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When pricing your product, think like a photographer

(ENTREPRENEUR NEWS) On of the growing pains associated with starting your own business is knowing how much to charge for goods and services. Use these helpful tips one photographer uses for pricing a photo and get the ball rolling!

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More than a thousand words

A picture may say a thousand words, but a photo doesn’t just tell a story. A simple photo can be an excellent example on how to price your next business product.

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Photography blogger Sarah Petty wrote her method of pricing a simple 8×10 inch photograph for as advice for her fellow photography business owners. But her advice can actually be applied beyond the world of studios and darkrooms. Here’s how to think like a photographer whenever developing the cost of your next good or service.

Step One: Know thyself (and know thy client)

Your first step in knowing your next price for your next best selling item or service is knowing what type of business you run. This is solved by answering the simple question: are you a high volume seller with lower prices or lower volume seller with higher prices?

This question can be answered by looking at your sales for the past month. Are your trends indicating your customers prefer a more personalized, boutique approach to the things they purchase from you (with higher prices), or do you move a lot of product (with lower prices)?

When you understand what type of business sales trend you’re following, move onto step two.

Step Two: Understand your sunk costs.

A sunk, or fixed cost, is the price to manufacture or deliver a good that will not change (unless reacting to the market’s inflation). What is the basic core cost of manufacturing the product you intend to put in your store? That amount, your cost of goods sold (CGOS), is the baseline from which your ultimate price will come from. Now to step three.

Step Three: Look at your other overhead for producing your product.

So you know your CGOS, so all you do now is just add what money you want to make off that? Wrong. You’re forgetting that you’re not just making that product. You are maintaining a store or electronic storefront, you’ve got office space, human resource costs, and other things that may slip by whenever you’re trying to develop your price for your next big thing. This doesn’t mean you’re charging a customer a month’s rent for consultation fee, of course, but knowing that you’re going to need a comfortable cushion whenever figuring this product’s cost out. According to the federal Small Business Administration you should allocate a portion of the profit “to each service performed or product produced” and this cost should be calculated annually. Finished, now to step four.

Step Four: Profit!

Finally, after factoring your CGOS and your overhead, now you can decide what you want to make by selling. Petty personally uses the approximation of making 4 or 5 times her CGOS plus her overhead per item. Whatever the ultimate cost is, it has to be able to lend you the ability to live comfortably in order for you to be able to manufacture more in the future.

The next time you have to develop a price for a new product, don’t forget to step into the world of photography for awhile. You’ll be saying cheese all the way to the bank.

#KnowYourPrice

Alexandra Bohannon has a Master of Public Administration degree from University of Oklahoma with a concentration in public policy. She is currently based in Oklahoma City, working as a freelance filmmaker, writer, and podcaster. Alexandra loves playing Dungeons and Dragons and is a diehard Trekkie.

Business Entrepreneur

How to know when a candidate is a true fit for your startup

(BUSINESS ENTREPRENEUR) Knowing whether a potential hire is a good fit for your startup is a difficult one, so we suggest asking these 3 questions at your next interview.

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Hiring, in general, can be a daunting task. Knowing whom you like to fill the role can seem pretty ethereal until you put pen to paper. The struggle is even bigger for smaller companies, such as startups, as they’re not only looking to fill a role based on skills, but they’re also looking to find someone who will jive with their existing employees and culture. And while culture-driven corporations like Apple do this to a degree, too, it’s nowhere near as delicate as hiring can be for a startup.

Startups often struggle in bringing on new hires from beginning to end. A lot more is at stake when you’re hiring for a small company. Any missteps can be detrimental to profitability, productivity, efficiency, and even business projections. But if you’re a startup looking to hire, look no further.

Writer and former Google Vice President, Jessica Powell, has some great questions to ask your potential future hires to limit any possible setbacks.

It’s important to realize that Jessica’s experience is pretty limited to corporations and that she’s spent much of her time at one of the biggest of them all – Google. Therefore, as a seasoned businesswoman with vast experience in startup life, I’ll be adding some colorful insights that should help both employers and employees even further.

