Invoicing for a photography project is quite different from other types of work. For one, there are a variety of billing methods that you can use. However, if you’re not aware of this and you’re not taking advantage of the right option, you can potentially lose profit.
In this article, we will discuss three effective billing methods that are commonly used in the photography industry. They are Time Plus Cost, Upset Limit, and Lump Sum. We will discuss the advantages and disadvantages of each one.
We will also discuss how to create a photography invoice. That way, you’ll be fully equipped with all the information you need to start billing your photography clients the right way.
It might now seem important at first, but your manner of invoicing photography clients can have a huge impact on the success of any job you take. In addition, it can also affect your profit margin.
Knowing your Hourly Rate
As someone who offers photography services, you should always be mindful of your hourly rate. Time is money – if you don’t know how much your time is worth, you’ll end up wasting both time and money. So, before we get started, let’s first discuss this matter.
It’s a good practice for photographers to bill clients at minimum three to four times what they expect to get as their pay per hour. For example, if you’re expecting to earn $60,000 per year ($30 per hour) as take-home pay, you should bill your clients – at a minimum – $90 to $120 per hour for your time.
While a number of photographers claim that charging clients per hour may not be the best business practice, it’s still necessary to know what your time is worth before invoicing your clients.
Now that we have that out of the way, let’s proceed to the methods of billing photography clients:
Method #1: Time Plus Cost
This billing method is exactly what it sounds like. Basically, you bill your client for the time it took to accomplish the job, plus the direct costs that you incur to complete the work.
Note that your direct cost does not include your cost to do business (overhead). Instead, this is included in your total hourly rate.
Examples of direct costs include travel (accommodation, parking, mileage), rentals of specialized equipment (bodies, grip, lenses – essentially any equipment that you don’t own), and the cost of hiring subcontractors (makeup artists, models, stylists, caterers, etc.).
Pros of Time Plus Cost
- Useful for open-ended projects (jobs where it isn’t easy to estimate a specific amount of time to complete the work).
- You don’t have to worry about under-quoting a job.
- Get paid for exactly how much time you spend on the project and the costs you incur.
- Can be very profitable when extra work is required.
Cons of Time Plus Cost
- Clients may use Time Plus Cost as leverage to negotiate discounts.
- Can be a source of contention after completion of work.
- Clients will scrutinize everything you do during the entire project just to lower the total price.
Method #2: Lump-Sum
This method involves offering a single, predetermined price for a defined task, or a set of tasks. Lump-sum price also includes a photographer’s direct costs; however, it can also be billed separately.
If you choose this method, you must bill an entire job for a single lump-sum price. You can itemize all of your work and bill individual sum payments to each specific task.
Pros of Lump Sum
- The best-suited option for photography jobs.
- Has a very well-defined scope that’s well understood by both parties (photographer and client).
- Gives you an incentive to improve your efficiently.
Cons of Lump Sum
- A problem for photography jobs that don’t have well-defined requirements.
- The risk of spending a huge amount of time to accomplish the work due to unexpected circumstances.
Method #3: Upset Limit
This type of billing takes up the concept for both time plus the cost and lump-sum billing. Basically, it follows the time plus cost basis, but only up to a predetermined lump sum upset limit. There’s also an upset limit to the cost of expenses that can be billed to the client.
For example, you’re charging $100 per hour of photography on location up to a maximum (the upset limit) of $500, or five hours. If it takes you more than five hours to complete the work, the maximum they can charge will still be $500.
Pros of Upset Limit
- It’s usually the required billing option for some public sector clients.
Cons of Upset Limit
- Has all the disadvantages mentioned on time plus cost and lump sum.
- If you’re efficient at getting the job done, you will get less money.
- If you deal with circumstances that will increase the amount of work originally anticipated, you will still make less money.
Preferred Billing Method
So now that you have an overview of the three billing methods for photography, you now have an idea as to which is the best option for you.
Just to give you an advice, we highly recommend billing with an itemized list of lump sum items, a detailed estimate of costs and markup, as well as a detailed usage rate.
