CODB 101 for content creators
This post is an addendum to Ep 01 CODB 101 on my Youtube channel. In that episode we look at a basic CODB, as if you are just starting out. We’ll populate a few of the typical line items you’ll need to get your business off the ground. Check it out here.
Over and over again I’m surprised by freelance artists who have no idea what a Cost of Doing Business calculation is. How can this be? The CODB is a critical financial calculation, a simple calculation, that needs to be run at the very least once a year, better quarterly and if you are just starting out, I recommend running it on a monthly basis.
Before you can price a product or service, you need to know your costs to provide it. The CODB is my prefered way. It estabshes the benchmark or baseline number that you will use to establish your rates going forward. The longer you are in business, the easier and increasingly accurate it will become to calculate. As your expenses normalize, the line items will become fairly predictable and the calculations closer to reality.
Starting your career is an entirely different story. In this case, populating the spreadsheet is largely based on assumptions. I have a diagnosable aversion to guessing. But sometimes guessing is better than doing nothing at all. By making calculated assumptions, you’ll be in a better position to asses your position when the real numbers start rolling in. Once they do, all you need to do is fine tune. The biggest x factor is just how much you’ll be working when you are starting out. Most likely not much. But that’s why I suggest running the numbers monthly and making adjustments up or down as your situation plays out.
As far as gear, assuming you are just starting out, or perhaps you are already on your own path, I suggest buying a solid, blue collar, hard working, no frills kit. At this point I wouldn’t focus on video. If you want to start generating revenue as quickly as possible, stick to still photography. For now.
I polled a good friend of mine who’s pretty good at appraising the beginner to intermediate gear market. Since we’re both Canon shooters, and know the brand well, we built the follow list, but if you would rather a different brand, just look at the specs and find a comparable model in the brand of your choice. The important thing here is I amortize my equipment across 1-3 years. You pay for it up front, but dollar cost across time. See Fig 1 below.
Looking at the spreadsheet, I’ve got cameras and lenses spread across 3 years, lighting and support 2 years and drones just 1 since they have a very high refresh rate. If you are comfortable buying on eBay, I suggest looking for equipment that’s no longer in production if you want to save some money. The Canon 6D is a good example. It’s a rock solid camera and an awesome value. For $700.00 (as of January 2019) you can find a good copy on eBay. Just vet the buyer using their ratings and reach out to them before with questions like shutter count, has it been dropped, exposed to water etc. Just by asking questions, good buyers should tell you more than you care to know.
Continuing down the spreadsheet, reference Fig. 2.
The next area for those starting out that’s of interest is the workstation. You gotta work on those digital files you just shot right? I’ve always been an Apple customer, so those machines are familiar to me. But again, like the camera equipment, just spec out a machine similar to what I’ve got here. Computer, I almost always work in the field, rarely in a studio or office. So I only have a laptop. I use a maxed out MacBook Pro. It’s got 3.3gHz and a fast video card. I can run Adobe Photoshop, Lightroom, Premiere Pro and After Effects all at the same time with no lag. But, since we’re not focusing on doing video and mograph work here, I’d find a machine in the 2.3gHz range with about 513GB SSD onboard. If you get a desktop, you’ll get MUCH more bang for your buck. Look at the iMac I spec’d out, 3.0gHz and 1TB of storage for half the price of a MacBook Pro. Your call. Also notice, I amortized the workstation over 2 years. In reality you could probably lengthen that to 3 years, thereby lowering your yearly costs.
Also, you’ll need an external storage drive. No way around it. I used to be a big fan and long time user of G-Technology drives until one recently let me down so now I’ve joined the collective herd and now use LaCie rugged drives exclusively. Plug ins and LUTS, ignore for now.
The bottom half of the spreadsheet is super boring and dry, but… we gotta do it anyway sorry. Besides at the end is where we enter the salary we want to earn!
Reference Fig 3. We have marketing. You’ll need a website, host and domain name. We’re aiming to be polished here, this isn’t the place to cut too many corners. I like Squarespace, I’ve been with them for awhile. No I’m not sponsored, they have no idea who I am, nor should they. Just saying their service is good compared to the cost. I’ve never has the site go down, or really any other problems. Just always works. Plus they have pretty good looking templates to get you up and running fast with little fuss. Also, you’ll need to order some basic business cards to give to potential clients, I know most of you think business cards are dated, they may be, but for such little cost, it doesn’t hurt to have a few in your bag for when someone asks for one. Also, budget for some 3x5” postcards to “leave behind” when you finish a shoot. They are a nice touch.
Next… you’ll need to subscribe to Adobe’s Photography plan. It’s just necessary, includes pretty much all of the software you’ll need to archive, process and export your work. Again not sponsored, just been using that software for ever.
Office, naturally, you’ll have different prices, I prefer to stay lean and mean, keeping office expenses to a minimum. You’ll want some sort of cloud storage to host large email attachment or the occasional image gallery for clients if in a pinch.
Last, yep, legal and accounting. I’ve entered the basic prices I’ve paid over the years for reference, I keep things pretty simple though, attorney for the occasional contract / license look over, accounting for yearly taxes.
Fig. 4 Last but certainly NOT least. Pay your self dammit!! This number is completely up to you. Maybe you have three other gigs and you just want beer money. Fine put that in there. Maybe you’re going all in and want to make this job it. Cool, put that number in. Just beware, the salary line is 100% hypothetical. At this stage we have NO idea who our clients are or how in demand we are. So be realistic. The numbers we filled in above are somewhat realistic and concrete. We looked them up! We can’t look up our clients and get a concrete number from which to plan. As we continue the spreadsheet though we’ll be able to see how busy we need to be to meet the sheet. Oh yeah… TAXES. Budget for them. I normally set aside 30% at a minimum. Enough said.
Ok… we’re getting there! Now that we’ve summed up our anticipated expenses and salary, we need enter how many day we anticipate working. Again, I’d keep this on the lean side to start. Follow the flow in Fig. 5. Divide your expenses by the hours / year you expect to actually be “on the job” to get your hourly rate. Cool. Now create your services. Are you a portrait photographer? Come up with packages. Below I made an example. If you sell a one hour session, you know damn well you’re not going to just work for 1 hour right? Let’s say it’s 1/2 hr to drive to the location, 1/2 to set up and brief the client, 1 hour to shoot, another to tear down and drive home, the last hour to download, archive, select, process and online deliver. Four hours goes fast doesn’t it? So multiply your hourly rate by 4, not 1. So we get a package price of $285.48. Kind of a wonky number so round up or down as you see fit. I’d go $275 or $300 if the market can bear it. I’d also price check against others in you area who offer the same services. My guess is you’ll be close!
So that wraps up CODB 101. The starter spreadsheet used above is linked below. It’s not that difficult really. You’ll be so much more confident as well because you can, down to the dollar justify how you price your work, rather than pulling it out of thin air or worse copying your competition. If you have comments or questions, leave them below so we can all join in the discussion. Peace till next time!