1. In her article, Jessica alludes that an employee’s resilience is a big part of being able to handle a startup, and I completely agree. Startups are typically very touch and go. Even if the startup appears successful, policies, processes, and even something as critical as re-allocation of budget are all subject to scrutiny – often until a time when the company sells or goes public. This is exactly why Jessica recommends employers ask resilience-related questions, probing for “weaknesses and missteps”.

Our favorite question related to resilience that she suggests employers ask in interviews is: “Some people tend more easily to put responsibility or blame on others, and some people tend to put it on themselves. Where would you see yourself? Can you give me an example of when this happened?”

We like this question because it’s incredibly important to know if a new potential employee has perfectionist tendencies and is incredibly hard on themselves, or if they are incredibly hard on their co-workers. If you’re speaking with someone who already puts the blame on themselves half the time, you may be looking at a self-starter who has the potential to lead – very important when considering future scaling, especially because many startups like to promote from within. If they’re more on the perfectionist side of things, you may also be speaking with someone who is incredibly resilient. Why? Because they’re already hard on themselves, which often times leads to allowing others to be hard on them. That means they’ve probably experienced a lot of defeat, but they keep on going, which, in my opinion, is exactly the type of employee startups need.

2. Jessica also goes over how ambiguity in the workplace (again, something very common for startups) can affect new hires, which is why she makes it a point to ask pointed questions that not only gauge the potential hire’s comfort with ambiguity, but also what they value their work environment and career and “to see how they approach complex problems”.

We actually have 2 questions we think startup employers should ask in the ways of ambiguity. The first is pretty basic: “Do you love your routines or do you like to do things on the fly? How much structure do you like in your work day?”

We love this question because startups are often moving so quickly that any employee needs to be accustom to changes be made on the fly. It’s a question that basically assesses whether or not something is a go-getter and can work with unknowns. Let’s say you’re an employer hiring for a sales role. What someone who has never worked at a startup might think is that they’re 100% supported with consistent documentation, training, and pay.

What they don’t realize is that startups often shift gears pretty quickly, so any collateral they may have provided you (I’ve worked for startups where this wasn’t even offered), for example, can quickly become out of date – and with the limited resources some startups have, it could be a month or longer before someone actually gets you what you feel you need to do well in your job. If that’s too ambiguous for you as an employee, you may consider working in a more corporate environment.

The second question is one that I see fit for anyone above entry-level, but mostly for those potential hires who are looking for an upper management or leadership role. Reason being, this question brings experience into question and obviously, if you are entry-level, you don’t have much yet. The question is: “Where was your favorite place to work and why?”

There’s a lot that an interviewer can learn about an interviewee with this question. Not only does the topic of past employment come up, but it also asks the potential hire to dig deep and explain why they liked their past role. This can often lead to other probing questions, such as “why are you looking to leave your current role” and “was there anything about this role you didn’t like?” Depending on their answer, an employer can quickly see if the interviewee’s past experiences, and their preferences, line up with what the employer is looking for.

There are many more great questions you can ask in interviews, but when it comes down to figuring out if someone is fit to work at your startup, starting with these questions can push you past the average, cliché questions at warp speed, making room in the often time-crunched interviews for solid and valuable data on the potential hire.

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Business Entrepreneur

Which city has your back when trying to start your business?

(BUSINESS ENTREPRENEUR) Have you ever wondered which city will support your big idea, and help you achieve your dreams? Well here are the top 10 entrepreneur friendly cities.

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So, ya want to start a business? (Even if you don’t, just play along.) Well, then it’s important to know the best city in which to start a business. Take a moment to come up with your top-10 predictions prior to seeing what Inc. Magazine and Startup Genome had to say are at the top.
The top 10 are as follows: 1. Austin (what’s up?!), 2. Salt Lake City, 3. Durham, 4. Denver, 5. Boise, 6. San Francisco, 7. Charleston, 8. San Diego, 9. Phoenix, and 10. Miami.

