for the week, but all the additional costs above. I won't even go in to continegency for lax periods

Hope the above is of help to some people, or at least a good starting point for discussion. I'm sure those who have run their own companies will have more understanding on the subject, which they could share with us.

Catdaddy · 23-01-2006, 10:15

Really useful info, Dave!

One thing (if I may add) is the 'rates' issue - your local council will only charge business rates if the premises you use is solely dedicated to business use. If you work from home, they ought to charge business rates only if you do silly things like have a constant stream of traffic outside your house and clog up the streets with it, disturb the neighbours, etc...

Cav · 23-01-2006, 10:52

Good info DJW, the true costs of living truly are daunting when we look at them.
Take me, for example, reasonably comfy in a nice house and no money worries...other than being over $200 000 in the red stuff! And no D-SLR...

Getting back to the point, for those of us who wish to get to the point where we are selling a few photos on a part-time basis, registering as a business will make some stunning tax savings on kit, lenses, PC consumables, etc. I think?

Add to that signing up for a one week correspondance course in anything cheap (just to get a student number), and you can also get CS2, etc etc at student rates and costs can be cut dramatically, so there can be a happy flip-side.

Steep · 23-01-2006, 11:30

Buy the book "My Mamiya made me a million" if you can get hold of it. Written by a guy who turned pro, tells what he did how he went about it and the mistakes he made, It's a very good read too.

http://www.amazon.co.uk/exec/obidos/...074726-3315125

evilowl · 23-01-2006, 13:08

Great post - worthy of a sticky perhaps?

barrymoir · 23-01-2006, 13:53

Great stuff, interesting read

Venomator · 23-01-2006, 18:47

Quote:

Originally Posted by DJW

From my Mgmt/finance experience in Corporate IT land, the real cost to a company of an employee is double their salary.

Excellent rule of thumb Dave - and true across most businesses I have been involved in ... small or large !

Comprehensive listing there too - Profit is all I would add !

23-01-2006, 09:59	#1 (permalink)
*Dave* Pixalo Crew Join Date: Jul 2005 Posts: 14,710	Turning Pro - Understand your Business costs I was going to post this at the end of PeteMCs latest thread, but thought this would be better on its own. Most of us dream of being able to make a living out of our hobbies. Let's say you have the skill, drive & create the opportunities to make this happen. You now need to understand what your Business costs will be for the year, including your salary. This will give you a minimum amount of revenue you must achieve. From my Mgmt/finance experience in Corporate IT land, the real cost to a company of an employee is double their salary. This is with large economies of scale, so for a 1 man band this could be more or less. I'll try & list what costs will be incurred by your business (others can add if I've missed anything) Premises Rental costs Mortgage costs if buying Rates Utility bills Telephone / Broadband Insurance Furniture Maintenance - the above is still applicable if you use just 1 room in a house (take a % from house costs) Studio / location rental () Equipment* All Camera equipment & Accessories PC equipment, printers & Accesories Consumables (batteries, printer ink, paper) Hiring of equipment () Software Maintenence Support (eg. PC support) Insurance Transport* Vehicle, including maintenance, insurance, TAX Shoot transport costs - Petrol, Parking / Taxis, trains, planes etc () Offsite Accomodation* Hotels / B&B's etc. () Meals () Marketing / Advertising Magazines, Radio, TV etc Internet - Web site Design Web hosting Entertaining () etc.. Employee Salary / Benefits* Salary NI Pension Sick pay Holidays Training Other Accountant Admin Hiring of models for shoots () Agencies () - These are likely to be non core costs - eg. only applicable to specific shoots Note certain items above such as hardware/software purchases can be spread over several years via loans etc. I know it looks a bit daunting & some people would say all the above is not necessary, but there is a big difference between running a successful business (however small) & being a successful Photographer. One cannot work without the other & from my experience it's very hard to juggle both hats. Your salary is just 1 part of overall costs. Therefore when pricing jobs for the week ahead, you not only have to cover 37 hrs pay of the Photographer for the week, but all the additional costs above. I won't even go in to continegency for lax periods Hope the above is of help to some people, or at least a good starting point for discussion. I'm sure those who have run their own companies will have more understanding on the subject, which they could share with us. __________________ Last edited by Dave : 23-01-2006 at 11:09.

23-01-2006, 10:52	#3 (permalink)
Cav New here Join Date: Dec 2005 Location: New Zealand Posts: 24	Good info DJW, the true costs of living truly are daunting when we look at them. Take me, for example, reasonably comfy in a nice house and no money worries...other than being over $200 000 in the red stuff! And no D-SLR... Getting back to the point, for those of us who wish to get to the point where we are selling a few photos on a part-time basis, registering as a business will make some stunning tax savings on kit, lenses, PC consumables, etc. I think? Add to that signing up for a one week correspondance course in anything cheap (just to get a student number), and you can also get CS2, etc etc at student rates and costs can be cut dramatically, so there can be a happy flip-side. __________________ On a perpendicular learning curve and loving every minute of it!

23-01-2006, 13:53	#6 (permalink)
barrymoir Been here a while Join Date: Dec 2005 Posts: 369	Great stuff, interesting read Last edited by barrymoir : 23-01-2006 at 16:50.

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode

Similar Threads
Thread	Thread Starter	Forum	Replies	Last Post
So this is why a camera lens costs so much	Dave	General photography questions and answers	4	29-06-2007 17:07
Turning Pro - Understand your Revenue Target	Dave	General photography questions and answers	7	23-01-2006 19:18
Costs of advertising on websites - CPM	dod	General photography questions and answers	6	08-11-2005 11:27

23-01-2006, 10:15	#2 (permalink)
Catdaddy Forum Regular Join Date: Jan 2005 Location: Berkshire Posts: 508	Really useful info, Dave! One thing (if I may add) is the 'rates' issue - your local council will only charge business rates if the premises you use is solely dedicated to business use. If you work from home, they ought to charge business rates only if you do silly things like have a constant stream of traffic outside your house and clog up the streets with it, disturb the neighbours, etc...

23-01-2006, 11:30	#4 (permalink)
Steep Forum Regular Join Date: Jan 2005 Location: Inverness Posts: 964	Buy the book "My Mamiya made me a million" if you can get hold of it. Written by a guy who turned pro, tells what he did how he went about it and the mistakes he made, It's a very good read too. http://www.amazon.co.uk/exec/obidos/...074726-3315125

23-01-2006, 13:08	#5 (permalink)
evilowl Been here a while Join Date: Sep 2005 Location: London village Posts: 376	Great post - worthy of a sticky perhaps?