What Is Reasonable and Affordable?
“Reasonable” and “affordable” are two terms commonly used by people looking for services like photography, catering, custom clothing, videographers, landscapers, hair stylists, make up artists, and more.
But what is reasonable and affordable?
What’s a good price for small, local businesses to charge?
Defining “Reasonable” Technically, the definition of “reasonable” is “not extreme or excessive; moderate, fair.” However, this is an answer that only leads us to more questions. What is extreme? Excessive? Moderate? Fair? These are all broad, completely subjective words. Your idea of a reasonable price for a cake could be completely unreasonable for the baker. But, on the other hand, for the baker, a lower price might be excessively cheap and extremely unfair.
Defining “Affordable” “Affordable” is defined as “able to be afforded; having a cost that is not too high.” But, again, these definitions are highly subjective. “Able to be afforded” varies by the individual, and so does “a cost that is not too high.” One person’s idea of ‘expensive’ is another’s idea of ‘affordable,’ and vice versa.
Plus, do we really expect businesses to price their services according to what we can afford? Or should small businesses price according to what they can afford so they can make a living? If you were running a small business of your own, which approach would you choose? Would you choose to work for a company that paid you an unlivable wage?
So what is in those ‘unreasonable and unaffordable’ prices? The price we pay for the product or service is not the take home amount for these small businesses.. The vast majority of the revenue that businesses earn from the product or service we buy goes towards expenses like rent, equipment, utilities, accounting, legal, insurance, maintenance, website, marketing, software, labor and many other costs. Small business owners simply can not price their products/services according to each individual’s definition of reasonable or affordable. With that approach, they would be out of business in no time.
So instead, their prices are based on a reasonable, affordable take home pay — one that can support themselves and their family.
Let’s Consider an Example
As a real-world example, let’s consider hiring a photographer for a newborn photo shoot. Your local photographer charges $1,500 for a newborn session. It takes approximately 3 hours for that session.
You think that photographer is making $500/ hr and is completely unreasonable and unaffordable for what you get.
Let’s break it down a little further.
For every one hour of shooting time, photographers spend, on average, 9 hours doing work that you don’t see them do. Most of the time is related to your shoot, e.g., communicating with you, culling the images, editing and retouching the photos, posting to your gallery, preparing for the shoot, travel, preparing the end products.
Some of the time is allocated to building their expertise to provide the best service (education, training, mentoring).
The remainder of the time is spent running their business to provide the service to you (marketing, social media, networking, accounting, legal, administrative).
So let’s break down the time for that session again. Now it is at 30 hours for that one shoot. That’s still $50/ hour, you say. That’s unreasonable!
Well, this is still before photographers account for their expenses. Photographers incur a lot of costs, including:
Equipment (camera, memory cards, batteries lenses, lighting, computers, misc gear, props)
Cleaning and repairing/replacing equipment and gear
Insurance for equipment and liability
Multiple software licenses needed and domain hosting
Marketing expenses (including website development, branding, printed materials)
Administrative costs (accounting, legal, etc.)
Any expenses associated with a physical business location/studio
Any costs related to getting to the shoot (gas, tolls)
And many, many more...
With all of these expenses, Photographers, on average, take home between 19-25% of their gross sales.
So back to the $1,500 newborn photographer. At the higher end (25% take home), the photographer has netted $375 for the shoot. Considering the 30 hours of actual work it takes, it leaves the photographer $12.50/ hour for their take-home pay (before taxes or healthcare costs)!
So, what’s reasonable? Surely it isn’t reasonable to ask the photographer who has spent the last decade perfecting her skills to be a newborn photographer to bring you beautiful memories that will last a lifetime to work for less than minimum wage?
Photographers aren’t unreasonable. They want to earn a living that will allow them to pay their bills and feed their family. Don’t you?
Small business owners aren’t mass-producing products in factories.
They don’t have a team of people working together to create a final product that you’ll love.
They don’t have investors willing to lose money to gain market share and dominate the world.
They don’t have the capability to offer a product at a loss in order to get you into the store to buy additional products.
Small business owners have to spend money on materials and equipment. In addition, they’re paying their business expenses, insurance, and taxes.
Finally, they spend hours of hard work to ensure that you’re a happy and satisfied customer. These factors all carry a price.
So, remember that these terms are entirely subjective when looking for a “reasonable” and “affordable” product or service. Prices aren’t based on your definition of these terms but on what the small business owner can reasonably and affordably charge in order to survive and thrive.
Jane Goodrich is an award-winning photographer whose underlying mission is to support and empower other photographers in reaching new levels of profitable success. With a background in business and marketing, vast industry experience running two successful photography businesses, and building The Photography Business brand, Jane is one of the most respected photographers in the industry when it comes to running a successful business. Jane took her knowledge and experience and poured it into Picsello – a business management software platform for photographers that will genuinely support photographers in setting their pricing, running their business effectively, and marketing and monetizing their services. In addition, we'll help photographers navigate the challenges and cut through the misinformation. Picsello launches in 2022.