Why Price Discrimination Makes Sense

Posted on 7/1/2009 by Jim Pickerell | Printable Version | Comments (3)

Market value for most products depends on how they are used---the value the customer receives. The distinguishing factor is often between renting and buying a product: from DVDs to photo equipment, renting based on value received is a very common practice, which has been all but eroded in the photo industry with the proliferation of microstock.

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Selling Stock is an on-line newsletter that reports on developing trends in the stock photo industry. It is updated at least twice a month. On-line subscribers receive e-mail notification whenever new stories are posted. Archives containing stories going back to late 1995 are fully available to subscribers.

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Copyright © 2009 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.

Comments

Bill Bachmann Posted Jul 1, 2009
Jim,

It seems funny that NOW you are seeing the problem with Microstock prices being so low and BIG clients buying for $1 and using it to make a lot of money. You have told photographers for several years to dash their images to Microstock, RF or ANYWHERE to make any money.

Now you see some of the problems! In my books, and in my lectures for years, I have said Microstock is NOT FAIR to the photographers... that all the good goes to the client. What you & others have done is create a LOT of people who sell a few dollars worth of RF or Microstock and run around saying the are photographers (while they sell shoes full time!) The profession of photographer has lost value because so many have jumped at low prices. Now you start to see that.

In my latest book, I tell the truth about HOW to make a real living in stock,,, not just be on the sidelines. Yet so many of you writers just keep saying sell your pictures CHEAP and I will never agree with that premise.

My book is on my website and it is titled appropiately....... "Remember The Joy: How To Have A Successful Career In Photography And Have Fun Dong It". www.billbachmann.com

I wish more people would do it the right way!

Bill Bachmann
Orlando, Florida

Jean-francois Cardella Posted Jul 2, 2009
You could argue that if you buy a T-shirt at Marks and Spencer, the price is the same whether you are a millionaire or if you are on the dole.

However, differential pricing (or as Lee Torrens calls it Price discrimination) is not new. In fact it is everywhere, everyone discriminates. Moreover it accepted by customers. It is not “paying more because you can afford it”. It is all about the value the customer receives from the products or services. Many sectors apply this price discrimination where different prices are charged based on where and when customers make the purchase, depending on their status, age, job, if they buy in bulk quantity, depending on the method of payment, or the number of employees in the business, etc. I do agree with Jim, we should “discriminate” just like any other industries: different price for different customers.

Want examples?
Look at the airline business, you are “discriminated” if you fly at certain dates, holidays for example if it happens that you have kids. And you pay early bird rates for your downtown car park. Depending on your age, gender you will pay a premium with your car insurance policy. If you are a civil servant you often get government rates for a number of services. If you license a software it is likely the vendor will offer specific license fees for the education sector, not because they are cash poor, only because of the nature of their business or “mission” they won’t get the same commercial benefit as a private commercial enterprise. If you register with BAPLA, depending on the size of your library you pay a different fees.

The Data Archive is currently working on a pricing system allowing clever fees adjustment because we think SOHO business types should be able to license images with traditional libraries both on RM and RF basis. Incidently the RM model has an evident price discrimination based on the value received by its usage, but the license matrix should go even further and integrate other elements in the background. The reality is that small businesses, bloggers, students, teachers etc. just can’t afford traditional license fees and legions are embracing the microstock model which is fair enough. The system currently in development with The Data Archive will be beta tested on Construction Photography who has clients ranging from giant multinational companies to “Joe” the plumber. The value they receive from the licensing of our images (which at the end of the day is a service) are not comparable and the license fees should reflect this.

JF Cardella
Construction Photography

Stanley Rowin Posted Jul 3, 2009
"If someone needs a car for a day . . ."
"It is also possible to rent bicycles, sailboats, golf clubs and other recreational equipment . . ."
"If you want to see a movie . . .It is also possible to rent, rather than own, computers, VCRs, large screen TVs. . ."

While I have no problem with your analogies, it seems that you all are discussing commodities. And if you are, you have different pricing models than many photographers want. Most old-business-model-photographers don't consider their work commodities, even though the market does and forces the price down because of that.

Until photographers take a step back to look at the industry in the 21st Century, they may be forcing the square peg of "Rights Managed" pricing and all the current incarnations of it into the round hole of online commerce.

Stan Rowin

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