Price Segmentation Strategies for Real Estate Photography

I was reading an article about Savored, a company that's helping restaurants charge different pric..., but it's wrapped up as a Groupon-style discount app. The definition of price segmentation is to charge difference prices to different customers for the same goods or services.

Most companies start out with a simple pricing structure - it's easy to explain, it's fair, and frankly establishing your business as a going concern is far more important than optimizing that last 10-20% of revenue. However, once your business is established and you're busy all the time, you should re-visit the topic of price segmentation.

I often discuss this issue with our customers as I think it's a routinely overlooked strategy for growing a photography business. Many of our customers are 100% booked, but aren't sure how to make the leap beyond self-employment. You might not think pricing has much to do with hiring, but it actually can be a huge help in finding the right way to add capacity.

In the end, all price segmentation is about producing more revenue, and more money means either more profit, or alternatively, additional capital for you to invest in growing your business.

Here are a few ideas of how to use price segmentation to help your photography business:

  • Charge more or less depending on the turnaround time. A same-day option of up to $100 might be small change for an agent compared to not having good pictures on the MLS before the Sunday open-house rush. In the alternative, having 2 or 3 days to schedule a shoot might yield you the flexibility to create much better logistics for your shoots, saving you hours in driving time.
  • Not everybody cares about "good photography" the same amount. Even though you're an amazing photographer and a Photoshop wizard, some people just don't care. They just want timely, decent pictures from a good camera at a decent price. So, increase the price for customers that want you behind the camera, and for those that don't care, hire a junior photographer.
  • Financing - this can be tricky, but if you have a trusted way to charge people at the time of sale rather than at shoot time, you might be able to charge double or triple your normal rate. Managing cash flow is extremely important to some customers and you might be surprised how profitable it can be to offer flexible financing. Obviously you need to beware the impact it could have on your cash flow or the risks it could present to your collections. On the other side, pre-buying blocks of tours for a slight discount can foster loyalty, encourage higher utilization, and improve your own cash flow.
  • Overpricing things that aren't profitable. Are there some things you hate doing? Price them high! You'll spend less time doing them and if they do sell at least they're worth your while.

Price segmentation can actually increase customer satisfaction by better matching your prices to the desired service levels of your customers.

You can learn much more about price segmentation (or price discrimination) and the various ways it can strengthen and grow your business. I also highly recommend following my personal pricing guru @pricing on Twitter.

Hopefully these ideas will give you some ideas to help grow your business in new and creative ways.

Alan

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Tags: pricing

Comment by TourBuzz Fellow on September 4, 2012 at 6:37pm

Great post!  The biggest problem is trying to keep it simple.  Our competitor has a three page pricing sheet, so we tried to keep ours strategically simple.  We thought about the same day service fee, but fear it would overwhelm us if too many people expected it.

Comment by Carol Grape on September 4, 2012 at 10:37pm

Alan,

Thank you for the great post. Good things to consider.

Carol

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