Both time plus cost and lump sum are great options, depending on the situation or the project that you’re going to tackle. Avoid upset limit as much as you can. It has way too many disadvantages for it to be worth the option. The only time you will go for upset limit is when it’s the only option billing method the client would take. Otherwise, just avoid clients that demand upset billing.
How To Create a Photography Invoice
Now that you know how to bill your clients, the next thing you need to know is how to create the right invoice for your photography work. This section will serve as a quick guide on how you can do just that. We’ll also mention useful tips that you can use to make the entire process easier and worthwhile.
1. Find the Best Invoicing Software for your Photography Business
Using basic tools like Microsoft Office will limit your capabilities of creating a professional and compelling invoice. You can also download photography invoice templates from FreshBooks.
But nowadays, you need invoicing software. This type of application not only helps you create invoices but also track and manage all of them as well. With a comprehensive invoicing system like ReliaBills, you can create, customize, send, track, and even receive payments. If you have an invoicing system in place, you’ll be able to automate the entire invoicing process. There are also other features that you can take advantage of, such as expense tracking, financial reports, and setting up recurring invoices.
2. Include Payment Terms in your Invoice
Avoid sending out an invoice that doesn’t include terms of service and payment. If you do, you’re setting yourself up for delayed payments and disputes. There are certain terms that you want to include, which you should cover within your invoice. Make sure to write this concisely and clearly. That way, it will be easier to comprehend.
Make sure you place it where it’s visible and in a legible format.
Here are some terms that you would want to include in your invoice:
- Either upfront payment or payment upon project completion.
- Due Date.
- Late fees that you will apply.
- Modes of payment that you accept.
- Whether you’ll do the project before or after receiving payment.
The purpose of these terms is to make sure everyone is on the same page. It’s good to go over each of these terms before you agree to take on a photography project.
Once you’ve determined all the relevant terms, make sure you include them in your invoice. That way, your client will also be reminded of them. You can also test out different terms and adjust them based on your needs.
3. Customizing your Photography Invoices
When you’re using a quality invoicing system like ReliaBills, you can ensure that all of your invoices come out attractive and professional. It’s essential that your invoices not only provide the details but also represent your brand as a whole.
That’s why it’s always a great idea to include your company logo, as well as colors. The best thing about using ReliaBills is that you don’t have to be a designer to be able to pull this off. ReliaBills offers a variety of templates that you can choose from.
You can then save the one you like to create invoices whenever you need to quickly. In addition, you can send them via email so that they will be received by your client right away.
Your invoice should include important information about the customer, the project that you’ve worked for them, and your business. For example, your invoice should include your business name, address, and phone number.
These details are typically positioned in the top corner of the invoice. At the same time, you should include the name of your customer, their address, and phone number.
Every invoice that you send should also contain an itemized list of all the services that you made throughout the entire project. That way, the client will know exactly what you’re charging them for. It also offers transparency and allows your clients to raise any questions before paying you.
Once the client receives your invoice email via ReliaBills, they can click and pay within minutes. This will boost your revenue since it removes any potential delays associated with confusing payment processes. In relation to that, you should always make your entire payment process as simple and straightforward as you can.
4. Monitoring your Photography Invoices
The photography business is a bustling one, which is great since you don’t run out of opportunities to earn. However, there will be problems if you’re not careful with managing your invoices.
Not paying attention to which invoices are paid and which aren’t can potentially ruin your business. Using paper-based documentation for invoicing can be complicated and burdensome. Fortunately, you can easily track and monitor your invoices with ReliaBills.
With the ReliaBills invoicing system, you can create and keep track of all your sent and pending invoices. That way, you can reach out to customers for delayed or late payments.
You can set up to where customers are sent payment reminders periodically. Once payment still hasn’t been made, you can then contact them personally.
Your invoice records will also be useful when it’s time to do your taxes. Knowing all of your income and expenses will ensure that you fill out your tax return accurately.
Now that you have all the information you need, it’s time to remodel your billing strategy and incorporate the things that you’ve learned in this article. Always keep in mind that invoicing clients isn’t as daunting as it seems, as long as you know what you’re doing.