10. Miami:

  • is number One in rate of entrepreneurship
  • number 19 in high-growth company density
  • number 22 in net business creation.

Much like the weather, the startup scene just keeps heating up.

9. Phoenix:

  • is number 2 in net business creation
  • number 7 in population growth
  • number 9 in job creation.

Many have flocked to the Arizona city for warm weather and lower costs of living.

8. San Diego:

  • is number 7 in rate of entrepreneurship
  • number 7 in high-growth company density
  • and number 7 in early-stage funding deals.

Three rated sevens in a row? Somebody call Monica Gellar!

7. Charleston:

  • is number One in net business creation
  • number 6 in high-growth company density
  • number 10 in job creation.

In the Souths of Carolina, founding tops funding.

6. San Francisco:

  • is number One in early-stage funding deals
  • number 2 in wage growth
  • number 8 in high-growth company density.

All of this in spite of the pricey cost of living.

5. Boise:

  • The capital of Idaho is number 2 in population growth
  • number 3 in job creation
  • number 3 in net business creation.

According to the data, you can buy four houses in Boise for the cost of one house in San Francisco. Breaking that knowledge out at my next cocktail party.

4. Denver:

  • is number 2 in rate of entrepreneurship
  • number 4 in high-growth company density
  • number 8 in wage growth.

People have been moving to this Colorado city like crazy

3. Durham:

  • is number 3 in high-growth company density
  • number 8 in net business creation
  • number 10 in job creation.

This North Carolina hub was once known for big tobacco

2. Salt Lake City:

  • is number One in high-growth company density
  • number One in job creation
  • and number 3 in population growth.
  • This spot is popular with adventure seekers

    1. Austin:

    • is number 3 in population growth
    • number 27 in net business creation
    • number 4 in early-stage funding deals.

    The American Genius’s home town is leading the nation in job creation and high-growth company density.

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Business Entrepreneur

MLMs can be dangerous; this podcast explains the schemes

(ENTREPRENEUR) The Dream podcast provides another valuable way to understand the pervasive nature of MLMs. From their history and tactics, to their legality.

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MLMs the dream podcast

Okay, if you haven’t been a part of an MLM scheme or known someone in an MLM who has had things go horribly wrong, it can be hard to understand why they are so pervasive and so dangerous. If you don’t know what an MLMs are, check out our introduction here, but if you’re ready to learn more, consider checking out The Dream, a podcast by Little Everywhere and Stitcher.

The Dream podcast is a great way to gain insight into the world of MLMs. Narrated by Jane Marie, this podcast uses a blend of research, interviews and personal experiences – one team member actually joins an MLM – to give an in depth view on how they operate. You’ll learn about why people join and stay in MLMs, ways they screw over their customers and the history behind MLMs.

This podcast manages to tackle difficult topics without dehumanizing the people victimized by the system. One reason is likely due to the fact Marie grew up surrounded by individuals who had been sucked into MLMs, including family members, and she discusses their plights with compassion.

That said, the sweetness of sympathy in each episode is cut with legitimate research from academic authorities. From the history of MLM mentalities to the legal battles waged around these pyramid schemes masquerading as businesses, listeners will gain a logical, as well as emotional, understanding of how these schemes operate.

Each episode ranges from 30 – 60 minutes, perfect for listening during a commute.

Need a second opinion before taking the plunge? Here’s what others have had to say about The Dream.

Alice Florence Orr of The Podcast Review notes: “The podcast zooms in and out, encompassing both the deeply personal and shockingly political.”

Shannon Plaus of Slate adds that: “This relatability is exactly what makes the show so excellent. Rather than perching from a place of financial guru explaining to people why MLMs are so bad, it willingly positions itself as closer to the victim of such a scheme.”

The first season is eleven episodes, with an additional four “bonus” episodes, opening with a discussion about pyramid schemes before diving into the more sinister world of MLMs. The Dream has also recently started its second season, this time with a focus on the “wellness” industry.

If you want to learn more about MLMs, you could do a lot worse than the well-researched, deeply personal perspective of The Dream. Check it out today wherever you get your podcasts.

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