Undercutting & Underpaying: is the short term gain worth the long term loss?

[mattlock]

Had a really interesting experience today that got me thinking about this.
I find many people undercutting each other in various media fields (photography being one of them)
I'd like to hear what people think about it and maybe they can share their experiences related to the issue.

I personally have offered my services at really cheap prices just to get a certain job I wanted, but at what point does it become detrimental to your own pocket and the market in general?
Are there moral issues to consider also when you undercut to get a client and then you have to pay your own employees or assistants less?

 

[Benign]

Mattlock,

The issue is survival.....bills to be paid, mouths to be fed.

Just my worthless peanut shell thought....

 

[HeWolf]

It happens in many areas, not only media fields.

That's why so many construction companies went bankrupt. All bidded projects with unreasonably low bid. Won the tender, so what?

IT industry also the same. Companies undercutting each other. Only some to realise later that the hat is too big for the head.

 

[zaren]

undercutting is a one way ticket to financial ruin.

know your worth, and price accordingly.

 

[Hommie]

It's a bread and butter issue here. If you have not felt the effect working in the media industry that meant that your work is still plentiful. If not, you might starve.

 

[detrop]

sad. many ppl do that juz fr d sake of making ends meet fr a while. but i suppose its better if we keep to the standard price and offer slightly better service in relation to the price. doesnt necessarily means better product in comparison to the higher priced ones, but sometimes, good service and a standard price might juz be the key to retaining customers. probably more on customer relations.

juz my immature opinion.

 

[Hommie]

Fact is that most Singaporean doesn't value quality as much as cost factor. Look at the state of local TVC, how many of you are sick and tired of those cheapo sliming/diet and mega mattress ads around?

 

[detrop]

i know. but certainly many ppl are fussy abt good service?

 

[DeusExMachina]

This happens coz Singaporeans can't get their act together. If there were controlling unions many things will be different.

 

[mattlock]

I met a photographer today who wanted to bypass the talent agency and so hired people off the street for shoots, and since these people aren't knowledgeable about pricing they're ok with small amounts. I was quite distressed when I found out how little the photographer was paying, and without even any contractual agreement.

many of the modelling agencies here have grouped together to try and raise the rates being offered to models for runway and print, which sounds like a good plan

but what's a good way to convince people that it's worth paying a fair price for services?
there was quite abit of mention of wedding photographers who undercut like hell to get jobs.
It'll be great to hear more personal experiences, for those who are still surviving in their businesses.

 

[ckuang]

Hi MattLock

I'm in the photographic industry and have increased my prices significantly over the last year as opposed to going lower and even when I started I was far from being the lowest. I never try to undercut other photographers and will not do so for the following reasons [my main source of money is from actual day wedding photography]

1. Every single time i use my camera there is a depreciation/operating cost to it, i cannot charge lower than the operating cost, because if i did, i might as well stay home and not use the camera. I think many photographers that try and undercut do not realize how expensive this depreciation is. Say you invest a small $8000 into a camera system, charge $600 to do a wedding, depreciate your equipment over 4 years and do 50 weddings a year, your equipment depreciation is $60 per wedding which is a whopping 10% of your day rate. Ouch. This is even before transports, food, pay, utilities, advertising, computer equiment, repairs, and on and on.

2. I target higher end clients. Their concern is not money as much as quality. In fact, if i tried to undercut they would see me as having no class and there's the end of my market for me. The strange thing is that the more expensive I am, the better they like it. I know strange when you kind of think about it but it's true.

3. If i was going to work for peanuts, there's a lot of other jobs out there that are better paying and more fun to do.

4. There is a big tendency for young photographers starting out to try and charge low rates, especially in the wedding industry. Terrible, terrible mistake because they don't realize that the price you start at is the market segment you are going to be stuck in for a long long long time. So if you start at $600, they are going to be stuck in the $600 segment because the referrals you getting are going to be for that market sector. Their reputation and personal image becomes associated with that market sector and higher end brides wouldn't want to go near them with a 10m pole. Yes, in know it sounds snobbish but this is seriously how it works. And when you want to get out of that market sector, it's like having to start your business all over again because all your past referrals now no longer fit into your marketing/business plan. I can't say for sure if this is the same for commercial work, but i have a strong feeling it is.

So what is the solution to undercutting...there are several which I feel would work well for aspiring wedding photographers in Singapore

1. Assist first until you are up to par, then start your own business at a sensible pricing so you won't be stuck in crappy market segement for the rest of your life.

2. Make sure you have a definable style. I find people tend to pay a lot more if you have a very strong style. Not everyone will like it, but those that do are the ones that will pay a lot more and be more appreciative.

3. Get together with other photographers to form groups to share resources and set a minimum pricing. For some strange reason, I find photograpehrs in Singapore hate to work together and share. That's a terrible loss as an industry.

4. Quit worrying about those low cost photographers from Malaysia or India or whatever. They will always be here and that's fine. Even with them around, our market is still not even as competitive as New York or London. Instead of trying to match them on price, why not try and see where you can market yourself differently or provide value added services which they are unable to to

5. Consider investing in client education. Wedding photographers here spend thousands and thousands on gear thinking it will make them a better photographer or that clients will pay them more. 99% of my clients couldn't care less if i turned up at their wedding with a holga. The only times client have paid me more is when i have approached them with the intent of educating them about my work.

