I recently ran into a woman who told me about a Groupon deal she bought from another photographer. It was $50 for a one-hour session and a CD of images. She tried to convince me I should offer one myself, claiming he “made a KILLING” from this deal, because he took in at least $20,000 selling 400 of these sessions. Wow! That sounds like a lot of easy cash.
But let’s take a look at this. Before we talk about the money, let’s look at the liability instantly incurred from this promotion. This photographer now has 400 one-hour sessions he has to provide. If he does 8 a day (and that would be grueling and only possible if he did them all at the same location) then it would take 50 days for him to finish fulfilling this obligation he’s now legally bound to. This particular photographer offered these at the client’s location of choice, so he’s not going to do 8 a day. He’s going to be tied to this unprofitable work for a long time.
Unprofitable? The woman I spoke with didn’t get it. I tried to explain costs, and she said, “oh he’s been in business for a long time. His camera was paid off years ago.” Really. He’s still using a camera he bought years ago? Hmm. I know mine have to be replaced every year or so.
So let’s look at the money numbers. Ignore that big $20,000 for a moment. It’s deceiving. Instead, look at the numbers for each session. $50 for each job becomes approximately $25 after Groupon takes their cut. For every session, the photographer also incurs mileage cost (average 30 mile trip at the federal rate of $.50/mile is $15.00) He incurs the cost of an archival-quality disk (bought in bulk, they are $3.50 each plus shipping) and the cost of packaging for that disk and shipping to the client…about $5.
So just taking into account the immediate costs of each session, that $25 has now been reduced to $1.50. You might think he made $1.50 per hour, but no…it’s worse than that, because every one-hour photo session requires much more than one hour of work.
For every hour I shoot, I spend at least 10 hours in post-production. Most do less, admittedly. I don’t batch my images, that’s why. I work on each one individually. But okay, let’s go with a more normal 5 hours of processing time. Add to that about 30 minutes getting each session booked, contracts delivered, signed, and received. Add 1-2 hours driving time to and from the session, then another 30 minutes just to upload the images to the computer before post production begins, 30 minutes backing up images before working on them, another 30 minutes to burn a disk of all these very large files, and time packaging and shipping the disk. That’s 9-10 hours of work for every 1-hour session. $1.50 divided by 9 hours = 16¢/hour. Wow! He made a KILLING! …if that’s what you call it when you make WAAAYY below minimum wage!
At $1.50 a session, so far that $20,000 has been knocked down to $600….for 400 sessions. Actually he hasn’t even made that. He’s lost money, because there are other costs that have to be applied to every session…a portion of all the other costs of just simply being in business. So he hasn’t made a killing; he’s taken a loss on this deal.
Plus add to that the opportunity costs of giving away files instead of selling them or selling prints, and spending time on 400 sessions at a loss that could be better spent on actual paying clients.
I can think of a few ways to turn this Groupon loss into a profit. Not much of one, but maybe slightly in the black: shorter sessions, one location, no editing whatsoever…just shoot and burn. I know some people are using unpaid interns, but it can actually be illegal to have unpaid interns doing revenue-producing work. It’s not only unethical exploitation, but it also gets into the realm of unfair competition laws and labor code violations.
We all love bargains, and I can’t begrudge someone for taking advantage of one. I do! I also can’t begrudge a business for offering a Groupon deal. I may do so in the future. I can’t say Groupon isn’t worthwhile…as advertising. But no, photographers do not make a killing on Groupons.
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