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Thread: Depreciation of Equipment - the Aspiring Pros need to know

  1. #1

    Default Depreciation of Equipment - the Aspiring Pros need to know

    Sorry for the provocative title, no offense intended and its only to attract your valuable attention. After all, nobody will admit they are dumb so nobody's affected. Mods, feel free to edit if deemed needed. I wanted to add this to the original Gear For the Aspiring Pros thread but it had grew too long and I feel that depreciation of equipment is a seldom discussed topic and very worthy of its own thread, especially since most pros stated out as hobbyists and such things were often never considered till they turned full time and hungry.

    Assuming you bought Nikon's flagship DSLR the D3 in late 2007 or early 2008, shortly after its release, you probably paid about S$7000. Now in early 2013, which is 5 years later, people are having difficulty selling a great condition set at S$2800 (checked BNS for recent transactions). Realistically, if you need money in a rush, $2500 will be a more realistic figure. In other words, it depreciated $4500 over a span of 5 years. The cost of ownership is about $900 a year. We have not taken into consideration maintenance or repair costs, if any was incurred. If you lost the camera to theft, destroyed in an accident, etc. You suffered the lost immediately, plus you got to add in the figures for another replacement unit. It is very painful to a photography business to have its main machine stolen or destroyed.

    The D3 is still a very relevant camera and I foresee it can still be acceptable for most professional usage for another 3 years before the latest prosumer pro totally trash it in specs. You CAN still use it, no doubt, I still have my D70 from 2004, yes I can still make good photos with the D70, but will I use it for my next big gig or project? You get my idea - very probably not, just too much at risk. We are pros with reputation and a business to loss. We cannot sing the 'its the photographer rather than the gear' tune as easily as a hobbyists with no risk or responsibilities to clients.

    Back to the D3's depreciation, many pros have two units for redundancy, backup and for speed. If you have 2 units, you lost $9000 over 5 years, or $1800 per year. Scarely? Yes, thats why many pros don't use D3, despite marketed for the pros, its really bought by the amateurs. Fortunately we have the darling-seven-hundred D700 and the choice of buying Pre-Owned.

    Assuming you bought the D700 in early 2009, pre-owned, you probably paid about $3500. Now in early 2013, 4 years later, realistic price to sell it off is $1800, depreciation of $1700 over 4 years, or $425 a year. Two units will mean $3400 over 4 years or $850 a year.

    That was for camera bodies ALONE. The more stuff you own, the more money you lost. Lenses and flashes, fortunately, does not depreciate as much and stays relevant for a way longer time.

    SB800 flash bought 5 years ago was about $600, now it can be sold for about $300. Depreciation is $300, or $60 per year, per unit, so two units is $120.

    24-70 f2.8 lens bought 5 years ago was about $2500, now people are trying hard to sell pre-owned at $1800, so realistic price is about $1700, depreciation is $800 over 5 years, or $160 a year.

    85mm f1.4D lens, 5 years ago was $1600, now sell $1000 nobody interested, so realistic price probably $900, depreciation is $700 over 5 years, or $140 a year.

    A cheapo zoom from film era, 5 years ago bought $250, 5 years later now maybe can sell at $150, depreciation is $100 over 5 years, or $20 a year.

    So my friends, assuming you own two units of D3, two units of SB800/900 flash, a 24-70 main zoom, a 85mm speciality lens (or any other speciality lens depending on your genre of work), plus a backup cheapo plastic zoom, your depreciation is $11200 over 5 years, or $2240 a year. If you are having two units of pre-owned D700 instead, it is $1290 a year. If you are having a hybrid system somewhere in between, you estimate its about inbetween. This is a conservation and optimistic figure only, many of you gearheads have more toys than you want to admit. Add another $150 per extra speciality lens and another $60 per flash. We have not even consider the amount of crap accessories, R rated straps and T branded bags you have. And if you have a studio or studio lights, oh my Lord Guan, even more, you do the math.

    SO TELL ME HOW, how can you not calculate depreciation of your gear into your photography rates. So if you don't make at least $2240 for the dual D3 set example above, you did not cover that expense in your business and you actually lost money without you knowing. That's why some studios can suddenly close down after 2-3 years, or photographers changing jobs and returning to their old jobs again. In between the years of your career, any major purchase (camera/lens/studio flash) is a significant expenditure to your business, for they are fast depreciating assets. If an piece of equipment does not bring in money, does not get used, it only serve two purposes - 1) loss money and 2) hinder your cash flow.

    As a working pro, even part time, you CAN NO LONGER treat it as a hobby anymore. The thinking of "I bought the gear, its mine, still in my hands, I did not loss any money what" just have to go. The moment you bought something, you lost money. Until that thing you bought makes you money, it is not an asset but a liability.