6. The one thing unique about so many Singaporean wedding photographers is that they have talked themselves into a corner by constantly complaining that the client won't spend money, have low budgets, etc, etc. They've said it so often to the point where they actually believe it's true and have become too scared to raise prices and have stayed low for years and years. But think about it if a couple if willing to get 30 tables and spend 30k you think they really give a crap if the photography is 1k or 3k or 5k or more?

So anyway, that's my spiel on undercutting.

 

[catchlights]

Hi ckuang,


Agreed with you. Good explanations.

 

[Pro Image]

Hi MattLock

I'm in the photographic industry and have increased my prices significantly over the last year as opposed to going lower and even when I started I was far from being the lowest. I never try to undercut other photographers and will not do so for the following reasons [my main source of money is from actual day wedding photography]

1. Every single time i use my camera there is a depreciation/operating cost to it, i cannot charge lower than the operating cost, because if i did, i might as well stay home and not use the camera. I think many photographers that try and undercut do not realize how expensive this depreciation is. Say you invest a small $8000 into a camera system, charge $600 to do a wedding, depreciate your equipment over 4 years and do 50 weddings a year, your equipment depreciation is $60 per wedding which is a whopping 10% of your day rate. Ouch. This is even before transports, food, pay, utilities, advertising, computer equiment, repairs, and on and on.

2. I target higher end clients. Their concern is not money as much as quality. In fact, if i tried to undercut they would see me as having no class and there's the end of my market for me. The strange thing is that the more expensive I am, the better they like it. I know strange when you kind of think about it but it's true.

3. If i was going to work for peanuts, there's a lot of other jobs out there that are better paying and more fun to do.

4. There is a big tendency for young photographers starting out to try and charge low rates, especially in the wedding industry. Terrible, terrible mistake because they don't realize that the price you start at is the market segment you are going to be stuck in for a long long long time. So if you start at $600, they are going to be stuck in the $600 segment because the referrals you getting are going to be for that market sector. Their reputation and personal image becomes associated with that market sector and higher end brides wouldn't want to go near them with a 10m pole. Yes, in know it sounds snobbish but this is seriously how it works. And when you want to get out of that market sector, it's like having to start your business all over again because all your past referrals now no longer fit into your marketing/business plan. I can't say for sure if this is the same for commercial work, but i have a strong feeling it is.

So what is the solution to undercutting...there are several which I feel would work well for aspiring wedding photographers in Singapore

1. Assist first until you are up to par, then start your own business at a sensible pricing so you won't be stuck in crappy market segement for the rest of your life.

2. Make sure you have a definable style. I find people tend to pay a lot more if you have a very strong style. Not everyone will like it, but those that do are the ones that will pay a lot more and be more appreciative.

3. Get together with other photographers to form groups to share resources and set a minimum pricing. For some strange reason, I find photograpehrs in Singapore hate to work together and share. That's a terrible loss as an industry.

4. Quit worrying about those low cost photographers from Malaysia or India or whatever. They will always be here and that's fine. Even with them around, our market is still not even as competitive as New York or London. Instead of trying to match them on price, why not try and see where you can market yourself differently or provide value added services which they are unable to to

5. Consider investing in client education. Wedding photographers here spend thousands and thousands on gear thinking it will make them a better photographer or that clients will pay them more. 99% of my clients couldn't care less if i turned up at their wedding with a holga. The only times client have paid me more is when i have approached them with the intent of educating them about my work.

6. The one thing unique about so many Singaporean wedding photographers is that they have talked themselves into a corner by constantly complaining that the client won't spend money, have low budgets, etc, etc. They've said it so often to the point where they actually believe it's true and have become too scared to raise prices and have stayed low for years and years. But think about it if a couple if willing to get 30 tables and spend 30k you think they really give a crap if the photography is 1k or 3k or 5k or more?

So anyway, that's my spiel on undercutting.

Explaination is clear cut but only really meant for full time photographers. Those who is into freelance, will still undercut. No one will really follow as there is no ethics in Singapore photography market, especially in ROM and Actual Wedding Day. Nowadays, I just open my minimum price at $1,200 for Actual Wedding Day.

I just met a couple that wanted to shoot ROM. Before I even showed my folio, they told me they were approach by a freelance photographer who is willing to do it for $80.00 plus print and additional digital photographer as back up for 4 hours. They even asked me whether it's a good deal. At the end of the day, after much persuasion they decided to use me instead of the $80.00 photographer. My price was $550.00 for 2-3 hours and small mini coffee table album. So it boils down on how your good your sales technique is, your presentation as well.

90% of the photographers who just startd are quite desperate to get a portfolio, so in order to close a deal they sell themselves really cheap. There is no control. I have to comments for those who shoot for their best friends but if you are smart you will charge them as well.

