Understanding Cost of Goods Sold

Understanding Cost of Goods Sold


The second half of figuring out what to charge for your photography requires us to figure out our cost of good sold or COGS. So what is COGS??? It is simply the costs  associated with making a product. Let’s use a laptop computer as an example.  The manufacturer must invest in all the parts necessary to build a working laptop: i.e. motherboard, screen, hard drive, ports, etc. Adding up all the cost of these parts is the COGS. So while they may charge you $2,000 for a laptop, their cost to actually make it could be half that.

So what makes up your COGS?

  • the cost of albums, prints, canvases, frames or other items you purchase from a lab that can assigned to a particular customer
  • Square, PayPal or other credit card company processing fees
  • Parking fees, tolls to get to a photo shoot

Now that we know what can be included, what is not?

  • Camera equipment, including cameras, lenses, CF cards, etc.
  • Books, workshops or other continuing education
  • Business cards, order forms or other marketing materials
  • Insurance, utilities or professional fees


How about a couple of real life examples?

1 – You have a shoot at your own ranch….

Customer purchased 20 digital images from the session.  These are delivered via Dropbox or email.

Since you have not traveled anywhere, there are no costs associated with travel, (ok, you are so lucky to have your own ranch to shoot at!!!).  While the customer placed a nice order, you have no cost associated with the deliver of images since you are delivering them digitally.

So what is your COGS for this example??   If you came up with $0, then you would be correct!


2 –  We are still shooting at your ranch (you lucky photographer!)…

You customer has decided to purchase 15 of your amazing images, but they want them on a USB drive.

Once again you have no costs associated with travel, so there is nothing to include there… But, you have purchased a USB drive to deliver the images to the customer.  You purchased the drive for $15 (if you purchased a bunch of drives in bulk, I would still calculate the cost of each drive then assign that cost to each customer that gets one).

Our COGS for this examples is………. yep $15.



3 – Shooting at a customers ranch…

Our next customer had you come out to their stunning ranch to do portraits of their prized horses and their family.  And guess what they have decided to purchase a very large canvas of the family, 5 – 11 ” x 14″ prints of the horses, some digitals for advertising purposes which shall be emailed to the ad design company and a usb drive with some family photos on it.  So now what is our COGS???

The usb drive still has a cost of $15

The emailed images have a cost of $0

The large canvas cost from the lab is $65

The 11″ x 14″ prints are $4 each so $20

So our COGS for this shoot is $100



We also need to remember that every COGS is only associated with the production of a service or tangible good.

Knowing our COGS tells us if we are  pricing our products appropriately to make a profit. I mean really who wants to work for free?

Well now that we know how to figure out or COGS, what the heck do we do with it??

When we start setting our prices, we need to take into consideration not only our CODB, but also our COGS.  By using all of the information we have  work so hard to figure out, we can now decide how much to charge not only for our time, but also for our product.  While looking at what others are charging will give you a good idea of what your competition is doing, it will not help you.  Usually you want to at minimum triple your COGS for each product.  You have no idea what their CODB or COGS is, which will not help you, your costs could be less or more than what theirs is, and by just using what they use, could put you in the red.

Ok next up we are going to start shooting!!!!




How to Charge for Your Photography

How to Charge for Your Photography

Next in our series of starting an equine photography business is to figure out what we need to charge for our beautiful pictures and oh yeah our time. Yes, you should get paid for your time as well as your products.  Many new photographers want to know what others are charging and base their fees on those numbers.  While it is great to know what the competition is charging, it does nothing for sustaining your own business.  Your costs may not be the same as mine, and I know my costs are not the same as others in my industry. We each have our own CODB and we need to know what that is. So today we are going to get into another portion of our business,  (sorry no shooting yet….we will get there, I promise), we are going to be figuring out our cost of doing business or CODB. You only thought that doing a business plan was scary, this work is going to show you what you need to make in order to make a living. I know when I fist did all of this, my eyes must have glazed over and looked like the proverbial deer in the headlights. We are going to try to make this as non scary and painless as we can.CharlySRS_9627

CODB – what is it and why do you care?   Your cost of doing business is the result of an equation. (Yep we are doing math here, so hang on!) The equation is not that bad.

Non-reimbursable expenses (A), plus your desired salary (B), equals your total annual costs (C). Simple!


First, how much do you want to make a year this is what you want to make as take home pay. (as if you were receiving a paycheck from an employer, and get to take home and spend how you want) $50,000 a year? 75,000 a year? more? Don’t sell yourself short, but also don’t think you will make as much as Bill Gates in your first year.

