Pricing and Packaging For Profit PDF

Pricing and Packaging for Profit Chan, 1
PRICING AND
PACKAGING FOR
PROFIT
PSYCHOLOGY
BEHIND NUMBERS, $
VALUE, AND
DECISIONS
WRITTEN BY
LAWRENCE CHAN of TOFURIOUS
Dedicated to Julie, my reason for a wonderful life.

Pricing and Packaging for Profit | Psychology Behind Numbers, Value, and Decisions
Copyright 2014 by Tofurious
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Table of Contents
INTRODUCTION ........................................................................................................................ 7
ECONOMIC FORCES ................................................................................................................................... 8
POLITICAL / LEGAL AND REGULATORY FORCES ................................................................................. 9
TECHNOLOGICAL FORCES ..................................................................................................................... 10
COMPETITIVE FORCES ........................................................................................................................... 11
SOCIOCULTURAL FORCES ...................................................................................................................... 12
CHAPTER 1: BUSINESS BASICS .......................................................................................... 15

BUSINESS OBJECTIVE ............................................................................................................................. 18
PRODUCT / GOOD ................................................................................................................................... 19
QUALITY ................................................................................................................................................... 21
TARGET AUDIENCE ................................................................................................................................ 22
OPPORTUNITY COST .............................................................................................................................. 23
COST OF GOODS SOLD (COGS) ............................................................................................................ 25
Figuring Out Minimum Costs ........................................................................................................ 25
CHAPTER 2: VALUE ............................................................................................................... 32

PERCEIVED VALUE ................................................................................................................................. 34
PRICING RIGHT ....................................................................................................................................... 44
CONTEXT .................................................................................................................................................. 49
Market Assessment ............................................................................................................................ 49
Product Desirability .......................................................................................................................... 51
Barriers Add Value ............................................................................................................................ 53
Timing ..................................................................................................................................................... 58
Selection Risk ....................................................................................................................................... 61
DISCOUNTS AND PRICE DISCRIMINATION .......................................................................................... 62
CHAPTER 3: CHOICES ........................................................................................................... 67

DILEMMA WITH CHOICES ...................................................................................................................... 68

Create Less Attractive Packages ................................................................................................. 71
Choosing Tools .................................................................................................................................... 73
Recommend as an Authority ......................................................................................................... 75
Integrate Testimonials .................................................................................................................... 76
CHAPTER 4: ASSEMBLING PACKAGES ............................................................................ 78

NUMBER OF PACKAGES ......................................................................................................................... 79
Zero Packages: La Carte Approach ........................................................................................ 81
La Carte Pricing .............................................................................................................................. 82
Two Packages ...................................................................................................................................... 85
Three Packages ................................................................................................................................... 88
Five or More Packages ..................................................................................................................... 97
INCALCULABLE NUMBERS ..................................................................................................................... 97
THE LURE OF FREE .............................................................................................................................. 103
BEEFY FACTOR ...................................................................................................................................... 108
NAMING OF PACKAGES ........................................................................................................................ 110
SEQUENCING OF PACKAGES ................................................................................................................ 113
Descending or Ascending ............................................................................................................. 113
Equal Packages ................................................................................................................................ 114
CHAPTER 5: SALES .............................................................................................................. 117

PRESENTING THE GOODS .................................................................................................................... 117
Who ....................................................................................................................................................... 118
Where to Post Rates and Where to Meet .............................................................................. 120
COMMITMENT + UPGRADES ............................................................................................................... 123
MEETING MATTERS ............................................................................................................................. 128
PAYMENT FORMS ................................................................................................................................. 134
SETTING TERMS .................................................................................................................................... 135
PEAK END .............................................................................................................................................. 136
AFFILIATE .............................................................................................................................. 142
ACKNOWLEDGEMENTS ..................................................................................................... 144

Introduction
What a clever shooter you are for selecting this book to

help you develop a smart pricing strategy! While the
examples are geared towards photographers, the
strategies are applicable to virtually all businesses.
My goal is to help you understand the psychological

triggers behind decision-making and to help you create
effective packages for your photography clients. Go
beyond breaking even! Youll be surprised that many
small businesses may not even be doing that.
This is not a budgeting book, and I will not delve into

how much you should charge to make your time
worthwhile. Everyone has a different definition of worth,
and every business owner has unique financial
commitments (mortgages, school fees, leisure activities,
and etc.) that determine how much income is needed
to live a desired lifestyle. In reality, there are many
factors that influence how someone plans for pricing
and which products to distribute. For example, look at
the following items that influence how you respond to
market conditions because, in reality, they are all out of
your control.
o Economic forces
o Political forces
o Legal and regulatory forces
o Technological forces
o Competitive forces
o Sociocultural forces
o Environmental disasters (hurricanes, floods,
fire, tsunami, and etc.)
While the impact of these forces on your business can

be minimized by having a financial buffer and a
constant demand for your services, you may still need
to be responsive to these forces. This is extremely
relevant for photographers, who are providing a luxury
service, since most people could forgo photography
and their lifestyle would be unaffected. On the other
hand, without necessity products or services, such as
bread, milk, water, and electricity, life would be a
constant struggle. So, lets see what these outside
forces can do!
Economic Forces
Economies typically follow a cycle of prosperity,
depression, recession, and recovery. You need to
understand where your community is positioned in this
cycle because it will heavily influence how much they
are willing to spend. For example, during recessions,

when unemployment is high and buying power is lower,
people are less willing to spend on luxuries, such as
photography services, jewelry, or international travel.
Conversely, people are more willing to spend during
periods of prosperity because of higher discretionary
income. So, should you adjust your prices in line with
economic forces? Good question. It depends!
Political / Legal and Regulatory Forces

Since most photography businesses are small
businesses, Im lumping political, legal, and regulatory
forces into one section. The basic thing to be
concerned about is how your country, state, and city
manages laws and taxes.
Higher taxes imposed on your services and goods

means you may have to consider lowering your fee to
attract business. For example, sales tax in America is
roughly 7-9%. However, it can be as high as 22% in
some parts of Europe. Therefore, depending on where
you operate your business, you have to be mindful of
how much to charge. Speaking of business location,
there are also different tax laws to be conscious of
when you are dealing with out of state or out of country
clients.
Additionally, deciding on what products to sell should

also greatly influence how you price your goods. For
example, in certain states, delivering digital files is
considered an intangible good, meaning that you
cannot technically touch a JPEG, so there is no sales
tax. However, if you deliver a flash drive, DVD, or a
print, then you are delivering a tangible good, meaning
that there is a sales tax attached. You could factor that
tax into your costs or have your clients pay the
difference, which could deter them from hiring you in
the first place. For example, hiring a photographer for
$4,500 plus 9% sales tax is the same as a
photographer who costs $5,000 without sales tax. That
difference is substantial.
Therefore, you not only have to consider where you

operate your business, but you also have to factor in
which products to deliver, taking into account
regulatory forces in place in your local community.
Technological Forces
Advances in technology continually change how
consumers and businesses operate. Communication,
for instance, can now be done over the Internet on
Google Chat or Skype. Not only does this make tasks
easier, but it also influences the expectations of clients.
As an example, someone may not hire you if you do not

offer an online gallery, or do not offer videography as
part of your wedding services. These are part of the
cultural values that change with peoples needs and
desires.
Dont be dismayed if you dislike or are challenged by

technology. There are arguments for and against new
technology and this presents opportunities to provide
specialized products and services. For example, you
might offer traditional hand printed fine art BW images.
Competitive Forces
Competition greatly influences how much you should
charge for your services. For example, if there are lots
of competitors who produce comparable work, its
difficult to charge 10x as much as they do. Even with
good branding, you have to consider a consumers
willingness to spend. There is a threshold for everyone.
On the other hand, on the rare chance that you are the
only photographer in the entire area, you could possibly
charge more. This is, of course, dependent on whether
prospects in the area value photography, have the
means to afford it, and are willing to spend money on
such a service.
Sociocultural Forces
Peoples attitudes vary based on age, gender, race,
upbringing, ethnicity, marital status, income, education,
and environment. Even so, these things change over
time. Sociocultural forces control how people perceive
consumerism. They prioritize what is important to them,
including memories, thus photography. Some people
value family portraits, while others are content with
smartphone selfies.
With that said, can you see how you cannot just throw
a number out there and hope that people will hire you
based on it? There are many external factors to assess
before execution.
Even so, there is the whole concept of budgeting and

accounting. Before you can create effective packages,
you need to know what it's costing you to stay in
business, and you need to set personal and business
financial goals. In other words, ask yourself: How much
money do I want to make this year? Next year? Then
do the math and set costs accordingly. Be sure to add
the time for consultations, even the failed ones.
As a creative person, you may struggle with this

process and are possibly much more comfortable
shooting than setting up robust financial systems and
processes. Thats why I offer some basic business

concepts before getting into the dynamics of choice in
purchase behavior. Im talking about things such as
establishing that theres a need in your market for the
products you plan to deliver and developing business
objectives. Dont worry; I wont dwell. But this
information will help us establish a stable foundation for
developing a smart pricing model. Hint: Focus on
selling your premium service and not on selling tons
and tons of shoots (thatll get tiring and wont
necessarily pad your bank account).
Consider:
o How much is an hour of your time worth?

o How much do you (and want others to) value
your experience, knowledge, and technical
skills?
o Are you allowing self-doubt about the worth
of your work to hinder your earning
potential?
In the spirit of staying on topic here, youll notice that I

recommend other books and resources that can help
you explore related concepts that may be helpful when
fine-tuning your pricing and other aspects of your
business. Definitely take some time to check out this

additional information if you think some more
information on a certain topic can help you.
Chapter 1: Business Basics
Before delving into pricing strategy specifics and psychological triggers, it is

crucial to have a sound knowledge of business basics the products and
services youre selling and the clients whom youre targeting, and et al.
Before we get into how customers choose products

and services, this chapter covers some general
business basics, such as developing a product that
people want, deciding on quality standards, identifying
your target audience, and determining your market
position. Dont yawn. These are the foundational
elements of a pricing strategy! If you want to really get
into the nitty gritty of this stuff, check out Social Media
Marketing for Digital Photographers.
Lets cover some basics when it comes to pricing:
o Your business objective is basically a

fancy way of talking about what you want to
do. How do you envision your company
operating? What do you want your work to
be about? Things like your vision, mission,
strategic plan, market position, and
operational tactics come into play here. Well
get into this in more detail later in the book.
o A good is an item or service offered to a

marketplace that might satisfy a need or
want. In photography, goods may include
hours of coverage, albums, prints, and digital
negatives.
o Quality (actual and perceived) refers to how
well a delivered service or product meets a
customers expectations. Actual quality is
comprised of tangible metrics of a product
(think: grade of paper used for prints).
Perceived quality is based on how a

customer feels and thinks about the benefits
of a product or service.
o Possibly one of the most significant aspects
of a strategic pricing strategy is identifying
your target audiencethe specific people
you want to reach and influence to purchase
your offering.
o Opportunity Cost is the loss you
experience when you choose an alternative,
making the choices mutually exclusive. For
example, you cannot have an intimate dinner
with your significant other and go hang with
your friends at the same time. Choosing one
means forgoing the other.
o Cost of Goods Sold (COGS) is an
accounting term that refers to your
production costs. Not to get into financial
accounting, because this book isnt about
that, you must understand the costs for
operating a business, including
Depreciation and Amortization.
Understanding some accounting basics will
help you evaluate your income better. Its not
as simple as, I spend $X and I make $Y.
The difference is my income. There are even

