Pricing Stock Photos

A professional stock photographer has pointed out to me that a long held tactic to price a premium brand of anything is that a higher price indicates higher quality. He argued this is why some photographers insist on selling their images as Rights Managed. They believe they are producing a higher quality product. They often go to a great deal of effort and expense to produce their images. As a result, they feel they are not only justified in charging more, but that it is the only way they can recover their production costs.

In fact, the RM strategy has never been based on quality, or the cost of production of an image. Instead, the basis has always been on the use of the image. A given image may be licensed to one customer for a very high price for a large and important use and the next customer for a much lower price for a small use of the same image because it is deemed to be of minimal value to the customer. The actual price is almost always determined through negotiation between the seller and the customer based on the value the customer places on the image and what the seller thinks he can get. The seller tries to determine how the image will be used and then quotes a price, but if the price doesn’t seem reasonable to the buyer then negotiation ensues.

A classic example for me was a shot of a variety of colored leaves on the ground for which we received $10,000. The photographer had been taking pictures of fall foliage, saw some pretty leaves in a variety of colors on the ground in front of him and snapped a picture. It was one of hundred’s shot that day. A pharmaceutical firm decided to use the image on the cover of an important brochure that was intended for wide distribution over a long period of time. They found the price quoted reasonable. A great sale, but very rare.



The above sale was made in the 1990s when there were fewer stock images images available. Finding an image that fit the concept the art director had in mind was a much more difficult job then than it is today given the overabundance and easy availability of virtually every conceivable subject.

In addition, now we have Photoshop enabling art directors to easily manipulate and create from pieces almost anything they can concieve. And finally, on top of all that, instead of using a single image for one long range, blockbuster project, there is a tendency to use a much greater variety of images for short range and narrowly targeted projects. All this tends to reduces the value of any given images for most end users.

Determining What To Spend On Production

The photographer argued that contributors can’t determine what to spend on production unless they have some control over price, but in fact contributors have never had much if any control over price. There is no guarantee that any image will sell for any given price.

It is true that photographers must somehow determine how much they can afford to spend in time and money to produce a certain return. Unfortunately, there is no way to do that without producing some images on speculation and putting them in the marketplace to see what kind of revenue they will generate.



The only sure thing is that there is no way to predict what a given image may produce. Some images that cost very little to produce may generate a high rate of return. Others that are very expensive to produce may not sell at all.

Volume

There is also no guarantee that those who charge the highest prices will earn the most money.
It depends on how many sales an individual can make at the high prices compared to what they can earn charging lower prices and selling move volume.

One of the classic examples is Yuri Arcurs who licenses all of his images through microstock and in his career has licensed over 1.7 million downloads through iStock alone (at one time his images were being licensed through other agencies as well.) Some of his images have been licensed thousands of times.

If an image is made available at a lower price there is a much better chance, but no guarantee that it will be licensed multiple times. The big question is how many sales can you make at a low price in order to offset one sale at a somewhat higher price.

There is no guarantee that either a high price or a low price will generate a good return on investment. At both price levels there are many images that either are not selling at all, or sell so infrequently that they don’t generate enough revenue to cover the cost of production, let alone show a profit.

While there are still a few photographers licensing their images as RM who earn six figure incomes, I believe that if we really had accurate figures on everyone we would find that there are more people earning six figures who are licensing their images at microstock prices than than there are those licensing their images as RM.

The bad news is that prices have been falling so much on the RM and traditional RF side of the equation that almost no one is earning what they used to earn. On the microstock side sales volumes relative to the number of images produced have fallen so much that very few are able to produce enough volume to earn what they once did. The trend continues downward.

Choosing To Sell At High Or Low Prices

Given industry trends it seems it may be time to look for a new pricing strategy. I have suggested that in today’s market a better strategy might be for price be determined on performance. Tomorrow, I’ll explain this in more detail.

No matter what the price there will still be a significant number of images that never sell, or sell for such low amounts that they never cover their cost of production. What the successful photographer needs is for enough of those that do sell to earn enough to also cover the costs of the non-sellers and generate a profit.

No matter how high the image quality and how hard a photographer works there is no guarantee that any set of images will generate enough revenue to cover costs. But a system that prices images based on their performance may generate more revenue for more photographers and more agencies than the systems we are using today.