    *Canon version, should have similar price points.
    Last edited by JasonB; 21st March 2013 at 01:26 PM.

  2. #2
    Senior Member Nikkornos's Avatar
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    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    Many many years ago, I personally saw a guy in Camera workshop buying a Nikon D1H with a 28-70 zoom.
    The total deal was something over 10k, and he negotiated for part payment or pay by different cards.
    It was a very amusing situation, as the guy appeared to be an aspiring Pro. During that time FILM was still strong. All processes for film were robust.
    How much is a D1H now? It is , you give me free I also don want it.

    I have my respect to a Pro who used to shoot with Nikon F501 bodies (others may have F4, or later F5 etc).
    F501 was always the only thing he used, and he scored every shot (cannot delete or preview on film, but over 99% success rate).
    Many photogs that time looked down on him, but he was the one who made money and scored.
    His argument: camera is a TOOL:
    Tool is for making money. As part of the business, Tool effectiveness and Tool depreciation _ Tool maintenance all comes into the budget.
    I still have some F501 influenced by this professional guy. The F501, to me, is 10X better than a FM2 or FM3 hype up manual cam.

    I am not a Pro. (but my job involves industrial Zeiss lenses) I do part time freelance jobs at times.

    Strictly speaking, one do not need really a D3 D700 or more to do a Professional job.
    I have seen many Pro using much more basic camera to make money.
    Such as D60. As simple as that.
    My kid's school has 20 sets of Canon 5D2 + white lenses! And all of the cameras are set at 1M pixel or less because kids want to save time loading.
    The teacher shot with a much more basic camera, and the teacher always have better shots.

    If a Pro suffer such a loss due to depreciation and constant changing of gear, he is not in a business. He is on the road to bankruptcy.

    I bought a Nikon F90X in 1996 to take pictures of my first baby.
    The F90X later took over 1000 rolls of film doing jobs, or as hobby.
    I picked up several F801s or F601 along the way, all about $100 each , mint and fully workable. Some F501 for almost nothing.
    The income generated from this oldies, more than bought me flash lights, films, and even family holidays.
    Now my kid is 15 years old, the old F90X still works and I used it to do a job for a TKD school recently.

    I only have a few DSLR. All bought in USA as factory refurbished units, very cheaply.
    I know value of DSLR will be reduced to nothing within 2 years, so buying DSLR is always not high on agenda.
    These cameras are good for my kid to do weekend mugging around. Or for me to go outings.

    I have some old Rolleiflex bought in the 90s and early 2000s. There were a few hundred dollars or at most 1k.
    Now, a Rolleicord mint can easily ask for over 6-700 dollars.
    A Rolleiflex the ones I have can ask for 3000 or more.
    That is not bad at all.

    The camera is a tool. For those who shoot DSLR, why not you try film now (cheap body cheap lens).
    You can still buy slide film, B&W film, and in Clubsnap there are many heros who can do it really high standards (developing).

    I find it very hard to believe there are many people who do not know what is F1.2, never shoot a frame of film, never learn exposure/composition, never learned to process film, are called Professional. Anyway, I am an outdated film user.

    I understand the advantages of DSLR:
    1. easy to use, even blurr king also can shoot decent photos not like film camera
    2. Instant results , no risk in film processing
    3. Easy to shoot a lot, then choose a few to show customer (film? you failed!)
    4. You can shoot over 300 people in prize giving ceremony, no need to change film

    However, in this competitive market, WHY DON"T you offer film service?
    Customer will be very impressed by how 3D a REAL photo looks.
    Not a plastic looking D picture so common everywhere.

    In Korea, I know no one will accept important photos like Wedding or Baby or whatever taken by digital.
    I know some one shoot 6X6 B&W wedding picture here in Singapore . The profit collected is .... good....
    Its a business worth exploring. Right? And the camera value appreciates or maintains!
    Last edited by Nikkornos; 21st March 2013 at 02:14 PM.
    MF Film user. Nikon D800 works too.

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    >In Korea, I know no one will accept important photos like Wedding or Baby or whatever taken by digital.

    Wow, I admittedly find this hard to believe..
    Please share so whats the reason you think Korean feel this way?Thx

  4. #4

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    Quote Originally Posted by Nikkornos View Post
    Many many years ago...

    Not a plastic looking D picture so common everywhere...

    In Korea... SNIPPET to reduce length
    Thanx for your post Nikornos, I came from film, the pro industry moved and I moved, I have pro friends who refused/unable to move and they... let just say they didn't.

    Hope this discussion does not turns into the age old film versus digital threads.

    Main point of this thread is to be aware of gear depreciation in the business of photography.