a variety of accounting methods that your
CPA would be better suited to explain.
Business Objective
Maybe youre keeping your day job for now and taking
on some weekend gigs for spare cash and much-
needed experience, or maybe youve already built a
decent full-time job doing what you love. Maybe youre
just thinking about dipping your toe in the world of
professional photography. The story on pricing is the
same. You need to set a price that your customers will
pay and that makes it worth your while to do the jobs
because, ultimately, you are forfeiting your weekend(s)
to work.
What you do today is important

because you are exchanging a
day of your life for it.
Unknown
So who do you want to be? What do you want to

accomplish? How do you want to be perceived by your
potential customers and your fellow photographers?
Your answers to these kinds of questions will ultimately

guide you to honestand hopefully productive
decisions about your business operations, including
pricing.
Product / Good
Before you can figure out the right price for your
creative services, you need to have a firm grip on what
youre offering and why. Building a business takes an
awful lot of effort and a lot of guts. Its risky. It can
be incredibly rewarding, but it takes a certain kind of
person to succeed. And your product offering needs to
meet a need for the folks you hope to attract as buyers.
As a professional photographer, keep in mind that at

the heart of your business, youre offering expertise,
creativity, technical skill, and an enjoyable experience.
This is different from a commodity product, which is
like a t-shirt or a pencilbasically the same no matter
whos selling it.
Consider the pricing of a carrot, for example, in light of

the business focus of the seller, target customer, and
expected quality. A carrot is a carrot is a carrot, right? If
you go to a grocery store to buy it, theres the regular
variety or organic, loose with green tops still, cleaned
and bagged, or even frozen; and of course you can

choose to buy them peeled, sliced, shredded, or cubed
with other veggies, too. Pricing varies, and most people
think thats okay.
So how does a single item affect its sales? Context!

Think about how your pricing expectations change
when buying carrots at a farmers market, from a food
delivery service, or at a restaurant (fast food, mid-level,
or trendy gourmet).
Now think about how you approach service-based

purchases. How much does the sellers attitude and
presentation influence your expectations about quality?
What does the sellers approach say about how he
thinks of his target customer? A picture is a picture is a
picture, right? Of course it isnt. Every detailfrom the
tone of photographer-subject conversations to print

specsmatters a lot.
So, depending on a slew of different factors, a person

may ask a friend or relative to photograph a situation or
event and then get prints from a kiosk, or maybe a
student, amateur, or hobbyist photographer is more
appropriate. For more meaningful photography needs,
a person may decide that only a specialized
professional photographer fits the bill. Still others will
decide that a celebrity photographer is the only real
option for a certain occasion.
Quality
Quality is a shifty concept, but its a huge factor in
determining a price for your goods that others are
willing to pay. No one in their right mind is willing to pay
the same price for an amateur, untested photographer,
as they would pay for a well-known photographer who
regularly gets published. This hinges in large part on
expectations about quality, which includes objective
things like camera and lighting equipment, the type of
paper, frame and albums used for deliverables, and the
amount of time spent shooting as well as intangibles
such as friendliness and appearance of the
photographer, the vibe of the experience, and how
others perceive the persons work.
Target Audience
When it comes to your target audience, you cannot put
a blanket on the worlds population and claim it as
yours. Ive heard of clever responses, such as, anyone
who is willing to pay. While willingness to pay is
important, the target audience needs to be much more

specific.
The first thing you must determine is the type of client

you want to work with. Do you want high volume at a
lower rate or low volume at a higher rate?
Ultimately, getting a job means that you and your

clients are aligned in terms of the perceived value for
what youre offering. This requires a certain knowledge
about whom youre pursuing for work and what he or
she is looking for. Does your target customer care
about status, convenience, quality materials, or cost
savings? Only by knowing his or her priorities and
capitalizing on them can you attract your targets as
buyers and make them happy enough to call you for
the next shoot or refer you to others.
Opportunity Cost
Opportunity cost is every possible alternative that you
must forgo in order to pursue a certain action.
Opportunity cost is important to consider for both your
business and the psychology of your prospects. It plays
heavily into loss aversion and fear of missing out
(FOMO).
Lets talk about your business first. In accounting

terms, its fairly clear. You calculate your explicit costs,
which represent clear outflows of money or time from
your business. For example, you could be a
programmer and make $150,000 a year. Instead, you
chose to be a photographer and make a salary of
$50,000. The difference is evident. However, in
economics, you have to factor in implicit costs, such as
intrinsic motivations. Maybe you find programming to
be the most miserable job in the world and
photography to be the most fulfilling. How do you put a
price on that? In this case, it would be the difference
plus some. Choosing one over the other is a hard
decision. Clearly, you dont want to make the wrong
choice. This is loss aversion.
Understanding loss aversion can be a powerful tool for

your marketing. Imagine the choices your clients have
to make. When it comes to low cost items, its easier to
recover from small mistakes. For example, one day,
your client tries ABC gum for $1. If he or she doesnt
like it, this person can try the next brand. The cost is
not great and neither is the risk.
However, to hire photography services is not a simple

task. You dont cost $1. Plus, when it comes to a
[usually] once in a lifetime event, such as a wedding or

a babys first week, your client clearly doesnt want to
make the wrong decision. This fear of choosing
incorrectly is a powerful phenomenon that I will
elaborate on later.
Cost of Goods Sold (COGS)

COGS, also referred to as cost of sales, appears on
your Income Statement. Its an accounting term that
covers all direct costs involved in the production of your
goods, including your wage as an employee for your
company, raw materials, and rent overhead if you have
a studio space. This expense is factored into your
operating costs.
This is important to understand because, in the end,

you need to know your bottom line. You can
manipulate prices all you want, but if you are losing
money on every shoot, your business will not last long.
Figuring Out Minimum Costs
What you decide to charge depends partially on what

your competition is charging. You need to be
competitive. But you also need to make a profit in order
to stay in business. To do this, well figure out overhead
costs, set a profit goal, and set a pricing structure

(based on a set of package options).
Overhead and direct costs for photography are less

complicated than for inventory-based businesses. But
these costs can still add up and are probably more
expensive than you think they are.
In other words, think about how much you spend on

average each month to maintain your equipment, buy
supplies, fill up your gas tank to get to shoots, maintain
reasonable insurance coverage, procure Internet
access and cell phone service, promote your business,
etc. Its critical for you to keep track of your expenses
and the time you spend working on and in your
business. Be diligent about this. Most creative soloists
underestimate how much it truly costs to be in
business.
The cost of running your creative business most likely

includes expenses for the following items:
o Meals and Entertainment (client meetings,

drinks, dinners)
o Auto (vehicular fees e.g., leased cars, gas
mileage)
o Equipment (cameras, lenses)
! Depreciation
o Supplies (prints, albums, film, pens, paper)
o Travel (airline tickets, taxi fees)
o Online Services (website hosting)
o Advertising Costs (online ads, business
cards, brochures, thank you cards)
o Telephone / Internet (cell phone, business

internet)
o Rent (retail or dedicated home space)
o Rights
! Amortization
o Taxes (income, SUTA, FUTA)
o Deferred Tax Retirement Savings
o Insurance (equipment and
professional/public liability)
o Networking Costs (membership fee,
meetings)
Let's set aside your business costs for a second. Now

think about how much you want to work. After all, a big
reason that many people go into business for
themselves is to improve work/life balance and have
more control over their time and attention.
How many hours do you hope to work each week?

That is, how much time do you expect to spend on
consulting clients, shooting, and editing? Do the math
to determine your hourly rate based on your desired
workweek (40 hours, 20 hours, 15 hours).
Then, know how much time you actually spend on

administrative activities, such as promoting your work
through a blog or other means and invoicing, filing, and
handling other housekeeping tasks. Until you know

differently, allocate 50% for billable hours; the other half
of your working time to internal items.
How much do you want to make each year as a salary?

If youre just getting started and want to keep it
conservative, lets say $40,000 of disposable income
be sure to add 30% to that to cover your income taxes
you are projected to have to generate a gross of
roughly $57,000, not including the other business
expenses.
Now, how much profit do you want to earn for your

business each year? This is an important but often
overlooked aspect to self-employment. Your business
profit is different and separate from your salary. The
business itself needs to make money to cover things
like new equipment, better space, etc. A standard profit
margin ranges from 10% to 20%. Add this to your total
grossmultiply your gross by 110% or 120% (1.1 or
1.2 respectively). Thats how much youll need to
generate a profit for your company.
To determine your hourly rate, use your desired

personal income (after company expenses are paid off)
and divide that by the number of hours you want to
work. That gives you a number that represents the

minimum amount of money you need to make per
billable hour. This is the minimum amount of money you
need to make to make it worth it for you to pick up your
camera.
Keeping all this in mind, avoid pricing yourself by the

hour. Sometimes there are opportunities where you
need to shoot for free or less than your billable hour to
build business connections or future referrals.
Everything is relative.
Your minimum hourly rate is for your information only

to help you ensure that you actually break even on your
business and maintain a healthy profit margin to stay in
business. As you get better at your job, youll be
quicker and more efficient. And you should be paid
more, not less, as you get better. This minimum rate
reflects what you must make on a job per hour you
spend working on it (and unable to work on something
else or do something else).
In the end, most small business owners work more

than 40 hours a week, but they are willing to do so
because the work is fulfilling. You will eventually
understand the bare minimum to operate your business
by sorting things around. I dont mean to simplify the
accounting process with a few paragraphs, but this

book isnt about accounting. And dont be fooled into
thinking that a single Excel spreadsheet can do the job
itll help monitor a particular aspect of the business
but the big picture is much more complicated. In reality,
there are four parts to accounting financial statements.
1. Income Statement
2. Balance Sheet(s)
3. Statement of Cash Flows
4. Statement of Retained Earnings
Your CPA can help better explain these items.
Depending on your goals, adjust your business

accordingly. There is not a single solution for
everyones challenges, which is why you have to make
the tough calls yourself. Whats most important is to
understand the reasons behind your decisions. There
will be a time when your business grows and you will
be forced to consider making changes.
Chapter 2: Value
We understand value by comparing it to other items in the same category.

