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.