If you educated a couple well, they will pay. So far, if they insist on their own pricing, I will just pass. I will not introduce to any photographers as this will pull the market price down.

This are my MINUMUM rates.
Actual Wedding Day - minimum $1,200 per day for Chinese, Indian and Church Wedding
- minimum $1,400 for 2 days for Malay Wedding.

ROM - minimum $450 for 3 hours

 

[catchlights]

Explaination is clear cut but only really meant for full time photographers. Those who is into freelance, will still undercut. ..........................................

If you educated a couple well, they will pay. So far, if they insist on their own pricing, I will just pass. I will not introduce to any photographers as this will pull the market price down.

This are my MINUMUM rates.
Actual Wedding Day - minimum $1,200 per day for Chinese, Indian and Church Wedding
- minimum $1,400 for 2 days for Malay Wedding.

ROM - minimum $450 for 3 hours

:thumbsup::thumbsup: couldn't agree more.

 

[arttl]

There's always different level of photographers to serve different levels of the market. So you can't really say it's undercutting.

Clients willing to pay peanuts, I'm sure there'll be someone out there who is willing to do the job. At the end of the day, who's the one on the lossing end? Both the photog and the client.

And not forgetting that underpaying is SOUL KILLING ah!

 

[fotoudavid]

Let it be, let it be, those who under cut will soon raise their price.................

cos cannot tahan the low price long....

 

[mpenza]

1. Every single time i use my camera there is a depreciation/operating cost to it, i cannot charge lower than the operating cost, because if i did, i might as well stay home and not use the camera. I think many photographers that try and undercut do not realize how expensive this depreciation is. Say you invest a small $8000 into a camera system, charge $600 to do a wedding, depreciate your equipment over 4 years and do 50 weddings a year, your equipment depreciation is $60 per wedding which is a whopping 10% of your day rate. Ouch. This is even before transports, food, pay, utilities, advertising, computer equiment, repairs, and on and on.

This applies only to people who are making money out of photography though. There're many who are into it as a hobby and the equipment are treated as sunk costs. Any "revenue" that they get are extra on top of their full-time job.

Just my view though.

 

[GitS]

this is somewhat like the prisoners dilemma - the industry settles at a suboptimal equilibrium, the industry gets screwed as the perception for a lot of people will be "but i can get this guy to shoot at this low price what" , the photographers get screwed becos charging submarket prices is untenable for long. nobody wins.

it seems that the undercutters are succumbing to the syndrome of TCS programming i.e. lowest common denominator. any market that subsists on low margins is destined for mediocrity.

my view is to let all those bottom feeders out there do their thing an let them dominate the price sensitive/no expectations segment of the market.

charge according to what you feel is a fair wage for your respective talent. else we will alway remain camera men, instead of photographers. trust me, i have been shooting long enough to be treated at times as just a camera man, but at the end of the day, when i see the couple's face light up on seeing the album, thats enough fulfilment for me, not to mention the $$$ hahaha!:bsmilie:

 

[Sion]

Explaination is clear cut but only really meant for full time photographers. Those who is into freelance, will still undercut. No one will really follow as there is no ethics in Singapore photography market, especially in ROM and Actual Wedding Day. Nowadays, I just open my minimum price at $1,200 for Actual Wedding Day.

I think many reasoned amatuers could produced technically competent and aesthetically satisfactory shots or more if given the opportunity of a weekend assignment. However it's the marketing and pricing knowledge they perhaps lack.

It's forum like this that the professionals would show us the best approach to do it for the long-term good of everyone.

 

[Pro Image]

I think many reasoned amatuers could produced technically competent and aesthetically satisfactory shots or more if given the opportunity of a weekend assignment. However it's the marketing and pricing knowledge they perhaps lack.

It's forum like this that the professionals would show us the best approach to do it for the long-term good of everyone.

I think this kinda of topic have been discuss again and again. Working photographers have gave them some valuable advice to some of them before. And those who really know full time photographers do not undercut other's as they really know how difficult it is to earn a living as one.

It's those who under cut would not know why they charge a certain rate towards their potential clients. Until you really become a full time photographer, then you will feel the pinch. It's difficult to wholly explain on how they market ourselves as each of one have a different approach.

I have shown what some of my pricing are and always stick to it. In fact, I always open my pricing higher than what I wrote earlier. Photography fees/service should not be bargain by customers but we can throw in some freebies for them to make your package more attractive. Freebies is really up to you to decide on what you can offer them.

If you look at the Consumer corner, some of us tried to explain about the pricing (especially the pricing) but it's always taken out by the Moderators. So we did explain to some but too bad, the Moderators do not see it that way. The only reason why they take our explaination is because some members loves to add fuel to the fire.

I hope the moderators will reconsider on some posts that we posted much earlier (this is about a couple of months back) not to take it out. The pricing and marketing that we are giving to some members are purely feedback from working photographers. This way, at least there is less undercutting. Although it's a Consumer Corner but we need to educate them as well that we are not "pasar malam photographers".

This will be good to even serious hobbyists as they will find plenty of satisfaction on taking photos and earning some side line (same pricing/fees with full time photographers) to fund their expensive equipments.