For example, the price for a night at Four Seasons is indicative of its
perceived higher value when compared to the price for a night at Holiday
Inn. So, a $2000 photographer is better than a $350 photographer. Am I
right? Heres a hint: It depends.
Theres no established, set-in-stone value for a

photograph. The fair market value of a 5x7 photograph
of a newborn baby or a reception toast varies based on
too many different factors to mention. That said, the
tangible picture itself has become essentially a
commodity product. Almost everyone has a camera
at least a cell phone camera and I estimate that one
in about every five people considers him or herself a
photographer. So between the availability of decent-
quality equipment and photo editing software, everyone
can create a good-looking photograph. So what makes
you so special?
Oh, okay. I hear ya. Fine. How do you put a price on

your training, your experience, your technical skills, your
eye for great composition, your attention to detail,
and your ability to listen to people and get a sense of
what they wantand then deliver it? How do you
portray the fact that youll adequately cover the

photography for a special event so your clients can
stop worrying about it? How much is that peace of
mind worth?
Case: Pablo Picasso by Ellen Rohr
Legend has it that Pablo Picasso was sketching in the park when a bold
woman approached him.
"It's you Picasso, the great artist! Oh, you must sketch my portrait! I
insist."
So Picasso agreed to sketch her. After studying her for a moment, he used
a single pencil stroke to create her portrait. He handed the woman his work
of art.
"It's perfect!" she gushed. "You managed to capture my essence with one
stroke, in one moment. Thank you! How much do I owe you?"
"Five thousand dollars," the artist replied.
"B-b-but, what?" the woman sputtered. "How could you want so much
money for this picture? It only took you a second to draw it!"
To which Picasso responded, "Madame, it took me my entire life."
Perceived Value
A buyers self perception and motivation for shopping
for a particular item/service matters a lot to the ultimate
perceived value of a purchase. How much do I need it
and why?
As described in the next chapter on choices, a buyer

considers a sellers market position, its vibe, and brand
personality when weighing options. Context is also
important. Is $5 for a bottle of water worth it when
youre beyond thirsty in a hotel room? Maybe itll be
worth even more in a dry desert. Context!
When hiring a photographer or hair stylist, how do

clients envision the job unfolding? How will their friends
or work colleagues perceive these purchase decisions?
Its the same as how purchasing a Prius or a Hummer
might be perceived differently you are potentially an
eco-friendly or monster truck driver. More importantly,
in your clients eyes, are you a Prius, Hummer,
Mercedes, Honda, etc.?
The priorities of a buyer represent another key

component of context. As decision-makers, we make
choices based on the things we care about most.
Depending on what kind of purchase Im making, I
sometimes care most about low cost or how much I
trust a brand. For other purchases, I care a lot about
exclusivity, familiarity, and approval of others; for still
others, I can grab and go with barely a second thought.
When youre developing your product and positioning

your offering in the market, be sure that you understand
the priorities of your target market. What do they want
more than anything when it comes to, say, a (wedding)
photographer? What do they hope to avoid?
A common way for customers to evaluate the value of a

particular choice over another is comparison. They
compare the pros and cons of certain choices over
others. Sometimes the main point of comparison is

cost; but when it comes to creative services, this is
usually not the main priority that guides a purchasing
decision. More often than not, customers seeking
creative services focus on the providers ability to
create a deliverable they can proudly share without a
lot of stress and effort on their own part. Without a
point of comparison, it can be difficult to grasp the
value of an offering.
Clients mostly want to know that the shooter knows

what he or shes doing and will handle the job without
making them worry about the details.
For instance, a client might compare the fact that

Photographer A is offering 12 hours of shooting time
and Photographer B is offering 8 hours. If I have a long
wedding, I might not even consider Photographer B
because of the possible additional cost for hours. Yet, if
Photographer B is more skilled and can get higher-
quality shots in 8 hours than Photographer A can in 12,
then perhaps he or shes the better option. See how
its tough to weigh options based on a single metric?
We instinctively compare. Its a primary way to

understand value, and the final decision isnt always an
issue of price.
TED Talk: Are We In Control of Our Decisions?
Dan Ariely, a famed behavioral economics professor at Duke University,

conducted an experiment on our control over the choices we make; or lack
of in this case. You can watch the video from the link below or read my
paraphrase.
http://youtu.be/9X68dm92HVI?t=12m31s
Economist magazine offered subscriptions with an erroneous price for Print

Subscription.
Economist Web $59
Economist Magazine $125
Economist Magazine + Web $125
When Economist realized its mistake, the price was fixed. Ariely decided to
see which choice most people would make, so he offered this as an
experiment to MIT students.
Economist Web $59 16%
Economist Magazine $125 0%
Economist Magazine + Web $125 84%
Happily, no one chose the middle option. However, if there is an option that
nobody wants, you omit it, right? So, Ariely conducted the experiment again,
but without the middle option and the results are nearly flipped.
Economist Web $59 16% 68%
Economist Magazine + Web $125 84% 32%
Even though the middle option (Print Subscription) was useless in that no
one wanted it, it was extremely important because it helped people
understand what they wanted relative to the other choices. Print alone for
$125 made Print & Web also for $125 look like a fantastic deal.
Its arguable that consumers are not in control of their decisions because of
the many external factors that influence choice. I will elaborate on these
various triggers in Chapter 3: Choices.
Reference: Ariely, D. (2014) Dan Ariely asks, Are we in control of our

decisions? TED YouTube.
Ariely is not the only one who utilizes this strategy. Trader Joes in Union
Square NYC plays the same game. Which set of eggs are you going to buy?
o Extra Large Eggs $3.99
o Large Eggs $3.99
Wait. What? This circles back to the title of Arielys topic, Are We in Control
of Our Decisions?
Comparison of things is commonplace and important

premium products vs. generic products. For
example, we will consider qualitative and quantitative
things such as the following when comparing name
cereals:
o Cost
o Quality (e.g., taste, nutritional information)

o Quantity (e.g., amount of cereal in the box
compared to alternatives)
o Packaging (single serve vs. bulk, product
shelf life, perception of brand based on
photography and graphics)
o Eco friendly
We use mental shortcuts to make our decision on

whether its worthwhile to invest the extra money to buy
a name brand or gamble our chances with a less
expensive generic label. For instance, we assume a
long line of people means there is something worth
waiting for at the other end. We also assume that the
USDA Certified Organic label means that the food is
truly organic, but we cant observe the seed to table
progression to make sure. In place of proof, we rely on
trust and mental shortcuts.
If all else is equal (premium vs. generic) except price,

chances are people might gamble with the generic
just as how hiring a less qualified photographer (say
Uncle Bob) who is less expensive with same number
of hours, prints, albums, etc. Obviously, theres a major
difference between commodity products and service
products in points of comparison. In cereal, yes, all else
could be equal. But in a service-based product like

photography and other creative services, that wouldnt
necessarily be the case. Uncle Bob and the Premium
Photographer wouldnt match up on the quantitative
metrics. The Premium Photographer will generally have
more experience, a better portfolio, higher-end
materials for prints, and etc.
Yet no amateur is going to admit that he or she is an

amateur. Anyone with a big camera, nice (template)
website, and business cards is a professional
nowadays. And it can be really tough for a client who
doesnt know a lot about the technical aspects of
photography to determine the difference between good
and great. So, the only way to compare is by
quantitative points, including price, years of experience,
number of hours, and so forth.
And its natural for people to convert your creative work

to a commodity product. The problem is that, a lot of
times, prospects compare the wrong things like years
of experience, megapixels, price, and so forth. But its
usually the things that cannot be quantifiedsuch as
personality, creativity, style, work ethics, etc. that

make all the difference in the world in photography.
So while price is not always the primary motivator for

clients shopping for creative services, it does send
some signals about what a client can expect from you
as a professional. Just keep in mind that, especially in
regions experiencing economic duress and periods of
economic downturn, getting the most bang for a buck
is essential to many people. Refer back to your
economic forces to determine if/how this impacts your
pricing strategy. Set your pricing and related points of
comparison to draw the kind of customers you hope to
attract and repel those youd rather avoid.
Pricing Right
One of my favorite activities is attending wine tasting
sessions. This is because, quite frankly, I have trouble
telling the difference between different wine qualities.
Unless you are a wine connoisseur, I highly doubt that
you could too.
When it comes to esoteric items, its difficult to tell the

difference between good and great. Other obscure
products include coffee, water, and beer. For example,
I love coffee, but I wouldnt be able to tell you which is
of subjectively higher quality or, simply speaking,
more expensive. But I could tell you when I taste bad

coffee.
How are photography clients able to tell the difference

between a good photographer vs. a great one? They
havent labored over thousands of images a week to
understand what makes a great photograph just as

how I havent drunk a wide enough variety of coffee to
know the difference between good and great. So,
considering a bride only gets married once, how will
she know who is a better photographer?
She will rely on mental shortcuts. A $5,000 wedding

photographer has to be better than an $800
photographer, right? At least thats how it appears.
Be honest about what you can do. If youre truly an

$800 photographer at this point in your career, own it. If
youre highly skilled at what you do and put out the
best quality out there, price yourself accordingly. You
want to exceed expectations. Thats the name of the
game in growing a business.
But does low balling work? It might be tempting to set

ridiculously low prices to get a lot of work and build a
reputation. But think about it this way: Would you eat
$0.25 sushi? Sounds fishy, right? Dont try to undercut
the market or worry too much about people who do.
This usually just ends up as self-sabotage because
being the cheapest is not a good brand differentiator.
Heres an example. I had to have my roof replaced a

few years ago. It was an unusually hectic time for me,
so I didnt have a lot of time to mull over my options. I
called two roofers. Each came by, measured the
square footage, and gave me an estimate.
Roofer 1 said itd be $8000 with an 8-year warranty. He

estimated 3 hours of labor with a dozen men. Roofer 2
quoted me $4500, also with an 8-year warranty and an
estimated 3 hours of labor with a dozen men. I planned
to call a third roofer, but was too busy. I thought about
the options and went with Roofer 1.
In the end, I was skeptical about Roofer 2 being almost

half the price. Who knew what corners he was trying to
cut? I didnt want the roof to leak in a couple of years.
Even with the warranty, I just didnt trust the lower
quote. I havent had a leak yet. Does it prove a point?
No. Maybe Roofer 1 was greedy (setting abusive
prices), didnt really want to do my roof job, didnt

measure correctly, or something else. Perhaps Roofer 2
was the best roofer in town and just didnt know how to
price himself properly or had much lower overheads.
Whatever the case, paying more gave me peace of

mind. When making a purchasing decision, I rely heavily
on the phrase You get what you pay for and also trust
my perceptions of quality. So, when all else is equal, I
usually tend to favor the higher-priced option.
Context
Context is one of the three pillars of value. And context
is comprised of a buyers market assessment, desire
for a product, timing of the shopping activity, risk in
purchasing the wrong option, and other factors. Lets
start with determining a products going rate.
Market Assessment
When people first ask about photography prices,

theyre usually shocked at how much professional
photography costs. They tend to think of how much it
costs to get a print at CVS. Wow, big difference. But
when they see an individual photographers prices in
comparison to another photographer that specializes in
the same kind of photography, it becomes more

acceptable.
This is because we tend to understand value in terms

of context. We compare. How does a $900 portrait
photographer compare to a $300 portrait
photographer? Is the difference in the offering worth it
to me? Refer back to the content on a buyers
priorities. If a buyer cared deeply about the added
benefits offered by the more expensive photographer,
then its worth it. If he or she doesnt value the added
perks, then its not; he or she will go for the lower-
priced option.
Product Desirability
Similarly, a buyers state of mind at a point of purchase

definitely comes into play when assessing value. If he or
shes on the fence about buying your product, then this
person will likely play some games to see what they can
get for a minimal price. This is where you have to

consider whether discounting is worthwhile.
For an uncommitted buyer, walking away isnt a big

