Much vigorous debate has been focused on the Singapore photographer’s fees. Some has argued with idealistic perspectives that photographers should uphold high fees and maintain creativity standards, others have called for a more logical and business-based solution to pricing. Yet there is also a sizable contingent that seeks to use price competition to distort market pricing of a Singapore photographer’s service.
What I meant by service broadly include not just photography coverage, but also other services such as digital editing, problem-solving, client servicing, equipment rental, and other services which have a cost.
From an economic perspective, the lament about lowly valuation of the Singapore photographer can be chiefly due to Asymmetric Information, one party has more information than the other. The buyer (the Client) usually has little ideas about whether the photography service which he is considering engaging is a ‘Lemon’ or a ‘Plum’. Conversely, the Seller (the Photographer) has perfect information about his photography service: his skills, equipment, work attitude, etc.
(A ‘Lemon’ is 1940s-1950s American car-dealer slang for a bad car; a ‘Plum’ is slang for a good one. In this case, a lemon is loosely use to mean an inexperienced and ‘lousy’ photographer, while a plum means an experienced and capable one)
But no matter how brilliant or abysmal his photography service is, he will market it as a plum (think of the many wedding photographers who painted a flowery picture on how they understand the single most important day of your life and that his photos will capture that beautiful moment; often they themselves are not married! Of course being married is not a requirement for good wedding photography, but I digress).
To see the problems associated with such asymmetric information and the resultant inefficient function of the Singapore photographer market, we build a simple model:
- Assume a simple market in which there are 100 photographers who are trying to sell their photography service and in which there are 100 clients who are looking for photography service
- Every one knows that 50% of the photographers are lemons, and the other 50% will be plums
- None of the clients know which is which; yet every single photographer knows the precise standard of his photography service
- Plum photographers would not be willing to sell their photography service for less than $125/hr, whereas lemon photographers would be happy to get $40/hr for theirs
- Clients would be willing to pay up to $150/hr for a plum (if they require a plum to do the job), but only up to $50/hr for a lemon
[The hourly rates are chosen to illustrate the model and in no way be taken to mean that all $40/hr photographers are lemons]
With the existence of symmetric information, where every one knows who is a plum and who is a lemon, and so clients who need only a lemon to do the job will hire one, and hire a plum if his needs are more demanding; it can be easily seen that no problems would exist. Two different markets would run parallel to each other, having an equilibrium hourly rate in each market for plum and lemon.
But since asymmetric information exists, there is only one combined market for photography service, and a potential client cannot determine easily which photographer is a plum or a lemon, he will have to guess about the quality of each photographer (maybe from his portfolio, recommendations, website, etc)
Given that 50% is plum and 50% is lemon, the client would be willing to pay up to his expected marginal valuation of the photographer’s service:
Expected Value = (0.5 x $50) + (0.5 x $150) = $100
The problem now is: no plum photographer would be willing to accept $100/hr for his photography service as he charges at least $125/hr. Lemon photographers would be ecstatic to sell their photography service for $100/hr since they are willing to provide the service for as low as $40/hr.
At the hourly rate of $100/hr; only lemon photographers will put up their service for hire.
The market for plum photographers has failed. And the market for Singapore photographers is flooded with lemon photographers.
Eventually, clients will realise that only lemon photographers are in the market, and they will revise their expected value to a lower amount: an amount up to $50/hr.
Therefore, lemon photographers convey a detrimental externality upon plum photographers. When somebody attempts to sell a low-quality photography service through a low price, he affects all potential clients’ perceptions of the quality of the average photographer on the market.
If too many low-quality photography services are placed on the market, it makes it extremely difficult for photographers who produce high-quality service to sell their services.
But of course, the trick now is to find the correct market price for an average quality service. Some says it is $150/hr, others say it is $80/hr, or even $50/hr. Is the hourly rate absolute or is there further reduction if more hours are taken? $2000/8hrs or $500/10hrs Furthermore, what is average quality? A set of 300 nicely exposed photographs and a friendly photographer? Or 100 creatively framed brilliant photographs with a diva-like photographer?
The other issue to grapple is on how plum photographers can (and must) convey credible signals to potential clients on their quality. Finally, the prevailing culture of accepting just mediocre photographs may also constrain the development of the local photography industry. Personally, I don't think this problem is going to be resolved anytime.
If you have read this far, I applaud you for having the patience to trudge through all this. In the meantime, keep shooting!