The addition of your non-reimbursable expenses, these are the costs associated with keeping the lights on and the doors open. Rent, computers, phones, internet, insurance, gear, office supplies, etc., fall into this category. Beware this is going to be a fairly large number for some of you.  Grab a blank sheet of paper and lets make a list of what our non-reimbursable costs are: office/studio

phone (cell and/or landline)

photo equipment (cameras, lenses, memory cards, etc.)

equipment service and repairs (let’s hope not…)




vehicle expense (double check with your tax advisor on what you can include in this one if you are using a personal vehicle for work)

office supplies and furniture

postage and shipping

professional development (workshops, etc.)

advertising & promotion

subscriptions and dues

insurance (business and equipment)

legal and accounting services

taxes and licenses (business and self employment)

office assistant (I wish…)

utilities (other than you phone since we listed that earlier)

travel and entertainment

Your list may not have all of these, or it may have other things not listed here.  The important thing is to include all that you can think of that you will spend to run your business for the year. Some of these thing will take a bit of figuring out, but again put in the time and work, so your outcome will be a realistic number to work from.

Lets try an example:

A= desired salary    $75,000/year

B= total expenses     $75,000/year

$75,000 + $75,000 = $150,000 per year expenses.  So our CODB is $150,00 per year. This is what you will need to make annually just to keep your business going and does not include any savings for your company.

Yep that is a BIG number.

So let’s break it down into some bite size pieces.

You can break it down by month, or week, or by session or horse show. Let’s do it weekly to see what that looks like. So out of 52 weeks in a year, how many will do you want to work? Be sure to include time you want off for vacations, being sick, time for workshops etc. One month off should give you ample time so lets use 48 weeks as our magic number.

So $150,000 codb, divided by our 48 weeks of work time

$150,000 / 48 = $3125

This means that in order to make your $150,00 per year codb, you need to bring in $3,128 each week.  For equine photographers this can be made by shooting ranch/portrait sessions or horse shows or a combination of the two (there are other ways, such as commercial, but we will keep it to just these two ways for simplicity).

Lets use ranch/portrait sessions for our example.  Lets say we can do 3 ranch sessions a week  (remember we need to include email time with the customer, phone time, editing time, travel time etc.). This means we need to make $1,012 per session each week.  This is where our next topic of cost of goods sold or COGS will come in, as this $1,012 per session is just to pay you, and cover your expenses, it does not cover any products for your clients.  SRS_7300

Lets see what  shooting horse shows looks like.  Lets say you shoot three horse shows a month that are each 4 days long, this means you are shooting 144 horse show days a year (this does not include edit time, travel time etc….these are just the days you spend shooting, adding these thing will put you about 250 days a year.)  In order to determine what we need to make each day shooting it will look like this:

$150,o00 / 144 days of actual horse shows = 1,042 per horse show day.

Again this only covers what it will take to pay you and your expenses and does not cover the cost of products that your customers may purchase. So when you are shooting horse shows on spec work (a topic we will cover later on) it can be very daunting, since sales are not guaranteed.DizzyLizzyGirlSRS_0343web

Our next stop will be figuring out our COGS, so stay tuned!







Starting an Equine Photography Business

Starting an Equine Photography Business

So you want to make a business of shooting horses. Awesome!! Now before we jump in and start shooting every living horse we see, lets get down to the business of running a business. Many factors go into owning and running a business and let’s be honest, many of them do not look or sound like fun. Trust me writing about it is not much fun either, but I am doing it to help you! So, don’t let the thought of it deter you from your dream job. What you need to understand is that by starting out the right way, your business is more likely to survive and grow. No one wants to say “well I started a business but had to close it because I did not make any money,” so lets start out with a roadmap to make you successful. While we have not covered everything here, these things are the biggest that you need to make sure you deal with.ShowYourGunsSgSRS_3549

The first step on your new business journey is to make a business plan. Creating a business plan sounds daunting and flat out scary, and for some they never do this. What I have learned though is that this is the equivalent to having a road map or blue print to run your business from. The more work you put into this step, the better prepared you will be. Ever try to build something very complex without a plan? (Ok if you are a guy – you probably have….) Your business should be no different, I would love to see you succeed and a plan will be more help than you can imagine. There are lots of resources to help you build a great business plan. Nolo press has a great book called How To Write A Business Plan and it is available at most book stores or online. (I do not endorse any book or product for remuneration but have used this book and it is easy to understand and helped me tremendously). Another great source for doing your business plan is the Small Business Administration . However you decide to work through creating a business plan, do it, and do it with as much passion as you would shooting a gorgeous horse with a long flowing mane.