deal. For those who arent sure that they want it, the
loss of the opportunity to get what youre offering isnt
as painful as it is for someone whos wanted it for a
long time and now can finally purchase it. In other
words, if someone has his or her heart set on your
product and literally cannot wait to acquire it, then the
buyer is less likely to haggle much over terms and
pricing. To form a relationship early on, read about
content strategy or the book TRUST.
http://www.tofurious.com/?p=8775
Its a pain in the neck to deal with the people who

demand a discount, but the fear of losing out on
potential work can be motivating, especially if a job
looks like it has portfolio potential. Am I correct? And if
a house payment, medical bill, or other daunting
expense is stressing you out, the guilt for not taking a
gig, even if discounted, can be nearly crippling. But
keep in mind that barriers add value. Discounting
removes barriers, thus removing some perceived
market value for your product.
Barriers Add Value
Well what about Groupon, you may be thinking or

the extreme couponing mania and other discounting
trends? Discounting seems to really light the fire under
some people and create a selling environment thats
hot. I say, sure, on the surface Groupon is indeed a
form of discounting. But this company uses two
powerful strategic barriers: time limits and scarcity. The
company also utilizes the power of social proof
everyone wants inso it actually heightens the general
appeal of items and services.
If Groupon removed those barriers and allowed

consumers to buy whenever they want and as many as
they want, customers might wait until next week, next
month, or next year to buy something or never
actually buy. It all becomes unimportant.
Think again about your business objectives and your

target customer, and make sure your pricing and
policies align to help you reach your goals.
Case: The Ultimate Discount
In 2010, I was invited by WPPI to speak at a business panel for

photographers. A budding photographer had a predicament.
Im new. I didnt have a portfolio, so I asked 30 of my mommy friends to

see if I could borrow their kids to use as sample work, Sarah told me.
So whats the problem? I asked.
Sarahs voice started to escalate, The problem was when I finished the
shoot, many of them started demanding that I edit this, edit that, print this,
and print that. They treated me like I was chopped liver! I did it for free! She
continued, What more do they want? Whats worse is that I didnt get the
portfolio I wanted.
That is troubling, I tried to console her. The issue here is the lack of
barriers to entry. When you are too easily attainable or, better yet, too
desperate, people will step all over you.
But I had no portfolio! And I still DONT! How can I not be desperate?
Sarah asked almost furiously.
I understand. Its actually a matter of words and presentation. Let me

propose a different technique. I thought for a moment. What do you think
about this way?
I started. Hello mommy friends! How are you? Im trying to build my

portfolio as a childrens photographer. I dont have any sample work yet.
Uh huh, Sarah looked flummoxed.
I continued, So, I am reaching out to the 30 of you first since you are all my
friends. If you want a complimentary childrens photo session by me, this is
what you will have to do:
1. Send me a photo of your kid

2. A short summary as to why I should pick him or her
3. From the submissions, I will choose 5 lucky kids
Thanks for your time! Signedyou, Sarah.
Sarahs jaw dropped. The technique was simple. I turned the table around
by adding barriers to entry. I made it seem as though Sarah did not need
them, but they need Sarah. Lets recap.
Sarah is reaching out to you 30 first, meaning that there are many
others who would gladly do this, well, because its free
Of the 30, Sarah will pick five
Moms need to send a photo of their kids, you know, to make sure
that they are cute enough
Moms need to submit a summary as to why Sarah should grace

them with her talent
Thats a lot of barriers, I agree, but this is for free. Its the same offer, but
when presented differently, it makes a world of difference.
Timing
Timing is a major component to context. Think about

when a person is coming to you for a product or
service. The nature of your business may dictate some
of this (e.g., funeral director, divorce attorney, wedding
photographer). And consider the state of mind and
attitude of your prospects at your various points of
contact.
o Wedding/Divorce
o Birth of Baby/Death in the Family
o Loss of Job/Promotion
As a photographer, your business is likely attracting

prospects that are approaching a positive life event and
who want to capture positive memories in a beautiful
and lasting way.
Think about Disneyland. Whether you took your kids or

went there as a kid, parents are more willing to spend
money on toys, clothes and photos.
Photos (along with other memorabilia) trigger emotions.

They are windows to the past. Memories make up the
fabric of peoples lives. Nostalgia is your selling point. If
you can understand and appreciate the important
milestones in peoples lives, clients are more prone to
warm up to you. For example, to some, its "omg, its
my kids first birthday", while others may see it as just
another birthday.
With that said, do not feel reluctant to charge more for

important milestones. Its a matter of economics.
Important milestones dont happen frequently, so you
dont get many opportunities to capitalize on them.
Equally, clients dont want any mistakes with capturing
it, so they hire professionals.
Selection Risk
Another critical aspect of context is the risk involved

with making a wrong purchase decision. What are the
risks to the buyer of making a wrong choice? In some
cases, its not a big deal. If you try a generic brand of
applesauce and it turns out to be gross, then youre out
a dollar or two, and you gain the knowledge to avoid
that purchase decision the next time you need to buy
applesauce.
But for purchases that come with a higher price tag

and life significance, the risk is bigger. If, say, a couple
skimps on a wedding cake, guests may wrinkle their
noses and giggle. The bride and groom will likely be
upset and out few hundred dollars or so. This is a
purchase decision they arent likely to be able to do-
over. Similarly, if a couple skimps on the wedding
photographer choice, they risk having no decent
photos of their once-in-a-lifetime day, and they cannot
reverse this decision to get it right next time. That event
is forever behind them. See where Im going with this?
But its not all about the buyer here. There are also risks
from the decisions you make about your business.
What do you risk by setting certain prices? If your
prices are too high for your target market, then you risk
losing opportunities to shoot their events and life

moments. What are the repercussions of you
discounting your service fees? This may carry a risk of
booking too many jobs and missing out on being
available for better, higher-profile events. Or, high-end
clients may perceive your value as low (why else would
you be so cheap?) and select a more expensive
photographer instead. In many circles, discounting
makes you less desirable, but its not always a negative
strategy.
Discounts and Price Discrimination

Are discounts really that bad? They get certain people
to buy. For example, my fiance is adamant about
eating organic foods, but I was surprised one day when
she came home with a box of inorganic cookies. There
was a coupon and I had to try it.
On the other hand, I understand how discounts can

diminish your value. It removes barriers to entry, the
very cornerstone of luxury businesses.
But how do you explain this paradigm for valued

brands that use coupons? The brands that I speak of
include Pinkberry, Chipotle Mexican Grill, and Regal
Entertainment Group.
In both economics and marketing, the concept of price

discrimination is a healthy way to capitalize on certain
target markets that may not have purchased in the first
place. In economics, there is a whole idea called
Consumer and Producer Surplus. I wont get into
details because it is difficult to explain in a brief manner,
but youre welcome to Google it.
Lets use the movie theater as an example. Prices vary

based on location, so Im going to use my local New
York City rates. Why is a regular movie ticket priced at
$15, but $9 for matinee (before noon), students, and
senior citizens? Its a matter of economics.
If the price was not reduced, unemployed people (who

might not have work before noon or at all), students
(who might not have expendable income), or senior
citizens (who also might not have jobs or as much
interest in flicks) may not go to the theater. The cinema
is already paying for the fixed costs of rent and utilities,
regardless if there are patrons or not. Therefore, by
reducing the price by a bit, theaters could attract those
who might not have even gone in the first place!
In regards to photography, apply price discrimination in

relationship to how much work you already have and
how much more you want to take on. If you are already
very busy with business, then theres no need to
discriminate. However, lets pretend that you are at
80% capacity and have time to take on a few more
jobs; you could attract people with lower affordability by
discounting your rate and look good at the same time.
Remember that your fixed costs of website hosting,
camera equipment, and so forth, wont change
regardless if you have no customers or lots of them.
The magic lies in strategy and wording. If you support

the military, local teachers, honor students, or quite
frankly, it could be anything, give that group of people a
discounted price.
Depending on your craft, you could give military brides

a deal or local educators dogs a pet discount! Not only
do you bring in extra revenue, but you also look good
for offering such a service to these revered groups of
people!
Just make sure that you set limitations. Remember

Sarahs story? Add barriers. For instance, you could
restrict it to eight bookings a year.
Another option, which requires more effort, is to simply

create a whole new company to capture the lower or
higher end of clients. However, think about how much
effort it takes to run your current business? Imagine two
or three!
Case: Loreal Products
In order for Loreal to capture various target audiences, it created and

acquired companies that serve various thresholds for willingness to pay. For
example, Loreal owns the following three hair product lines, but they are all
priced differently. Additionally, a person who buys one tier of products will
most likely not buy from another tier unless his or her external factors
change (e.g., increase or decrease in income).
Garnier Fructis $4.99
Redken $23.99
Kiehls $48
The last option for price discrimination is only applicable

for partners or teams. For instance, many photography
companies are built on spousal teamwork. A simple
strategy is to price one of the two at a higher rate, but it
requires the team members willingness to shoot
separately if there is a double booking. You can read
more about it at the following link.
Chapter 3: Choices
Understand how consumers think and maximize the possibility of your target
clients selecting you as a business choice. Offer a product, service, or
package that fits their specific needs.
Customers use all sorts of informational inputs to make

choices. Some inputs are quantitative, meaning they
are objective, tangible, and easily measured. Others are
less tangible; theyre more qualitative.
Quantitative inputs include things like numbers (of

hours, of prints, of whatever deliverable youre offering)
and specific quality metrics for materials used to
capture and present photographs. Qualitative inputs
include overall desirability as well as feelings and
perceptions related to trust and value. Both quantitative
and qualitative information include aspects that
customers use as a way to compare alternatives.
In this chapter, I describe how customers (thats you!)

use the different types of information to arrive at
purchase decisions and how sellers (thats you, too!)
can apply this knowledge to develop appealing
offerings that customers value and (hopefully) purchase.
Dilemma with Choices

Every single moment of every single day is saturated
with choices. Honestly, think about three of the most
recent choices you made and the questions you
asked yourself to arrive at a decision:
o What will I wear today?

o Do I want cereal or eggs for breakfast?
o Todays news: paper, TV, or Internet? (How
much time do I have?)
We live in a culture that loves choices. We adore and

need them. Choices make us feel liberated and
empowered. Just imagine the frustration if we had no
choices about the things we buy. One color, one size,
one flavor Come and get it! Mmm, no, thanks.
Choices ensure that customers get products that meet
their needs, and they help customers avoid undesirable
features and items they dont need.
But too many choices tend to overwhelm and paralyze

decision-making. This is called analysis paralysis. Too
many options can incite confusion and insecurity about
our ability to choose well. The extent to which this
happens depends on what were choosing though.
Risks of financial loss, embarrassment, or other factors
play a part.
For instance, choosing the right item among too many

options for a complex high tech product or service is
likely to be more stressful than picking a toothpaste
from a wall full of options. Flip back to Chapter 2 on
Value for a refresher on how risk affects customer
choices.
Here, were talking about the pain points associated

with choosing. Making a choice requires sacrifice.
Choosing one usually means not choosing another. In
some situations, theres a way to make trade-offs and
enjoy the best of both worlds, as the saying goes. But
lets stay focused here and agree that choosing a taco
means no burrito, enchilada, quesadilla, torta, and so
forth. Sacrifice sucks. No matter how much you might
like all of the foods, youre probably not going to order
the entire menu to not miss out. Thatd be really weird
and a waste of money.
But people tend to be loss averse. No one wants to

give up the range of options or make a wrong decision.
Think about Choose Your Own Adventure books. By
choosing one scenario, you cannot choose another. In
life, unlike in the book, we cannot turn back the pages if
we encounter an unpleasant outcome and take the
path not taken. No one likes making wrong decisions.

