Making the Case for Digital Delivery

For the sake of argument, let’s pretend that professional prints became obsolete and no longer desired by your customer. If that were the case, what would happen to your photography business? Could you survive?

The purpose of this article is to show you how you can make more money selling the electronic version of the digital photo, rather than prints of that digital photo.

In 2006, PPA published a financial survey that indicated that retail based studios averaged gross sales of $239,000. If you average the annual spending per household for family portrait, senior, children and adult you get roughly an average of $210 per sitting. Divide total revenue by this average and you get 1,300 individual sittings per year or 4 sittings per day. Cost of sales equals approximately 25%, primarily consisting of hard goods such as prints, frames and packaging. General expenses excluding the owner’s compensation, amounts to 40%, leaving $83,650 profit.

Instead of offering prints, you decide to provide a limited number of retouched, ready to print digital files along with your 2 hour portrait sitting for $250. At an average of 4 sittings per day, 1,300 per year, your annual revenue tops $325,000 and your cost of sales plummets to only 10%. This combination increases your profit by 94% to a joyous $163,000, not to mention simplifying your business model. No more lab bill, no more frame inventory, no more waiting, no more hassle for your customer. The result is instant gratification and delivery of what the customer wants; access to and usability of their professionally taken photos when and where they want.

If the customer wants you to make a print, that revenue is all gravy and you can decide whether to offer that value added service. Just remember that you’re now competing with Walgreen’s, Wal-Mart, Shutterfly and probably your old pro lab for that print, so be sure to differentiate and price accordingly.

What are you giving up? Well to be truthful you no longer hold the monopoly on the use of that photo. You have sold it to your customer and provided them with the ability to duplicate, share and print as needed. You have not however, sold your copyrights. You still own them and the image cannot be used to make money without your consent. Creative Commons http://www.creativecommons.org/ is a great organization that is helping artists of all kinds protect their copyrighted digital works using standard licenses that describe legal restrictions placed on the user.

So what is the result of this discussion? Well, printing will never cease, however it is and will continue to decline in value to your customer. Linking your business with a declining commodity is a recipe for failure. Those professional photographers who understand that the business model is changing and that digital delivery will soon be the rule rather than the exception will continue to succeed and reap the rewards for their innovative approach to meeting the customer’s demands. They will also be leading the charge to help solve important problems such as copyright and protecting their work against unlawful and unintended use. We can make the case for digital delivery, not only as a business model, but as a natural consumer progression tied in with the realities of a digital age.

A recent Infotrends market analysis report concluded that given the current climate, professional photographer’s need to reposition themselves as “visual memory service providers” that not only capture a memory, but provide products and services that extend how that memory is shared and displayed. I could not have said it any better than that.

How are you preparing your professional photography business for the future of digital delivery?