So you decided to start a photography business and you’re going through the necessary steps to set up your new business. One of those steps should be working out your cost of doing business to see if it’s a viable venture you should pursue.
In fact if you have been in business for a while It’s also a good way to cut costs by looking at a high level view of your spending habits using a cost of doing business calculator. working out your spend for all your necessary business operating costs.
This cost of doing business calculator is specifically for home based photographers that are trying to work out the different costs involved with running a photography business from the home.
The codb calculator we’ll work out your yearly costs and break down the average per month needed to run your photography business. Using that information, you can also workout how much it costs to run per session and how many sessions you need to break even for the month.
Cost of Doing Business Calculator
Fixed Costs for the year
Web Site & Hosting
Legal & Accounting
Variable costs for the year
Taxes & Business License
Camera Equipment Purchases
Yearly Fixed Costs
Monthly Fixed Costs
Yearly variable Costs
Monthly variable Costs
The calculator has been split into two types of expenses.
Fixed costs – these are expenses that are the same every month or paid yearly. fees such as internet, web hosting, mobile phone. These costs are necessary to run your business. You could potentially shop around and get better deals but for the most part they will stay static.
Variable costs – these are the expenses that are not the same every month such as postage, quarterly tax, advertising. These expenses will more than likely be different from month-to-month and they are also expenses that may be one offs such as repairs or equipment purchases.
Once you enter all your fixed and variable costs into the calculator you’ll be able to work out how much you need to charge so you can run a profitable and successful business.
The calculator will work out the average monthly cost for your expenses even though you may have off a season where you may not work. Your costs, especially your fixed costs will still be there and your variable costs will more than likely go down.
Let’s look at each expense in detail so you can fill out the calculator successfully.
Fixed costs of doing business
When working from home as a photographer you are able to charge a portion of your running costs from the house. This means that if you have a dedicated room for your business thay you use as an office or even a room where you meet with clients you’re able to use that as a tax write off.
But when you’re first starting out you’re more than likely going to be working from a spare desk within your house and at which point you won’t be ready to be claiming a room or even a portion of your house as a working expense.
If you have the space and have been working for a few years you can of course build an extension which can be utilised as a studio to photograph, do your editing, meet with clients until then you can simply put 0 in the corresponding field.
An essential part to running a business these days is having an internet connection. At first more you’re more than likely going to be piggybacking off your family broadband connection, but of course as you become more established that will change.
Think of the uses that you can use an internet connection for, such as uploading photos to galleries, sending emails, updating your website, admin tasks and promoting your business through the use of ads to name a few regular tasks. These will all be done using your internet connection.
Web Hosting / Online Services
Everybody needs a website for their small business.
It’s important especially when starting out so you can send your customers to your website and control the information that they see.
All websites need to be hosted somewhere so they are visible to the public. Think of your website as your shop and the web hosting is the address or land.
If you offer web galleries these will also need to be hosted unless they are attached to your website.
Also you may have proofing software for album design and other tools related to your website. These costs are fixed and would only change if you were to stop using them or upgrade to a more expensive plan when you need more capacity.
Equipment and Business Insurance
A very important part of running a photography business is having the peace of mind with your equipment and business.
Insurance for your equipment and business is one of those ways.
These days there are specific insurance brokers for photographers that include public liability as well as insurance for your equipment for damage or theft. You could also include your computer equipment as well. just be aware using home contents insurance is not the same and it will not cover you.
These days unless you have more than one person working within your home business you’re more than likely be running everything from your mobile phone. If you do have a landline you may be able to bundle your phone with your broadband plan.
Nowadays if you’re serious about running a photography business you’ll be using industry software such as the Adobe suite of products, Adobe Lightroom and Adobe Photoshop which are subscription based software.
There are of course other avenues you can take which aren’t subscription-based but, for most people, the ability to have software that’s constantly updated with tech tech support for the small monthly fee is peace of mind.
Also other software subscriptions could be your accounting software and software that you use to run your business such as a CRM.
If you’re part of any associations such as the AIPP or WIPP these are all associations that you pay yearly subscription and they allow you to join the community of professional photographer, where you can get assistance and ask questions and go to regular monthly meetings so you can network with other professionals photographers in your industry.
Useful to better your business and as personal development It’s an excellent way to get information about the business side from your photography business.
Legal and Accounting Services
Legal and accounting services are essential for your small business.
You may have an upfront fee where you deal with a lawyer to look over paperwork and create documents for you. Whereas with your accounting depending on how busy you are you may only need them once a year or quarterly depending on your country to do your tax.
Some countries like the United states have health insurance attached to their job.