Therefore, people want to make the decision that will
benefit them the most. (Remember, customers have
priorities.) Its a matter of minimizing loss.
What this means for you as a photographer is that you

need to develop your product options carefully. A
package list, for example, thats difficult to understand
and navigate makes decision-making hard for clients,
and it may actually motivate them to use someone
elsesomeone with a nice, clean, easy-to-understand
price listfor their photography gig.
Create Less Attractive Packages
Think in terms of how you can reduce the sacrifice of

customers who choose your services and decide on
specific packages. Understand that by committing to
one package, an individual is choosing to miss out on
some features of a different package. And the more
attractive all of your packages are, the more loss your
clients would feel because of opportunity cost.
Therefore, even though it is silly, create packages that
are less attractive to make the one that you wish people
to buy more desirable. Remember that people only
understand through comparison.
People are often nagged by the worry of sacrificed

possibilities. Buying shoes online, for example, can
have many pitfalls. What if they dont fit? Will I have to
pay shipping both ways, even if I can return it?
Understanding these fears in choosing to buy online,
Zappos, an online retailer, allows you to buy shoes,
return them, and ship them back for free. For major-
consequence decisions, such as the selection of a life
partner, a name of a child, or a photographer to
capture a wedding, buyers remorse isnt so easily
cured.
For me personally, years after graduation, Im still

imagining what my life might be like if I had studied
computer science instead of political science. I cant
help but wonder whether I could have been one of
those new tech startups published in Forbes. Ill never
know
This is just one more reason you need to understand

your target market and figure out what they prioritize.
Help customers feel excellent about a decision to hire
you to capture their once-in-a-lifetime moments by
aligning the features that matter most to them and
making it available at the right price.
Choosing Tools
With so many decisions to make each day, customers

draw on experiences and a variety of skills to make
decisions better and faster. As creatures of habit, there
are often clear patterns of purchase choices. This
pattern helps us make decisions quicker, but its also a
consumerism pitfall. We are often influenced by
decision shortcuts to avoid the lengthy process of
deciding from scratch.
The following three entities are great examples of how

we cheat the decision-making process:
o Friends: A suggestion or criticism from a

friend can sway your decision on a purchase
choice. For example, if a friend just loves the
work that so and so did on her floors,
chances are youll trust this friend and hire
the same contractor to work on your house if
you need the same kind of things done. The
reason for this is because friends dont have
ulterior motives for helping you.
o Authority: Figures of authority can also
influence your decisions. In a world of
endless options, we tend to trust authority
figures to know more than we do and to filter
the noise. We follow what seems to be solid

advice. For example, if Gary Vaynerchuck (a
wine connoisseur) suggests a certain brand
of wine and I need a good bottle, Im likely to
go with his suggestion.
o The Crowd: The endorsement of lots of
people can seal the deal on a purchase
decision. For example, a restaurant with
2,000 positive Yelp (online) reviews is an
indicator that many people have tried it and
liked it. Therefore, if so many people have
liked it, chances are its good.
Recommend as an Authority
The truth is that clients generally dont know what they

want. And it doesnt help if theyre not familiar with the
many products a photographer could offer. As I try to
figure out how to explain this, I keep thinking about
when I was in New York dining at a Lebanese
restaurant with some friends. None of us had ever had
Lebanese food before, so everything looked equally
daunting and ambiguous. We were all stumped and
needed some guidance on what we might enjoy.
I dont think any of us necessarily needed to know we

were picking the very best item on a menu, but we
definitely didnt want to pick the very worst.
Restaurants often try to guide customers to good
choices by including photographs on the menu to
highlight certain entrees. The next time youre at Olive
Garden, for instance, pay attention to what the
restaurant is suggesting for you to buy. A guiding
element is the use of symbols to indicate things like
low fat or vegetarian or even popular. Depending
on what customers prioritize, these indicators can
definitely influence purchase decisions.
Integrate Testimonials
One important way companies leverage the crowd as a

decision-making tool is through customer
endorsements. Long before the Internet and sites like
Yelp and TripAdvisor, businesses sought reviews,
recommendations, and ratings through reporters, print
publications, general news coverage and other formats.
The power of recommendations is only growing
stronger.
Therefore, it is essential to integrate testimonials into

your pricing and packaging list. Let happy clients quell
the doubts of your prospects. To get the most effective
testimonials, read this post.
Use this crowd psychology, also known as mob

psychology, as a way to coax prospects into choosing
you as the photographer by including testimonials not
only on your site, but also prior to or throughout your
packages. What others say about you is better than any
praise you could give yourself; you have an ulterior
motive.
Speaking of bandwagons never underestimate the

power of recommendations and testimonials. People
dont trust entities; people trust people. Its the magic

of social media marketing and other word-of-mouth
type promotionscalled social proof, a phenomenon of
people trusting others who are considered more
knowledgeable than they are about a certain topic. So,
seriously consider adding testimonials to the
presentation of your packages.
Chapter 4: Assembling Packages
Packages offer guidance in terms of value propositions. By packages, Im

talking about bundles of products. Think of packaging as the presentation of
an offering. In this chapter we explore the development of packages. Then
well get into the language and feel of how you present an offering.
A collection of products and services helps customers

get what they want for a price that leverages what
amounts to a volume discount. For instance, have you
spent a few extra bucks to qualify for free shipping?
Have you bought an extra item or two to qualify for a
special promotion? Have you bought extra food in
order to take advantage of a value as in a fast food
meal?
Packages make it easier to upsell. They provide a way

for you to make it easy and painless for customers to
take advantage of certain offerings that they may not
purchase in an a la carte situation. Think about
complementary offerings that make it easy for you to
deliver your best value and then offer it at a
reasonable price.
Number of Packages
How many is too many? How many is too few? Should
you even have any packages? Customers want to
easily see and understand what they can get from you.
If you make it complicated, you hurt your chances of
closing a deal.
Think of it this way: you and your buddy walk into a

pizza place and just want a nice and easy dinner.
Youre not too picky. Your plan is to check out any
specials that might be running and enjoy the place.
The menu says that a medium cheese pizza is $3.85,

and a long list of toppings show a different price for
each option: olives are $0.50, pepperoni is $0.65,
mushrooms are $0.40, a four-cheese blend is $0.55,
and so on. Forget it. Thats too much math.
Consider how much nicer it is to see something like

Medium Pizza: $5 with 5 Toppings. Pickem and
done. Nice and easy pizza dinner!
My point is that customers want you to do the hard

work. If you make them struggle to figure out how to
maximize a deal and get what they want without
breaking the bank, its going to lead to frustration.
Lets look at some menu options:

Zero Packages: La Carte Approach
Ever go to a sit down restaurant and never know what

to order? Well, thats me every time. Id take forever to
commit to an entre. As mentioned earlier, by
committing to one thing means sacrificing everything
else. Too many options suck. Conversely, having no
options sucks even more.
By not offering a package, photographers are left with a

coverage fee and a la carte items on their menu of
products. This is attractive because of a lower starting
rate. But as clients add items, it can feel like theyre
being nickel and dimed.
This can launch clients into a whole new (potentially

painful) round of decisions. And if a new mom or bride
or marketing director already had difficulty choosing the
right photographer, a no-package approach requires
clients to undergo another potentially grueling process
of choosing what they need (shooting time, prints,
albums, and so on) and what they must sacrifice.
Another problem with this is that your prices for

individual items will seem high to buyers because
youre not just selling a 4x6 print (which costs 20 cents
at Walmart). Youre selling your expertise, creativity,
and techniques, and your business costs are wrapped

up in the individual items youre providing. You simply
have to pass along non-billable costs to buyers if you
want to stay in business.
By quantifying individual offerings, its tough to guide

customer focus to the intangible benefits that you offer.
Instead, you lead buyers into a commodity mindset,
and they will likely respond to you accordingly. Clients
will compare your print prices to other photographers
print prices (or Walmarts). And your a la carte rates are
going to be much higher than Walmart or Costco rates.
Customers will no doubt wonder why youre charging
$18 for a 4x6 when they can get it for $0.20.
Keep in mind that a successful pricing strategy aligns

the wants and needs of both a provider and a buyer.
The value of a print isnt in its cost to produce; its in
the skill it took to capture it. But you need to be sure
that your customers understand and accept this.
La Carte Pricing
Even if you take my advice and don't go with la carte

pricing, how much should each item cost? Well, this
goes back to Chapter 1 Section: Figuring Out Minimum
Costs. All of this is subjective to what you deem
worthwhile. However, if you decide to use packages,
which I highly recommend, then you need to inflate

your la carte item prices to make the packages seem
more attractive.
For example, if your 4x6 prints are $18 each and one of
your packages includes a 250 4x6 print credit, then the
package, without any discounts, is already worth
$4,500 (250 x 18). And if the package was priced at
$2,000, your clients would go, OMG. This is a steal,
honey. Lets get this one. Do you see where I am
going with this?
One Package
The goal of packages is to spare customers the

process of calculating the sum cost of desired products
and to assure them that theyre getting a volume
discount. Theyll know that the package includes
savings over single-item purchases. Its expected that
combining items yields savings.
However, I also mentioned that people most readily

understand value by comparing to others in that same
category. We understand value if theres something to
compare it to. Remember the bit on choices earlier in
the book? Well, one package option fails to provide
customers any sense of control over the situation.
Lets imagine that youve never purchased an oil

painting of your family in your life. The cost, you
discover, is $1,500. Is this cheap? Is this expensive?
How in the world do you know?
You need a point of comparison, which brings us to

two packages
Two Packages
When two packages are available, it isnt a decision of

wrong or right. Instead, theres one thats good, and
one thats better. The question for you as a seller is
whether you want people to buy the less expensive or
more expensive package.
People will generally opt for the less expensive option if

they dont want or need the added features of the more
expensive option. Conversely, you could make the
more expensive package seem irresistible just as easily.
Lets use beverages as an example is the goal for an

upgrade or downgrade?
Scenario 1: Upgrade
Understanding that people compare, lets consider the
two products.
o 12 fl oz (355 ml) $1.50

o 24 fl oz (710 ml) $1.65
For those who are math whizzes, youll find that the
latter is 100% larger in size (12 fl oz versus 24 fl oz), but
only 10% more expensive. I dont even need to know
the exact percentages to know that its not silly to
upgrade (considering that I have expendable money).
Its only $0.15 more for a much bigger beverage. Are

you thirsty enough to double the size for just a little bit
more money?
Scenario 2: Downgrade
Conversely speaking, if value is not clearly
advantageous, there is a high chance those consumers
will just buy the package or product that is adequate for
their needs. Lets consider the two available options.
o 12 fl oz (355 ml) $1.50

o 24 fl oz (710 ml) $2.85
Between the two sizes, there is the same increase of

100% in size, but 90% increase in price. Theoretically,
the value per fluid ounce is still advantageous, but not
everyone is going to use a calculator to see which is
better. And even if consumers did, they might just settle
with the smaller one because its good enough.
Yet clarity can still have discernible differences in terms

of buyer benefits. Lets pretend that a First Class airline
ticket costs $1,500 and an Economy ticket to the same
destination costs $300. Assuming a person can afford
the First Class ticket, he or she still might hesitate to
purchase it due to a nagging issue of what could be
bought with the spare $1,200. Think: rent, an extra car
payment, some shiny Apple products, or 1,200 tacos.