  5. #5

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    It is normal for hobbyist wanting to be a pro to want the best gears at an early stage of their career. They will do whatever it takes to get it subsequently failing later as they did not factor in the cost of ownership. Many are attracted to the gross amount a photographer can earn. Trying to undercut the market by a few percent or even giving a price low enough to land the job not factoring other costs.

    Hobbyist on the other hand care less about the cost of ownership. Hobbies are funded by disposable income, an amount you set aside to reward your hard work. You can invest that amount or do something that makes you happy.

  6. #6

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    I am a dumb hobbyist.

  7. #7
    Senior Member edutilos-'s Avatar
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    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    Quote Originally Posted by JasonB View Post
    As a working pro, even part time, you CAN NO LONGER treat it as a hobby anymore. The thinking of "I bought the gear, its mine, still in my hands, I did not loss any money what" just have to go. The moment you bought something, you lost money. Until that thing you bought makes you money, it is not an asset but a liability.

    *Canon version, should have similar price points.
    That's why you don't see the problem. Most full-timers only have the source of money, part-time people are doing it for laughs and fun. It is a sideline income, they don't have to depend on it and earning $1 to contribute towards the next D5 purchase is better than earning nothing for some.

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    Senior Member Dfive's Avatar
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    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    To be honest If a genuine full time pro Photographer rolls over his / her pro model bodies; F3, F4, F5, D1, D2, D3, D4... ETC ETC.... every time the next one is released they actually dont loose any money at all.

    Also despite all the long winded text above ( no offence ) Just spend your $ on good ( the best ) glass end of story! ( in fact - I made $ on a 14-24 and a 24-70 lens when I sold them 2 years later. )

    Digital Cameras are more like Digital Trash... if your not a full-time pro or not accept the depreciation find a new hobby.
    Last edited by Dfive; 21st March 2013 at 06:47 PM.
    See my WTS items.. :) Any sales is by meet up face to face, payment is cash only.

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    Quote Originally Posted by eleveninth
    I am a dumb hobbyist.
    If hobbyist, you wont even have to bother with big words like Depreciation, u the smartest ah..

    Buy whatever you like, shoot whatever pleases you..

  10. #10

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    From Business Perspective:

    Here is my calculations when buying a piece of equipment for work.
    Average life span = 3 years

    In my case, I know my average shoot per month is 30 (average) and if I spend $20,000 on equipment, I should charge $56 more per shoot and I will break even in 12 months, so I just tweak my rates according to general ordering pattern. Another 2 years, it will double its price as income as it has been reduced in the first 12 months.

    From business stand point, it make no sense to buy a piece of equipment and it become bleed you more money. If it is, get rid of it.

    Film VS Digital... been there done that... It is a personal choice. No more and no less. If you can sell well using film because it offer the "look" that people want, why not? Many choose Digital for the convenience and control. Film still alive, but lab that can do the processing and printing is getting lesser. If you want to do film, just market it as premium service because really, the turn over rate will be slower then digital. With Digital, though gear is more expensive, it is compensated with higher speed of turn over. I learn that $3 x 7 = $21 but $7 x 3 is not always $21 in business world, but if you can ensure $7 x 3 is always $21, then by all means, this is how you charge. Just put as many Zero behind it as you see fit. It is always a choice to be a premium business or to be a business who is dealing with volume. Each has its own advantages and disadvantages.

    Sorry to say, but when I buy gear for business, I will spend the least to make the most.

    From Hobbyist Perspective:
    To be honest, from hobbyist, stand point, it really doesn't matter how much they spend on gear... it is in the name of "shiok". They have the money and they want the equipment, then they buy... no other justification needed. It is great to be hobbyist who makes money elsewhere and not depend on the photography for living. I don't really see the point of calling names as hobbyist at the end of the day is hobbyist.

    But when I am in Hobbyist mode, where I just want something, I just buy it, money is not the issue, as long as it is "Shiok". So I understand how it is like between Business VS Hobbyist as far as money spend on the gear. Hobbyist buying gear with their heart, and business buy gear with their head. It really doesn't make one smarter or dumb.

    If you are someone who is seriously looking to become a pro one day, the money out and money in is very important equation and you always want to have the least possible out and highest possible in. You decide which side of the fence you want to be.

    See it is not fun to be in business as you need to watch the dirty word "budgeting"

    Regards,

    Hart

  11. #11

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    Yea. This thread once again reminds me to think again before i buy any more equipment. Thank you.

    For everybody. Touch your heart. Do you really need them (so many?) Food for thought.

  12. #12

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    Many hobbyist don't have two units for redundancy
    Some of them buy 2nd hand D3 / D700.
    They may be using the "cheaper" D90 as backup.
    They also have their day job to support their hobby.
    They don't need to change their lens and flash every 5 years since the usage is lower than the pro (less wear and tear).
    They don't own a studio so they don't have to fear rising rental cost and utility bills.