In other countries such as Australia it’s separate to your job and if free. But you can add private health insurance for extras such as dental and hospital cover which is paid monthly.
Vehicle Expenses (Lease, Insurance)
When you run a business from home you will naturally use your car less since you won’t have to commute every day to work, only when you are out on the job and photographing that’s when you will use your car.
Your car expenses will still be there even if you’ve bought your car out right and not leasing it. You still need to pay car insurance which depending on who you go through it’s either a yearly or a monthly cost.
Also don’t forget to factor in the registration of the car as well, it’s non negotiable.
Variable costs of doing business
Taxes and Business Licenses
You will quickly work out when you run your small business. The taxman will come around like clockwork every year.
Depending on the country it may be quarterly or yearly. You will have to register your business name or company if that’s the route that you’ve gone which is usually a yearly fee.
Equipment Service and Repairs
At some point or another you need to service your equipment and this is why it’s essential to have backups when your equipment is getting serviced you have something to use as sometimes the turnaround can be lengthy.
It is good practice to get your equipment serviced regularly and of course if it’s being damaged in some way you need to get it looked at by a professional and not neglect it.
Camera equipment purchases
When you’re first starting out there will be the added expense of buying equipment.
You could go second hand if you’re strapped for cash or brand new if you want that piece of mind.
Whichever way you go It’s going to be a lump sum that you pay upfront or gradually build your kit as you either upgrade or simply just purchase enough equipment for the job at hand.
The good thing is once you do get your kit sorted out you won’t have to buy any more equipment unless it becomes really updated.
Advertising and Promotion
When you first start the business nobody will know who you are apart from your direct group of friends and family. Advertising a business either using Facebook, Google adwords or local newspapers all cost money and a monthly fee that you will have to pay to keep your ads going.
Running a business doesn’t mean that you have to stop learning. In fact it’s encouraged that you spend some money each year to improve your skills. Especially for things such as running a business or editing your photos in an inefficient way. Even a technical course on lighting will benefit you and your clients down the road.
Postage and Shipping
If you don’t hand deliver your products you’re more than likely using a courier or postal service to deliver your goods to your clients, this is a variable cost. Which will be closely connected with the type of client and how many clients you have in a given month.
Computer hardware and software
Like camera equipment, computer equipment is expensive but thankfully once you purchase your equipment it will last you for a few years.
For the most part running a home business it will be mostly online. Depending on the systems you have in place you will mostly be paperless and won’t require too much office supplies or stationery. But standard things such as pens, paper and printer ink will be the minimum.
If you don’t have a designated location in your house for your photography small business you may need to outlay some money for furniture. But will more than likely be a one-off upfront cost unless you start to expand and need additional tables for packaging your products or even if you hire somebody else and require additional furniture so they can work with you.
When your business takes off you’re more than likely need some sort of assistance to meet the demand or simply to make the work day less stressful. Extra help from someone that comes out on the photoshoot for you or someone that handles customer service to the editing and other day-to-day tasks that you may not have time for if you want to grow your business.
Vehicle Expenses (Maintenance, parking, petrol)
So we have the fixed cost of insurance and registration of our car. The maintenance of our car is kind of a variable cost in the sense that even though you have to do a six monthly or yearly service on your car depending on the manufacturer of the car.
Also don’t forget parking and your petrol / gas when out on a photoshoot as this will vary depending on how much work and some months will be higher than others.
Paying for utilities such as electricity and water is only going to apply to you if you have a separate studio or you’ve build something on the property that is detach from your house so you can bring clients.
The running cost of electricity and even if you have a kitchenette within the studio so you can make coffees for your clients and have lights and heating and cooling.
A lot of new photographers seem to think that running a successful photography business is simply finding clients and taking their photos. I’m hoping that this cost of doing business calculator has shown you that you need to consider your running costs. Because if you’re not able to cover the costs running a business then you’re knocking make a profit and simply will fail.
FAQ of Cost of doing business
Why should I split my fixed costs and variable costs.
It’s an easier way to look at your expenses. Even though you might be able to reduce your costs by shopping around for a better deal. Some costs are more consistent than others, while other costs increase when you have more customers. So it’s important to know which costs are eating into your profits.
Visually splitting up your cost of doing business will make the process much faster.
How do home based business costs differ from other types of business?
The type of costs will differ from a brick and mortar business such as rent and utilities which will allow you to lower your running costs, meaning you will have more profit.
Especially in the beginning the costs are not always taken into account and are shared with the household bills. An example would be the internet and phone bill. It’s important to separate all necessary bills early on to not cause issues with accounting.