This thought might cross their mind: Why would I pay
$1,500 to fly to my destination when I can get there just
as easily for $300? Do I care enough about the added
benefits of the more expensive ticket?
Depending on what you want your clients to purchase,

it can go both ways. They may realize that they can get
everything they want and need for the lower price, or
they may decide that the added bells and whistles of
the more pricy option are absolutely worth the extra
money.
Depending on what your goal is whether to push for

the lower package or higher package you have to
make it blatantly obvious that one is a superior choice
over the other.
If youre pushing for the lower of the two packages,

make sure that the top package is less attractive by
making it significantly more expensive with a lavish
amount of items. Understanding that most people are
risk averse, theyre going to pick the safer lower
package and add la carte items afterward.
Conversely, if youre pushing for the top of the two

packages, make sure that the top package is obviously
the better choice by making it almost silly not to

upgrade.
Three Packages
Three truly is the magic number. Generally speaking, a

seller offering three packages makes the selection
process pretty simple for customers.
The fear of being hosed with predatory pricing can be

equally as stifling as the fear of missing out (also known
as FOMO). Therefore, people tend to avoid purchasing

the most expensive and the cheapest options,
respectively. No one likes to be oversold or to have the
lowest-quality good.
Make sure that all of your packages offer a great value,

in the sense that its better than purchasing everything
la carte, but your targeted (middle) package is most
appealing.
Remember the Story of the Three Bears and

Goldilocks? By making the middle package affordable
and obviously the smartest choice, you can guide
clients to an ideal offering that includes all the features
that they want and also meet your own profitability and
business goals. For example:
o Top Package is significantly more expensive

than the Middle Package and will generally
be out of budget, but will include the most
items.
o Middle Package will be mildly more
expensive than the Lowest Package with
compellingly advantageous items.
o Lowest Package is priced for the budget
shopper and includes the least amount of
items. Barely worth the effort, right? Exactly.

Not many people would purchase this one.
For the most part, most companies use three packages

to pitch their goods because the middle choice is
usually the least painful commitment.
Case: In-N-Out Burgers
For those who have not tried In-N-Out Burgers, its a fast-food burger chain
that started in California and is expanding to other states in America. It is
wildly popular with its quality in taste and simplicity in menu choices. All
combos come with french fries and a medium beverage.
1. Double-Double Burger Combo $6.15
o Two beef patties
o Two slices of cheese
2. Cheeseburger Combo $5.15
o One beef patty
o One slice of cheese
3. Hamburger Combo $4.85
o One beef patty
Considering the options, granted that you are not vegetarian, would you pick
the Lowest Package? For $0.30, you can have a slice of cheese! Whats a
hamburger without cheese? Assuming that you settled for the Cheeseburger
Combo, would you want two beef patties and two slices of cheese? Maybe,
if youre really hungry, but its a whole dollar more Dont forget that each
combo comes with fries and a drink. Do you want all of the extra calories of
extra meat and cheese?
Notice how easy it is to move from #3 to #2? Its only $0.30. However, to
move from #2 to #1, the opportunity cost is $1, which is more than 3x the
previous upgrade cost. Those who want #1 will get #1. However, those on
the fence will probably get #2.
You want to make it easy enough to move from the Lowest Package to the
Middle Package without a moments hesitation, but significantly more painful
to move from the Middle Package to the Top Package.
Four Packages
If you are considering offering four package options and

really cannot provide an adequate selection with three,
be sure that all four options appeal to different
segments of your target customer groups and that the
four packages wont be perceived as a hierarchal
continuum of value. It can be tough for consumers to
choose when it seems that two options are below par
and two are more than what they need.
Consumer surveys, for instance, that do not offer

neutral options will ask you to rate an item on a scale of
1-4 with 4 being the highest. Theres no middle ground.
Your rating is either positive or negative. This is called
forced dichotomy. The survey forces you to pick a
side. Is your experience with a product:
4. Outstanding
3. Above average
2. Below average
1. Terrible
As mentioned earlier, most people do not want to be

oversold to nor have the lowest quality, so top and
lowest packages are omitted. The final question is
whether a person wants to be below average or above

average.
Case: Starbucks Trenta Cup Size
For the longest time, Starbucks had three cup-sizes.
1. Venti 20 fl oz (590 ml)
2. Grande 16 fl oz (470 ml)
3. Tall 12 fl oz (350 ml)
In 2011, Starbucks Corporation introduced a new cup-size, Trenta, which

holds 30 fl oz (890 ml). When it was announced, all of the news agencies
ridiculed the size as being preposterous, which it sort of is because a
standard bottle of wine holds 750 ml.
However, I thought it was rather clever. Even though Starbucks did not
disclose its corporate strategy (trust me, Ive pored over the Annual
Reports), it was evident to me that Starbucks wanted to make the Venti a
more popular choice.
1. Trenta 30 fl oz (890 ml) + 10 fl oz
2. Venti 20 fl oz (590 ml) + 4 fl oz
3. Grande 16 fl oz (470 ml) + 4 fl oz
4. Tall 12 fl oz (350 ml) + 4 fl oz
Notice the forced dichotomy? On top of it, each upgrade before Trenta was
introduced was 4 fl oz. Trenta stands out as an egregious option as a 10 fl
oz upgrade.
Now, in light of Trenta, getting a Venti beverage is not as guilt-ridden.
When it comes to packaging for photographers, the

strategy is similar. The Lowest Package would be
scant. The upgrade to Middle-Lower is worthwhile
(because it has a lot more goods) and is not terribly
painful. The upgrade to Middle-Upper should be the

obvious choice with many more goods for a small fee.
Lastly, the Upper Package should be nefariously high in
price with a lot of unneeded extravagance.
Five or More Packages
Offering five packages is similar to three packages; a

middle ground is available. I recommend a maximum of
four packages because beyond that, you run a real risk
of overwhelming your customers. Too many choices
can intimidate and stifle decision-making.
This doesnt mean, of course, that you cant have lots

of products. You can expand laterally, but the
packages are what people will usually buy.
Incalculable Numbers
If you were purchasing eggs at the supermarket, which
would you buy? Most people think that the more you
buy, the cheaper each item gets. Its common practice
that the savings from economies of scale is passed to
the consumers too, which is why people rarely second-
guess Costco prices. Theyre already buying in bulk, so
it has to be cheaper than individual servings!
Lets examine this scenario. Unless you take out a

calculator at the market, you wont really know which is
the better deal.
In this case, both options come out to about the same

price per egg. So if youre a single person, then buying
18 eggs in hopes to save some money might be a bad
idea if you dont finish the carton and the eggs spoil.
This is the same as Coke versus Pepsi. If you had to

buy soda for a company party, and brand preference
was not an issue, which would be the better deal?
o 32 cans of Coke $9.69

o 36 cans of Pepsi $9.89
Again, unless you use a calculator, its difficult to

compute the value per can quickly. The goal of this
strategy is to help clients focus more on what they want
rather than which is a better deal.
Similarly, as a creative services professional, try to

divert customer focus away from numbers. Move your
customers focus to what option they want. Dont make

your packages easily calculable, as shown above.
o Package 1: $1000
o Package 2: $500
o Package 3: $250
When considering the three above packages, a

customer may assume that Package 1 has twice the
content of Package 2 and that Package 2 has twice the
content of Package 3. Maybe. Maybe not. Thats not
the point, so make sure you dont lead your customers
down this road. Making them itemize individual
packages to find the best value just presents another
barrier for them to just book you.
See, if the numbers are incalculable, people cannot use

mental math to itemize each packages worth, so they
will more likely focus on the products within (number of
prints, hours of shooting) to make their decision.
o Package 1 $1100
o Package 2 $530
o Package 3 $295
However, make sure not to go overboard. Ive seen

some people make numbers so incalculable that they
start to look weird. For example, a package could cost
$342.89. Thats a big no-no. That is getting into nickel-

and-diming.
Think about fancy restaurants. Do they even put the

cents? Its $19 for the appetizer and $49 for the steak.
Case: UNIQLOs Number Psychology
There are a few numbers strategies that companies employ to create a

certain impression.
The 0.99 (uneven) pricing communicates the cheapest possible price.

Despite it being 0.01 from the next dollar, consumers are still appealed to it.
Conversely, the even pricing strategy conveys value. For example, to avoid
the appearance of a cheap brand, all of UNIQLOs clothing ends in 0.90.
Lastly, there is the unusual pricing, which does not follow any of the previous
rules. Walmart is known to end its pricing in 0.12 or 0.23. Another example
would be Disneylands 14 MPH (miles per hour) speed limit. The goal is to
create a number that stands out.
The Lure of Free

A fear of loss can halt purchase decisions. But when
something is offered for free, people tend to become
irrational in a sense that they become overly zealous to
acquire it. So while it might seem that something given
away for free may reduce its perceived valuefree,
after all, is the ultimate discountthink about the last
time you passed up on free. You might do it on
occasion, but its hard. Theres no loss involved. Free
means all gain.
In other words, free doesnt have the same perilous

effect on quality perceptions as straight discounting
because were talking about a gift. A customer can take
advantage of something thats free for no money.
Discounting requires a buyer to fork out some (even if
just a little) money, so it better be worth it; a guard goes
up.
Case: Dropbox
Heres a nice example. I recently invited a colleague to use Dropbox to

collaborate on files. She received the following message from Dropbox after
registering for the account:
Hi,
Thanks for signing up for Dropbox! For joining [colleagues name]

shared folder, we've awarded you 250 MB of bonus space. You now
have a total of 2.25 GB on Dropbox!
If you'd like even more space: invite friends, check out our upgrade
plans.
Thanks again!
The Dropbox Team
How likely is it that a person will write to Dropbox and say, Nah. I dont
want the bonus space you offered. I really just dont need it. Thatd be
weird. Instead, theres a little happiness at getting this bonus space that
was likely there all along.
Case: The Nuances of the FREE! Experiment
Psychologist Dan Ariely conducted an interesting experiment with the power

of free chocolates.
[W]e offered students a Lindt Truffle for 26 and a Hersheys Kiss for
1 and observed the buying behavior:
o 40 percent went with the truffle
o 40 percent with the Kiss
When we dropped the price of both chocolates by just 1, we

observed that suddenly
o 90 percent of participants opted for the free Kiss, even though

the relative price between the two was the same.
We concluded that FREE! is indeed a very powerful force.

