Getting PAID…the residual way.

I’ve run into a problem several times now…getting paid residuals for work already done, in the digital age.

Back “in the day”, residuals were easy money, sort of.  Let me explain.

Let’s say you do a head-shot.  How much can you charge for a simple headshot?  $100?  And how long does it take you?  Well, there’s studio set-up (or workspace set-up if you’re not in a studio), that might take you 20 minutes (more if you need to find a location), there’s time going back and forth on the phone and on e-mail arranging dates, advising what to where, giving direction, blaa-blaa-blaa, that might take another 20 minutes or more, there’s the shoot itself which should last at least 30 minutes if your client is to feel happy about the shoot, and then there’s everything done in post, like file transfer, picking the best shots, doing colour balance, removing dust spots, retouching, etc.  That could easily be 90 minutes.  So all totaled, that’s 2 hours and 40 minutes…and that’s if nothing goes wrong.  That works out to be $37.50/h, or, not a whole hell of a lot!  Factor in your costs for your camera, computer, location, etc., and it’s MUCH less.  You might even be losing money!

So, as I was saying, back in the day, the “real” money would be made in prints because guess what, you keep the negative!.  You could charge $15-$25 for a single photographic print!  Someone needs 10 prints, that’s 150 bucks in your pocket with a cost of only about $10 (including chemicals).  And if that person is really looking for work, they’ll be coming to you ever month or more for more prints!  If you’ve got only 10 regular clients that need prints every month, that could easily be an extra $1500 for  you every month!

But things change.

Now I’m asked for the files so my clients can do what they will with the image.

Recently I was asked (by two separate clients) for digital versions of their letterhead I did for them, so they could fax letters without using their expensive letterhead.  Great idea!  But this poses a huge problem for me because of the industry accepted pricing structure for letterhead design.  That is, generally speaking the price you charge for letterhead is subsidized by the price you charge for printing (the residual).  The result is, the price ceiling the market is willing to bear for design is fairly low.  The market is expecting the price of letterhead in their hand to cost them $x and that the design should be $y/x.  This same formula can be applied to headshots, flyers, ads, etc.

When you’re printing, this traditional pricing formula works beautifully.  Everyone wins.  Your customer has the option of deferring their costs to when the printing is required and the creator is able to accumulate residual payments from work already done.  It’s a bit of a long-term credit situation…creative layaway if you will.  But when we introduce digital files into the picture (no pun intended) the creator gives up all those residuals without gaining appropriate creation fees (because of the already-established low market rate).

So what’s the solution?

In my view, the only fair and viable solution to this problem is via licensing.  A monthly (or yearly) fee to use the product of my creation.  However, this brings up copyright ownership and value vs. price.  But I’ll save those for another post.

So the next time a clients asks for a digital file, consider what you’re giving up and the precedent you’re setting for yourself and your colleagues.

Enjoy!
J R Bernstein

And remember your ABC’s – Always Be Capturing!