If you have absolutely no idea on how to run a business, you may want to invest some time attending some business classes. There are many free resources for this as well as seminars. Again the SBA is a great resource. What you will find is that being a photographer is actually only about 20% shooting and the other 80% you will find yourself in some sort of business mode – accounting, marketing, post process, etc. You may as well figure the hard stuff out now so you can apply yourself to your passion of shooting. So again, find some resources to help you learn the ins and outs of running your business, it will make your life easier in the long run!


Where are you going to run your business? Are you going to get a studio space? or are you going to use a spare bedroom in your home? we need to find out what the zoning ordinances are for our area.  Some areas will not allow you to run a business out of your home.  Other areas may allow you to run your business out of your home, but you can not have clients come to your home office. Your state comptroller can help point you in the right direction of where to find information for your area.  The answer to this could determine where you have your business, so be sure to research this.

We have all heard of a sole proprietorship, LLC, S Corp and C- Corp, we are now at the point that we need to determine what kind of business we are going to be. But, how do you choose the right one? This is a very important area  and way more information than we can discuss here, especially since I am not a tax advisor or an attorney. They way that taxes are dealt with are different for each classification, which makes this a must have conversation with a tax advisor who can help you determine the best option for you. Really the best way to decide which you should use is to have a conversation with your tax advisor. So make an appointment with your tax advisor and be sure to have all your questions written down to take with you so you can make a very informed decision about this step.


So what do you want to call your new baby??  For some their name is the easy route but perhaps you want to have a clever name, like S. Sylvester Photography…oh wait, that is soooo not clever.  There are some great names out there that are being used. Our next stop on our business creating journey is to come up with a name. Your best bet is to come up with a few names that you like, because we are going to have to make sure that someone else is not using the name we want.  For me I had to go to the Texas Comptroller to see if the name I wanted had been used yet. So find your local comptroller and check the names you like and see which are available. The other thing I made sure to check was to see if the website name was available.  How awful would it be to have come up with a great business name, register it with your state and then find out that the website was taken by someone else? If a website is similar in name to yours, this could potentially cause your customers to end up at the wrong website, so make sure you research your web domain thoroughly. Network Solutions will let you check several web domains at one time.

Now depending on what type of business you have decided to register as, you may need to get a tax-id number.  Your tax advisor can tell you if you will need a new tax id number.  If you are doing a sole proprietorship, then you should be able to just use your social security number. To make sure we are doing things on the straight and narrow, check with your tax advisor to be sure if you need a new tax id or not. Last thing you want to do is go to file your taxes and realize that you have a huge mess because you don’t have a tax id number.048SRS_6582

Guess what?? We are not done with tax stuff…..ughh.  The next thing on the list is to obtain a tax license from your state and/or local municipality.  What you need will depend on your location, again the state comptroller is your friend for this question.  They really are great about helping new businesses get all the information needed to get going. Find out what you need, then file all the appropriate paperwork with them to get your license. Remember also to find out what you need to charge in the form of sales tax, and what is actually taxed.  In Texas we have to charge tax on the session fee as well as any product, but some states the session fee is not taxed but products are. So make sure you know exactly what you need to charge tax for and then file your tax forms monthly or quarterly as your license dictates.

A very often overlooked step in the business process is insurance. Most homeowners policies do not cover businesses, and if you choose not to have insurance, you could actually run into problems with your homeowners insurance. “Why do I need it?’ you may ask, this scenario will hopefully help you understand why:  Your friend wants cute pictures of her kid in the park that has that really cute little waterfall. You agree and off to the park we go with your gear and little Johnny in tow. Mom says “oh how cute would it be for him to sit on that rock next to the waterfall?” (now I am not talking a huge waterfall, just one of those cute little park ones…..) She sets Johnny up on the little rock, and he falls and hits his head and falls weird on his arm breaking it. Now we are off to the emergency room where Johnny gets stitches on his head and a really cool blue cast on his arm. Your friend has a $10k deductible that they have not yet met. The bill from today runs about $7k because the doctor wanted to do a ct scan since he hit his head, along with the xrays, cast, stitches etc. If your friend is super nice you may not have to pay anything, or they could ask you to pay the deductible (since you are the professional and should have known Johnny was going to maybe fall) or they could decide to sue you for damaging their precious little Johnny (even though he was being a brat and running all over and not listening to anyone). For me I would want my insurance co to say “we got this”. Horses can certainly create reasons for insurance!!SRS_0190web

Employees…..yes or no???   Most small startup companies usually do not have any employees other than the owner(s).  If you plan on having employees, please check with your tax advisor and your state comptroller on what you need to do. Your tax advisor can help with 1099’s or W2’s depending on how you decide to deal with having employees.