    Prehaps they are not as dumb as you thought

    For every successful business, you not only need to calculate the return on investment (ROI) but you also need to think about how to keep operational cost low.
    You don't need to upgrade to the latest gear every time a new model become available. This would keep operation cost low.

    You may use D4 as main and D3 as backup instead of buying 2 sets of D4.
    When D5 come out, you can sell D3 and use D5 as main and D4 as backup.
    This would also keep your operation cost low.

    Basic accounting skill is need to start a small business. Nobody should start a business if they don't know how to calculate profit and loss.

    How to start a small business?
    Last edited by sony90290; 22nd March 2013 at 09:01 AM.

  13. #13

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    Canon 5D MkIII|70-200 f/2.8L IS II USM|24-70 f2.8 L II USM|Σ 50 f1.4 EX DG HSM

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    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    Who cares? We are all dumb in one way or another.

    I had a (late) friend who was so calculative that he was reluctant even to treat his friends a cup of coffeeshop kopi.
    But when it came to ChinaGirls, this (late) friend of mine comes all unglued. He will do anything for them and spare no expense.
    It seems he frittered $900,000 on them.

    So who is clever and who is stupid? The answer is not always clear.

    You mean the motorist who pays $92,000 for the 10 years small car COE is "clever"?

    If you tallied all the costs of your photo hobby over your entire life, say it total $X - please note that in one night at the RWS or MBS casino, there are people who lose more than that.

    Life is short.
    Don't calculate too much.
    Sometimes you win, sometimes you lose.
    Last edited by ricohflex; 21st March 2013 at 09:59 PM.

  15. #15

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    good read but i have to agree with everybody else other than TS.

  16. #16
    Senior Member G-man's Avatar
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    This is a useful thread for those who are keen to do their sums. After all, in business one tries to spend the least and get the most. Yes it's distasteful to most of us on a basic human level but business was never about human emotions.

    While I see where TS is coming from, I can also see why many think it's rather long winded (it is! But I digress). Nobody said accounting was fun, short and succinct. Rather it's dry, long drawn and dull. But, an absolute necessity in the successful running of any business be it a 1-man show or an MNC.

    TS unfortunately, seems you are casting pearls before swine. No offence but most here are hobbyists who do indulge in a little freelance work here and there so as you have rightly put, depreciation does not get factored in.

    P/S - casting pearl before swine does not mean you guys are swine hor! It's just a proverb that suggests not everyone will appreciate what you say or do.

  17. #17

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    Quote Originally Posted by G-man View Post
    This is a useful thread for those who are keen to do their sums. After all, in business one tries to spend the least and get the most. Yes it's distasteful to most of us on a basic human level but business was never about human emotions.

    While I see where TS is coming from, I can also see why many think it's rather long winded (it is! But I digress). Nobody said accounting was fun, short and succinct. Rather it's dry, long drawn and dull. But, an absolute necessity in the successful running of any business be it a 1-man show or an MNC.

    TS unfortunately, seems you are casting pearls before swine. No offence but most here are hobbyists who do indulge in a little freelance work here and there so as you have rightly put, depreciation does not get factored in.

    P/S - casting pearl before swine does not mean you guys are swine hor! It's just a proverb that suggests not everyone will appreciate what you say or do.
    I think TS's thread is targeted towards aspiring pros, not amateurs doing a bit of small jobs here and there to fund the hobby, but it sure fan lots of emos, from the wrong targets.
    WTB Manfrotto RC4 L Bracket

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    Senior Member G-man's Avatar
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    Quote Originally Posted by sjackal

    I think TS's thread is targeted towards aspiring pros, not amateurs doing a bit of small jobs here and there to fund the hobby, but it sure fan lots of emos, from the wrong targets.
    Hence my statement "casting pearls before swine"

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    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    at the risk of sounding like a broken record... let's keep this discussion civil, shall we?
    If Life worked on auto mode then manual mode for photography would have never existed. ― Deeksha Mittal

  20. #20

    Default re: Depreciation of Equipment - the Aspiring Pros need to know

    Quote Originally Posted by sjackal View Post
    I think TS's thread is targeted towards aspiring pros, not amateurs doing a bit of small jobs here and there to fund the hobby, but it sure fan lots of emos, from the wrong targets.
    They were probably lured in by the misleading (and provocative, as TS admitted) thread title. Intention was probably to attract more eyeballs, but it probably also caught people for whom the content is irrelevant.

    ------------

    Back to the subject... For anyone serious about creating a sustainable and profitable business (in any industry), this is indeed fundamental knowledge.

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