Reference: Ariely, D. (2014) The Nuances of the FREE! Experiment.

http://danariely.com/2009/08/10/the-nuances-of-the-free-experiment/
I also have personal experience with being lured into

something offered for free. One time, I lined up for two
hours in the rain just to have free access to Londons
Museum of Science. Free tickets, I figured, cant go
wrong. Instead, I found the museum to be packed with

people and difficult to enjoy. Next time, Ill dish out the
15 for admission.
So when building your photography packages, keep in

mind that free is a powerful way to influence peoples
decisions. If theres a certain package that you want to
sell more than the others, attach something for free.
It should be an item that does not dampen profits

terribly. And if possible, make it an item that cannot be
purchased la carte. The harder it is to acquire
something, the more desirable it becomes. Such items
could be a brag book, slideshow tuned to music, (if
youre crafty) custom digital design save-the-date cards
[for a lab you work with], and so forth.
Beefy Factor
We typically understand value in terms of weight or
size. Thats why QuickBooks, Adobe, and other
software manufacturers usually sell their products in big
boxes. When you open it, you see that its completely
empty except one DVD and a small manual. Imagine
paying $800 for Adobe Photoshop and all you get is a
disc.
Similarly, when looking for a good dictionary, people

generally consider a thicker volume to be better than a
thinner version (unless theyre specifically looking for a
travel version).
Asking for customers to pay an exorbitant amount for a

perceivably intangible product (e.g., digital negatives)
can be difficult to evaluate. In fact, in some cases, its
hard to swallow. So be sure to include some nice
beefy things like lots of prints in your packages. They
are tangible and cheap to produce.
I understand that were paying Adobe for the amazing

program and that your clients are paying for your keen
skills, but if there is a takeaway, its easier for cognitive
dissonance.
Naming of Packages
A vital element of packaging and promoting your
products is language. It matters a lot. Im talking about
word choice, the overall tone, the style portrayed, and
even brand associations.
For instance, how you end up portraying the size of

your offering can impact its perceived value. In America
(and most modern civilizations), size is an indicator of
valuecars, buildings, and meals. Well talk more

about the small-large dynamic a little later. For now,
lets talk about customer perceptions of value in terms
of packaging and pricing.
When naming photography options, consider high

pedigree names. I mean, whod want to hire the
Smallest Moving Crew Ever to handle a cross-country
relocation?
For style and vibe, consider using positive brand

associations with naming. Consider this example. Dry
Bar, a hair blowout business thats popping up in
Southern CaliforniaNo Cuts. No Color. Just
Blowouts. For $35.has a menu of hair blowout
names that are all inspired by cocktail drinks (think:
Manhattan, Straight Up, Hot Toddy, Mai Tai). And Dry
Bar charges a flat fee no matter which you choose or
what kind of hair you have. Nice and easy and fun,
too. Lets go!
Understanding that people are averse to loss, many

other companies have taken to great efforts to remove
any small items from their menus. For example, Pizza
Hut does not have a Small Pizza; it has a Personal Pan
Pizza, and, of course, Medium, Large, etc. Starbucks
completely removed Small, Medium, and Large. In lieu

of those, it has Tall, Grande, and Venti.
Which reminds me: When describing your offerings,

focus on benefits rather than features. Benefits are
what customers gain or experience by purchasing your
product. How does this help me? Features are
characteristics that the product has; these are not
necessarily things that directly serve the customer.
Consider the language Apple uses to describe the iPad.
Its the people-friendly fast, times two instead of the
geeky Dual-core A5 chip. Its the same thing, but with
a totally different approach of saying it.
Some language will be lost on people who arent

experts in your industry, so speak their language and
not your own if its customers youre trying to reach,
inspire and motivate to buy.
Therefore, try to avoid any names that reference to

small (or inferiority). If you consider Pizza Hut, an
American restaurant chain with an international
franchise, the smallest size it offers is Medium. There is
no Small, but there is a small equivalent called Personal
Pan, which is cute in its name.
Sequencing of Packages
When deciding how and when to present your
offerings, there are essentially three ways of sequencing
the information: ascending, descending, or none at all.
But before we get to that, its important to understand
anchoring. Anchoring is the technique of using a certain
item to govern all comparisons made to it.
For example, a $40 jacket at H&M might seem

expensive since everything else is a fraction of that
cost. But a $50 clearance jacket might be cheap at a
boutique store. Its the same as how $3.99 for an Apple
app is considered super expensive since everything
else is either free or 99 cents. This is because the item
in question is compared to everything else. Perception
is entirely relative.
Descending or Ascending
If you have packages with progressively larger amounts

of items, then presenting packages in descending order
is favorable. Start with your most expensive option at
the top. This ensures that all of the lower packages will
be compared to the premium offering. For example, if
youre highest package is $10,000, customers could
get away booking a very premium photographer for a

fraction of that cost!
Equal Packages
On the rare occasion that you cater to different

audiences with different needs, offering different
packages of similar or equal value might be worth
considering. Remember Dry Bar? You can only get one
type of blowout, so it doesnt matter which you choose
because they all cost the same. This removes the fear
of missing out due to a price conflict. The client only
needs to focus on which blowout she wants
Manhattan, Mai Tai, or what have you
However, for most photographers, your services are

limited to one thing photography. Therefore, its
difficult to diversify your packages enough, so that you
will create distinctively different, yet equally valued
packages. I only left this tip just in case you are not a
photographer who is reading this book or, in many
cases, you change your business to something else. I
want these psychological strategies to still be

applicable.
Chapter 5: Sales
Ever find that eating ice cream on a hot summer day is more enjoyable than
on a cold wintry night? Me too! Environment and context affect how we feel
about certain products and services.
Ultimately, sales require a pricing strategy that reflects a

match between the providers values (preferred working
conditions and profits) and a buyers values (quality
goods, helpful service, and etc.). A range of other
factors also influences how customers receive
information about your work and, more importantly,
how they perceive the desirability and value of your
offerings.
Presenting the Goods

The manner and context in which you pitch your
offerings to a customer group makes a huge difference
in how the people in it perceive you and your products.
There are enough books on marketing productseven

creative servicesto fill bookshelves across the land.
So Ill be brief here and touch on just a few things for
you to consider when deciding how to tell the world
about your photography packages. Who do you tell,
where do you present the information, and what

language do you use to sell your work?
Who
Target audience is a term thats used to describe the

group of people you most want to attract as buyers.
The folks in this group share some characteristic(s) that
make them more likely to be attracted to the kind of
work you want to do and possibly even where you do
it. Sometimes demographics can help you to identify
quite specifically your ideal or preferred clients and help
to weed out people who you would rather not have as
customers. For instance, if youre a pet photographer,
your target audience might be dog owners in the
Pacific Northwest with an annual income of at least
$100,000.
Of course, the profile of your target customer depends

a great deal on your business objective and the other
things we covered in Chapter 1, so be sure that these
core elements of your business are in place. A cohesive
strategy will ensure that your price points match the
purchasing power of those you hope to attract as
buyers and ultimately result in the growth of a business
you love.
Where to Post Rates and Where to Meet
The number of possible places to communicate

information to the outside world is nearly limitless, but
this doesnt mean you want to use all of them to say
everything you want to say about your work. Reaching
your target customer group takes thoughtful
consideration and more than a little finesse.
As I explained in Chapter 4, your effort to create

product packages that people wantand take
attention off of pricewill pay off if youre reaching the
right people with information about your work. So
where you provide your information and visual proof
of your artistic skills matters.
Leverage your website and blog to spread the word on

how you approach your creative work. This is a great
way to leverage the power of social media. Check out
TRUST (2013) for a lot more on tips and strategies on
building trust with your audience.
Please resist the temptation to post all of your rates

online. Only put the starting rate to filter prospects. This
helps save you time from meeting with people who are
not even close to affording you. By not sharing
completely, you can avoid being assessed too heavily
on price. You dont want to be excluded from
consideration because another photographer in the

area offers more 4x6 prints than you. That would be
silly.
Instead, be sure that your target customers find you in

a place that presents you in a flattering way. A new
mom looking for an exclusive portrait photographer to
photograph her baby and create beautiful prints for
display in her multi-million dollar home will no doubt be
more attracted to a shooter she hears about from a
neighbor than one she finds in a free ad in the local
weekly paperno matter what each one charges.
Dan Ariely demonstrated the power of environment in a

coffee study he conducted at MIT. In two separate
setups, he gave away free coffee (of the same quality
and brand). The only difference in the two scenarios
was the presentation. In Scenario 1, condiments were
served in Styrofoam cups, and labels were handwritten
with a red felt-tip pen. In Scenario 2, condiments were
served in fancy glass and metal containers with
permanent labels.
In the end, students from the second scenario

demonstrated more affection towards the coffee.
When the coffee ambience looked upscale, in other

words, the coffee tasted upscale as well, said Ariely.
Reference: Ariely, D. (2009). Predictably Irrational.

Chapter 10: The Effect of Expectations
Another example is when Joshua Bell, a famous violinist

with a $3.5 million violin, played for free in the
Washington DC subway. No one stopped to listen. But
he regularly sells out for theater attendance in major
cities for an average of $100 per seat.
Reference: Weingarten, G. (2007). Pearls Before

Breakfast Washington Post. http://wpo.st/-vP
Video: http://youtu.be/hnOPu0_YWhw
This shows that when people are presented information

in a way that leads them to make an assessment on
quality, it influences their expectations. And chances
are good that the customer experience will end up
supporting this initial perception.
One way to take advantage of this is to host your

consultations at a location that represents your brand. If
youre upscale, try luxury hotel lounges. If its casual,
Starbucks is pretty relaxing.
Commitment + Upgrades
When talking with customers about your package
options, take a page from the rulebook that movie
theaters and fast-food restaurants use: Speak in terms
of differences, not absolutes. For a dollar more, you
could have a large drink plus free refills! Or, when you
order a Subway sandwich, the cashier is trained to ask
if you want to upgrade to a meal for two more dollars.
This is the gig for scoring upgrades based on pre-
committed decisions.
See, the moment someone commits to something, its

just a little more to upgrade. Notice how Subway
doesnt say, For $7, you could have a combo. Its for
two dollars more , which makes it sound much more
attractive. This is similar to how car salespeople add on
satellite radio, leather seats, and other upgrades. An
extra $350 is not much more for a $40,000 vehicle,
especially when it is broken down into monthly
payments.
However, depending on your prices, there is a

threshold for what is considered reasonable when
offering an upgrade. Adding a thousand or two is a
thousand or two! That can still be seen as a lot of
money.
Case: Uber vs. Lyft Power of Percentages by Irrational Labs
There is a service where you can summon a personal driver on your phone
app. Uber and Lyft are competitors in this market. During rush hours, both
companies have a fee increase, but both companies have a small difference
in their copies.
Lyft Prime Time Tip +25% to your driver