Whew! I think that should keep you busy for a little while! Running a business is work, starting one is even more work, but it can be done and if done with much consideration and thought put into it should be successful and rewarding. A business plan can and should become your roadmap for the short term as well as your next 5 years.  Each year make a point to revisit your business plan and revamp and tweak where needed, you will find it an amazing tool to help you keep your business in the black. Time to get to work and make your dream a reality!

Happy Shooting!





Of Horse Shows, Photographers and Poachers

Of Horse Shows, Photographers and Poachers

Being a horse show photographer has its wonderful moments. Then there are the moments where I am embarrassed and mad to be one. The Scottsdale All Arabian Horse Show is going on right now, and while the horses are beautiful and stunning to see, should other pros be there shooting it?   Rick Osteen and Howard Schatzberg of Schatzberg Photography are the “official” photographers of the horse show. Their work is amazing, they have done Arabians shows for years and have honed their craft with the utmost perfection. I know they are required to carry a hefty insurance policy naming no less than 3 organizations including city and counties as additional insureds, have overhead of employees, etc. and are there trying to make a living. I know these things because I have shot at this facility and have been required to provide the same things. On any day of the show you can stand beside any of the arenas and see countless “pro” photographers ringside happily shooting away.  Now don’t get me wrong shooting for your own personal enjoyment is one thing (people should be allowed to shoot their family – an entire barn? I don’t think so). However many of these self- proclaimed professionals are shooting and sharing on Facebook, as well as tagging anyone in the picture.  Which in essence means that they are selling their photos for $0.  Many are even handing out business cards to the people they are shooting to get them to buy the pictures (I  found one who has this blurb on his website: “Due to the sheer size of the event, I am afraid that I was not able to cover every arena and every horse at the event.” followed by a list of all the classes and photos from those classes for sale).  Here are these self-proclaimed “pros” who are coming into Rick and Howard’s work place to steal work and customers from them. Now I know many of you are going to say that the show producers should take care of these “poachers”, others are going to say that is the way it is now in the horse show world, my comment to those is “if they are professional, shouldn’t they behave that way?”

The poachers are not having to fork out money for insurance, employees at the show and cover who knows what other expenses that the official has to.   I have even found them trying to be sneaky at horse shows I have been the official at. Want to know something else???  Let me walk you through a scenario that could happen…. Perhaps Mr. Poacher scares a horse, causing the rider or the horse to get seriously hurt.  Someone happens to see Mr. Poacher with his pro equipment and says “That guy with the pro equipment caused this accident.” While Mr. Poacher may or may not get sued, I can just about guarantee that the facility and the “official” photographer will.  It is surely going to be assumed that the pro was working for the “official” since he was supposed to be the only pro there. Still not getting it?  How about this one? Let’s say you are the “official” food vendor for a sporting event, now I pay my entry fee into the park and proceed to sell hotdogs and hamburgers (heck I may even give them away).  Are you going to be ticked????  You bet, you have been required to have insurance, permits, employees etc., and here I come and cut in on your profits without having to provide any of the things you have.  The horse show photographer is no different!

The Scottsdale show is not the only horse show with this problem, just about all horse shows have this problem.The International Andalusian & Lustiano National Championship show was no different. Unfortunately there the “official” photographer Kristie Nichols Puckett of Moonfyre Photography, had to deal with a photographer who came in on a “media” pass.  While media passes are not bad, they are supposed to be for magazines, etc.  Not for that person to shoot hundreds of photos and then turn around and offer them for sale on their website or post them all over Facebook with people tagged…..so rather than buying from the official, they got free photos. This happened at the Scottsdale All Arabian Show in 2012 as well.  The person that was shooting for Arabian Horse World has all of the photos they took on their website for sale. So they got to go to the show – no insurance, no employees, etc. and shoot whatever they wanted for the magazine and then turn around and sell the photos. Were they the official? No Osteen-Schatzberg were. Not only is that unethical it is pretty immoral in my book as well.   I wonder if these photographers realize that they could be sued over this infringement?

Unfortunately I have found that this happens in other sports as well.  It just makes me mad and disgusted. Why do we as professionals insist on screwing each other?  Perhaps you may not be aware that at some point one of those people you have poached may need a second shooter.   Guess who they will not be calling???? And can you guess who’s names will be drug through the mud?  You “poachers” would not like someone coming to your horse show and behaving the way you are at the shows you are poaching….so how about we all grow up and behave professionally?