Who Controls The Price?

In most industries the manufacturer sets the price for his products based on his manufacturing costs. Of course if he sets his price too high consumers won't buy. Therefore, he certainly has to be sensitive to consumer demand.

If he sets the price too low, he must either cut his cost of production or generate more interest in his product through marketing. If neither of these options bring about an increase in volume then he stops producing and looks for another line of business. Usually this future demand is predictable in a relatively short period of time.

In the stock photo industry volume sales may help since a single unit can be licensed many times and it is the total of all the licenses that must offset the cost of production. On the other hand the time it takes to determine whether a particular product will be profitable is substantial - and each new photograph is a unique product.



This makes it extremely difficult to establish a fair price for any given image.

In the stock photo industry price is almost always set by the client and a middle©man (stock agency). [The price should be set by the seller.] Even if the photographer retains control of his work and licenses it directly to the client he is strongly impacted by the prices set by other stock agency sellers unless his work is extremely unique.



The stock agency for the most part has no knowledge of the cost of production and does not concern itself with the cost of production. The stock agency can predict with a reasonable degree of certainty the volume of sales they are likely to have on a quarterly or annual basis, and thus structure their overhead costs so they can realize a profit.

The problem is that the stock agency has a very fuzzy understanding of the photographer needs to earn in order to recognize a profit. The agency tends to think that if they are paying the photographer a lot the photographer is making a good profit when the photographer may be plowing every dollar earned back into new production. If the agency is paying the photographer little then they tend to think that is OK because the photographer isn't putting forth much effort toward stock production.

Agencies that have a photographer as a principle in the business may have a better understanding, but still it is difficult because photographer's production habits vary so greatly. But, more and more stock agencies have been taken over by financial managers who have no understanding whatever about the difficulties and costs of production.



[Photographers are likely to start dictating minimum prices for their work. The reason many photographers won't work with stock agencies is that they are concerned about their work being underpriced.]

Given the system it would seem very easy for production costs to get out of balance with income. The fact that the industry has worked well for many people for a long time encourages people not to worry.

They can not predict which specific images will be in demand. In most of the areas of high demand subject matter there is a glut of images being offered by a variety of supplers.

Photographers with an extensive file may be able to get to point of predicitability in gross revenue, but those with few images being marketed will experience wide swings in sales.

Moving away from the idea that the road to success is volume production. Getting production into an effective marketing channel is much more important.