Uber Demand is off the charts! 1.25X the normal rate
Even though both fee increases are mathematically the same, +25% =
1.25x, Irrational Labs, a non-profit consulting firm, decided to survey 300
people using Google Consumer Surveys to see how each fared. Participants
were asked whether they would pay the additional fee or walk 5-minutes to
hail a taxi that charged the normal rate.
Lyft Uses Percentage 44% of people chose to walk 5-minutes

to avoid the fee increase
Uber Uses Numeric 38% of people chose to walk 5-minutes to

avoid the fee increase
When the experiment was conducted again at 75% or 1.75X, the results
were similar. Its difficult to explain the disparity, but it was conclusive that
framing played a role. It could be because 25 seemed bigger than 1.25 or
that people were unfamiliar with dealing with a numeric opposed to a
percentage.
In any event, its still not a bad idea to use either of these strategies during a
sales meeting because a numeric or percentage can help people benchmark
quantity received. For example, For 13% more, you get over 40% more in
products. Thats something that easily computes, which makes upgrading
easier to swallow.
But no matter how affordable you make it sound or

how well you describe an item to your clients, seeing is
believing. So if youre trying to sell an album, have an
album available. If youre trying to sell a canvas print,
have a canvas print available.
Sounds like a no-brainer, right? I know. But youd be

amazed at how few photographers are fully prepared
for their sales meeting. Also, remember buyers need to
compare. If youre trying to sell a 12x12 album, be sure
to have an 8x8 album there for comparison. And if
youre trying to sell 50 pages, have a 20-page album
on hand, too.
Case: Seeing is Believing
Normally, eye shadow is sold in a palette of many colors. However, for those
who are inexperienced with makeup or on the fence of committing to certain
styles, seeing the blend in a model form helps them envision the product
better.
Look! You can imagine how youll look in these neck scarves!
Meeting Matters
The process of closing a sale hinges on how well you
can build a relationship. Not the quick and dirty kind
that some people enjoy. Rather, an honest-to-god real
life relationship based on listening, understanding, and

meeting the needs of clients.
Heres a good way to start: When a potential client

emails you to inquire about your rates, resist the urge to
shoot back all the information on the packages youve
got. Thats basically the same thing as posting a menu
of options on your website, which makes it easy for
customers to play the price-comparison game before
they have a chance to find out what makes you better
than the other photographers they might be able to
hire.
Instead, try to get clients on the phone or on video

chat, so you can demonstrate positive personality traits
when explaining your products. Explain that you prefer
to talk about the options in person because of the
custom approach you provide.
Begin the meeting with questions about their event:

Why are they having it captured? What are they looking
for? Hold off on talking about money until you fully
understand what the client is hoping to get out of the
photo session. With this information in hand, share with
them the stories of your portfolio that relate to their
situation. Talk about your specific offerings, but present
prices last.
You have to remember that showcasing your photos is

not of utmost importance. They probably saw all of your
galleries before your meeting.
Keep in mind that many people can take great

photographs. But a great photographer is a visual
storyteller. Share emotional moments you had with your
previous clients. Tell your new potential customers why
certain shots matter.
Then I suggest offering the prospect of some kind of

tangible product to explore. Whether its an iPad
gallery, an album, or canvas prints, let them feel things
out and browse at their own pace.
When they begin asking about pricing, share

information about your packages. Mention your first
most expensivepackage, and use this as an anchor.
Dont dwell on it though. My first package includes

such and such (the highlights) and costs x-dollars. Its
the full meal deal. I start at Here, describe your
lowest-priced package.
Keep in mind that youre not likely to sell a high quantity

of either the highest or lowest package, but both
should be solid options for some people and contain
value for certain groups in your target audience.
Nonetheless, as suggested in Chapter 3, those should
be your less attractive packages to put more focus on
the one that is most ideal.
From the bottom, move up to your next most expensive

post. Mention that its only x-dollars more (not for total
x-dollars). For example, For $200 more, you can have
a gazillion other goodies. The benefits should be so
obvious that its almost silly not to book that package.
Repeat if you have more than three packages. End with

your first and most expensive package.
If a prospect tries to bargain with your prices or product

assembly, give them your price sheet and tell them to
sleep on it. Use the excuse that theres a lot to mull
over. The more barriers to entry, the more perceived
value you will have. The more desperate you are, the
less likely theyll book you.
Payment Forms
The bottom line here is that youre running a business
and youre in it to make money. So set prices to meet
your profit and income goals and collect deposits as
soon as possible. By offering online credit card
payment options (e.g., PayPal or Google Wallet), you
can expedite the invoicing process and lessen the
chance that prospects will change their minds about
purchasing your work when they leave the meeting.
Decide how much you want to have up front to

guarantee a date and time. I generally request 50% or
$2500 down (whichever is smaller). It may sound like a
lot of money (before youve even delivered anything),
but youre setting aside a day to shoot, meaning that
you cannot take other bookings. This is a huge
opportunity cost in some cases. So be sure that your
deposit is costly enough, so its not painless for people

to back out on a whim.
Setting Terms
Making a living, even a creative living, requires some
basic understanding of business and accounting
concepts and the discipline to stick to certain

guidelines and procedures.
A big part of being a professional is acting like one.

When dealing with a professional, people expect certain
formalities. One of the intangible things your customers
are buying from you is the assurance that you know
what youre doing, youll do it well, and that youve
thought of things that need to be thought of prior to
the shoot.
A major element of establishing the Ive-got-it-

together assurance for your business offering is setting
terms for your service. As a photographer, be diligent
about writing specific contracts. Be clear about your
policies regarding shooting time, deliverables, and
cancellation policies.
Feel free to download the photography contract that I

use here: http://www.tofurious.com/?p=4931
Peak End
Dont lose sight of how you want to be remembered
when the job wraps. This is known as the peak end
rule. It stipulates that being remembered well by
customers hinges on how you part.
Think about George Costanza, a neurotic and

perpetually awkward character on American TV sitcom
Seinfeld (1989 to 1998). In Season 9 Episode 16: The
Burning, he tries on social showmanship with well-
timed exits. His tactic involves leaving on a high note.
When he makes people laugh or expresses a good
idea, he promptly leaves the room. It worked for
George and it can work for you as long as you dont
actually leave until the job is done.
This is to say, avoid leaving as the bill collector. Thats

most definitely not a high note for anyone. Instead, try
to collect the balance for a job a week before the actual
event. The last thing a person wants to worry about is a
large amount of money during their shoot (e.g.,
wedding day).
Another aspect of the peak-end rule is that people

remember pinnacle things during events. For example,
a bride might have the worst day in her life (wedding
plans gone awry), but shell only remember the best
moments; and photos help trigger those positive
memories and emotions. You want people to
remember you as a friendly, competent photographer
they could trust.
Plus, if youre worried about getting the money youre

owed for a shoot, or if that amount is too low, your
attitude toward the client will likely show. That wont be
good for anyone either.
Chapter 6: Repeat
As mentioned in Chapter 1, sociocultural factors change over time. Peoples

expectations change. Therefore, it is important for you to always stay
attentive to maturing norms and adjust your company accordingly. Stay
agile.
Just as employees at many corporations are reviewed

annually to evaluate performance and trajectory toward
their career goals, you should also make it a point to
look closely at your business over the past year and
determine what changes (if any) you need to make in
order to meet your personal, professional, and business
goals.
Review your business performance, financial goals, and

prices on an annual basis, making tweaks to ensure
theyre meeting goals (personal and professional).
But dont overlook the importance of commitment. Just

as buyers commit to you with deposits and payoffs,
you need to return a certain level of commitment to
them by delivering what you promise and exceeding
their expectations wherever possible. Even beyond
that, once you earn a customers commitment, know
that they expect a certain level of consistency. People

can be very sensitive to change in technique,
processes, prices, and even minor changes.
Consider the announcement made by Netflix in fall

2011. The company decided to increase its monthly
price and lost nearly half of its capital stock value in two
months. Or think about the practice of many cable
providers when trying to lure new customers. They offer
an introductory deal and then change things drastically
and unexpectedly. This kind of bait and switch ticks off
customers.
So be consistent in your materials, your techniques and

your prices as much as possible. And when you do
need to make a change, be sure to communicate it
clearly to your long-time customers and make sure
theyre comfortable with the new ways.
Affiliate
If you enjoyed this book and think it will benefit others,

you might as well earn some money while spreading
the word.
Become an affiliate.
http://www.tofurious.com/affiliates/
You can also visit the Tofurious Store to see other cool
products carried.
http://www.tofurious.com/store/
Stay abreast.
http://www.tofurious.com/subscribe/
About the Author
Lawrence Chan is a globetrotter, hedonist, epicurean,

carb eater, dinosaur trainer, author, international
speaker and marketing strategist for smart
photographers. He was educated at University of
California, Los Angeles (UCLA), Chapman University,
and Loyola Marymount University in a variety of studies.
He is currently studying for his MBA at New York
University (NYU). Lawrence also authors a blog, e-
books, and real books.
Lawrence so happens to be a photographer.
Connect with Lawrence:
http://www.tofurious.com
http://www.tofurious.com/twitter
http://www.tofurious.com/facebook
http://www.tofurious.com/instagram
Acknowledgements
I am thankful for my friends, industry peers, and editors

Rachael Foster, Andy Graves, and Jessica Elizabeth
for helping me with putting this book together. :) Love
you, all.
If you want to share your experience, Id love to hear

from you! Use any of the form of contact (website,
social media, etc.) that is most convenient.

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Pricing and Packaging for Profit Chan, 1

Dedicated to Julie, my reason for a wonderful life.

Copyright 2014 by Tofurious

CHAPTER 1: BUSINESS BASICS .......................................................................................... 15

CHAPTER 2: VALUE ............................................................................................................... 32

CHAPTER 3: CHOICES ........................................................................................................... 67

DILEMMA WITH CHOICES ...................................................................................................................... 68

CHAPTER 4: ASSEMBLING PACKAGES ............................................................................ 78

CHAPTER 5: SALES .............................................................................................................. 117

PEAK END .............................................................................................................................................. 136

AFFILIATE .............................................................................................................................. 142

ACKNOWLEDGEMENTS ..................................................................................................... 144

What a clever shooter you are for selecting this book to

My goal is to help you understand the psychological

This is not a budgeting book, and I will not delve into

While the impact of these forces on your business can

are willing to spend. For example, during recessions,

Political / Legal and Regulatory Forces

Higher taxes imposed on your services and goods

Additionally, deciding on what products to sell should

Therefore, you not only have to consider where you

As an example, someone may not hire you if you do not

Dont be dismayed if you dislike or are challenged by

Even so, there is the whole concept of budgeting and

As a creative person, you may struggle with this

processes. Thats why I offer some basic business

o How much is an hour of your time worth?

In the spirit of staying on topic here, youll notice that I

business. Definitely take some time to check out this

Chapter 1: Business Basics

Before delving into pricing strategy specifics and psychological triggers, it is

Before we get into how customers choose products

Lets cover some basics when it comes to pricing:

o Your business objective is basically a

o A good is an item or service offered to a

Perceived quality is based on how a

The difference is my income. There are even

What you do today is important

So who do you want to be? What do you want to

Your answers to these kinds of questions will ultimately

As a professional photographer, keep in mind that at

Consider the pricing of a carrot, for example, in light of

and bagged, or even frozen; and of course you can

So how does a single item affect its sales? Context!

Now think about how you approach service-based

tone of photographer-subject conversations to print

So, depending on a slew of different factors, a person

others perceive the persons work.

important, the target audience needs to be much more

The first thing you must determine is the type of client

Ultimately, getting a job means that you and your

Lets talk about your business first. In accounting

Understanding loss aversion can be a powerful tool for

However, to hire photography services is not a simple

[usually] once in a lifetime event, such as a wedding or

Cost of Goods Sold (COGS)

This is important to understand because, in the end,

Figuring Out Minimum Costs

What you decide to charge depends partially on what

costs, set a profit goal, and set a pricing structure

Overhead and direct costs for photography are less

In other words, think about how much you spend on

The cost of running your creative business most likely