Mark Loundy Common Cents Taking Care of CDBusiness

I was watching the old movie "Strategic Air Command" starring Jimmy Stewart the other night. God I love that movie - Colonel Jimmy doing what he loved best, flying B-36s and B-47s and keeping America safe from communism.

Even with all of the glory the Air Force still had to keep track of its resources. It cost a fortune to keep those 10-engine strategic monsters in the air. Here's a partial list:

* The purchase cost of the aircraft
* Thousands of gallons of fuel for even the shortest flight
* Staff time for mission planning
* Crew time for six to eight hours of pre-flight procedures
* Training and payroll for all personnel
* All of the above for inflight refueling operations
* Etc., etc...

OK, you got me. It's all a metaphor for a photography business. I can't fool you at all. But the parallels are almost scary. Just as the Air Force must manage its resources, so must a freelancer.

Like Jimmy's Air Force, you have to purchase, maintain and upgrade your equipment, pay for promotions, rent, auto, insurance, office supplies, utilities and much more.

The Holy Grail of your business is your CDB - your cost of doing business. The CDB is inexorable. It doesn't stop if you're not shooting. It rings up a new running total every single one of the 250 working days a year (including two weeks of vacation.) If your income does not equal or exceed your CDB, you're losing money - no matter how much fun you're having.

Boston-based freelancer and photo-business lecturer Paula Lerner says that there are two basic ways to figure out your costs. "You can calculate your CDB on a daily basis or on a per-shoot basis. For a daily basis, take your total annual costs and divide by 250. For a per-shoot basis, count your average number of shoot days per year, and divide your total annual costs by that number. Once you have calculated your CDB, you can then see how much you need to make per day or per shoot to cover your overhead plus a reasonable profit. The point of this exercise is to see how much cash flow you need to generate to both run your business and earn a living."

A typical CDB is a couple of hundred bucks per day - $50,000 a year. Remembering that most freelancers only shoot about 100 days a year, that means an average day rate of $500 - just to break even. If you bill fewer than 100 days each year, the day rate has to be even higher. If your CDB is lower, you can afford to bill less.
It's critical to remember that your CDB includes a salary for yourself including a retirement plan, college for the kids, etc. A well-known business axiom is "Pay yourself first."

Staffers doing freelance work "on the side" should figure their CDB the same way - even if they're using their employer's facilities for their freelance work. The way things are going no staff job is safe. You'll need to get your business ducks in a row before the layoffs. Your clients won't pay you more just because you lost your "day job."

Editorial Photographers has an excellent CDB survey-calculator combo on their site. Do yourself and your colleagues a service by plugging your numbers in. Not only will you find out your CDB, but you'll also improve the overall database.

THE GOOD
* Business Week for its "win-win" contract and considerably upping their day rates.
* I'm aware of one metro daily that is re-evaluating its current contract. I hope to include them in this space in an upcoming column.

THE BAD
* Sports Illustrated for its $150 work-for-hire "Faces in the Crowd" contract.
* TV Guide for its indemnification clause. This should always be a deal breaker.

THE UGLY
* Gannett's work-for-hire contract, which has the added indignity of requiring the photographer to allow the company to use the photographer's likeness in advertising and promotion.

Please let me know of any particularly good, bad or ugly dealings that you have had with clients recently. I will use the client's name, but I won't use your name if you don't want me to. Anonymous submissions will not be considered. Please include contact information for yourself and for the client.

Leftovers
Running your own business can sometimes be lonely. Editors present terrible contracts and say, "Everybody else has signed it." Clients say that no other photographer has balked at an all-rights contract. How do you know that they're telling the truth?

Well, usually they're not. But you don't have to take my word for it. You can hook-up with colleagues online and get the straight story. Both the Editorial Photographers group and the NPPA have online discussion areas. As I mentioned in last month's column, there is also a Group for New York Times freelancers. Get online. You're not alone.

© 2002 Mark Loundy
www.loundy.org

Mark Loundy is a visual journalist, writer and media consultant based in San Jose, California.