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Business pro tip: 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

Is this normal (you wonder about your business)?

(ENTREPRENEURIALISM) It can be lonely not being able to openly ask potentially embarrassing questions about your business – there’s a way to do it anonymously…

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Entrepreneurialism is wildly rewarding – you are fully in control of the direction of your company, and you’re solving the world’s problems. But it’s also isolating when you’re not sure if what you’re experiencing is normal.

Sure, there’s Google, news networks (like ours), and professional connections to help you navigate, but sometimes you just want to know if something simple you’re seeing is normal.

Is Instagram Stories really where it’s at? Probably not if you’re a consultant.

Is it normal for an employee to attempt to re-negotiate their salary on their first day? Nope, but how do you keep the desirable employee without being bullied into new terms?

Do all entrepreneurs spend their first year in business as exhausted as a new parent? Sometimes.

You have questions, and together, we can share our experiences.

We have a brand new Facebook Group that is already wildly engaging, active, and you’d be amazed at how selflessly helpful people are – and we invite you to be one of them.

Want to anonymously ask a question about something you’re unsure is normal or not?

Click here to submit your question, and we’ll select as many as possible to discuss in the Facebook Group!

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Business Entrepreneur

Amazon on a collision course with politicians as they strengthen their monopoly

(BUSINESS) E-commerce has come a long way in the last decade, specifically led by Amazon, but are their controlling ways putting them on a collision course with regulators?

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In March, Amazon stopped replenishing weekly purchase orders for tens of thousands of vendors in a move that has stirred up some trouble. The tech giant has once flexed its power over first-party sellers over their platform. And it’s not the first time.

Amazon originally sent out to vendors as an automated message citing the hold up in orders as a technical glitch. The following day, vendors were told the change was permanent. The affected vendors were categorized as making $10 million or less in sales volume per year and not having managers at Amazon. Vendors selling specialized goods that were difficult to ship were also a factor.

The effects can have remarkable effects on the market as Amazon’s algorithms decide who is able to sell what to whom via their near-ubiquitous platform. According to John Ghiorso, the CEO of Orca Pacific, an Amazon agency for consultation and manufacturers representatives, the decision is driven by financial data such as total revenue, profitability, and catalog size.

In a response from an Amazon spokesperson, the change was made in order to improve value, convenience, and selection for customers. The mass termination of purchase orders and the delayed response from Amazon herald the transition to the One Vendor system, putting vendors in an exclusive relationship with Amazon. This system will merge the current Seller Central and Vendor Central.

Amazon’s message is loud and clear: they will do what’s in their best interest to mitigate the market for their convenience. One may be reminded of the anti-trust lawsuit against Microsoft in 2001.

The lack of warning didn’t do them any favors either.

While smaller businesses need to change for Amazon’s program, first-party business will revolve around larger brands like Nike with whom Amazon is maintaining a relationship.

Despite the streamlined platform Amazon is going for, the company wields power over vendors and customers alike. Capitalism is one thing, but monopolies are a whole other ball game, and politicians are finally paying attention.

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Business Entrepreneur

Culture Codes is the guide you need for company culture questions

(BUSINESS ENTREPRENEUR) One of the biggest sellers of a company to a prospective employee or customer is their culture. Culture Codes has compiled some the biggest companies cultures in convenient decks for you to study and align with.

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Organizational culture is a hot button of conversation. While a variety of definitions exist, one way of defining Culture is the way businesses exist – a summary of values, rituals, and organizational mythology that helps employees make sense of the organization they work in.

Organizational cultures are often reflected in Mission, Vision, and Value statements of organizations.

What many entrepreneurs or new organization struggle with as well, is how to create a culture from the ground up. What kinds of statements and values do they advocate? What are areas of focus? Who are our competitors and what can we do to create a service, product, or quality advantage?

Building a strong culture can be challenging, but a good place to start is looking at the best cultures around.

A new resource by Tettra, Culture Codes, has everything you could want to know on different companies their cultures available for you to study up.

Over 40 companies employing over 280,000 employees have created culture decks and collected core values and mission statements. Companies like Spotify, Netflix, LinkedIn, and NASA have all contributed information.

This information is great for young companies or entrepreneurs to start building a schema about what kind of culture they want to create.

Or existing established companies can look towards peers and competitors and help decide what statements they want to engage culture change on.

For job seekers, Tettra can help potential employees gauge if they are a fit for an organization, or discover that maybe an organization they dream about working for has a culture they may not jive with. And perhaps most valuably, transparently showing off your culture and allowing it to be compared means that organizations can better compete in the talent market.

Recruiters should be obsessed with talking about culture – because it keeps people in the door.

The reasons why people leave employment: work/ life balance, poor treatment, lack of training, or relationship issues with a supervisor or boss; in many ways are a by-product of organizational culture. If you want to compete in the talent market, make culture a selling point and show it off in everything you do.

Even consumer’s benefit from learning about an organization’s culture – values that indicate a commitment to excellence in ethics make consumers feel good about supporting an organization.

It pays to have a good culture. I encourage you to head over to tetra.co/culture-codes and see how companies like Etsy are keeping it real, every day.

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