Where is the money from your sale going?!?
Most photographers price themselves without truly understand WHERE each dollar of a client sale goes. Looking at your sale from the end point will CHANGE YOUR LIFE! Don't forget to take out cost of goods, sales tax, and income tax. Forgetting about these deductions from your final sale could ruin your profit margins and your family's income.
Check this out:
Let's say that I received a client sale of $5,547 (which is my average product sale).
Here are the products that made up that sale:
Image Box - $60 Images inside Image Box (mounted) - $222 16x24 Canvas - $110 Grad & Thank You Cards - $77 Album (11x14 - 11 spreads) - $180
Cost of Goods ($649) to Sale ($5,547) = Profit Margin: $4,898
*This is about 88% profit margin from the sale's cost of goods.
Now remember... that is NOT all mine.
Sales Tax = $423
My profit total is now $4,475.
Still not all mine yet...
Income Tax needs to come out. Now, I take my tax bracket (37%) out of my FULL net income and put that in a liquid interest bearing savings account for income tax payments (like we talked about HERE).
Income Tax = $1,656 (vomit all over the floor)
*Remember that income tax is NOT actually your tax bracket from the FULL 100% net income... it's in pockets. But this way, I KNOW I'll have the money to pay my income tax and get a little extra at the end of the year. This way, I will make a little extra off the top by holding it in my own account, instead of the government.
My FINAL profit from the $5,547 sale is $2,819.
THIS RIGHT HERE is why most photographers FAIL in business. LOOK at the KILLING that sale just took... and I'm a damn good business woman with an insane cost of good to sale profit margin. Imagine if my a la carte products were priced much lower or ONLY 3 times the cost of good (like we, as photographers have been told so many times)... it would have made it so much worse. This is why it's so so so important to know WHERE your money goes once you make it. <3
Are YOU keeping up with where your sale money goes?
HOW are you tracking it?
Have you opened up an interest bearing savings account for your income tax funds yet?
Did you know that your sales get slashed like this?
Do you have any questions for ME?