WE receive letters quite fre-quently in regard to methods of determining the cost of making photographs, and we believe, as most of these letters indicate, that there is a growing demand for a greater knowledge of matters pertaining strictly to the business side of photography.

Most difficult of all business problems, as applied to photography we believe, is this matter of cost finding and the establishing of prices that will yield a legitimate profit on all business done by the studio.

The man who makes a thousand sittings a year at a known profit of $5.00 a sitting, over and above all expenses, including a salary for himself, knows he is just $5000.00 ahead at the end of the year, provided he pays himself the salary he earns, and it is enough to live on and is included as a part of his cost of production.

The man who makes only three hundred sittings a year must, in order to make $5000.00 a year, make a proportionately larger profit on each sitting, $16.67 to be exact. If his profit is less he must increase his volume of business or reduce his expenses or both.

The first requisite of any method of cost finding is an accurate method of accounting, as it is impossible to determine at what price photographs must be sold to yield a specific profit unless it is known definitely just how much money is spent during an entire year for everything that enters into the conduct of the business and the production of the year's work.

Some photographers who have no idea of actual costs are careful buyers, are economical producers and by experience and good luck are able to set prices for their work that give them good general returns in profit. But such methods are exceedingly dangerous and uncertain and do not permit of estimating profits with any degree of exactness.

Portrait Film Negative, Vitava Print By Louis E. Allen Rochester, N. Y.

Portrait Film Negative, Vitava Print By Louis E. Allen Rochester, N. Y.

Very often a photographer will admit that he has made a bid for a large volume of school or similar work, basing his price on a guess at his costs, only to find when the work is finished that he has not made any actual profit.

There is only one way to know actual costs. That is to find the total of every expense that enters into the operation of the studio. Every expense includes a paper of pins for the dressing rooms as well as insurance on equipment; a new broom for the porter as well as the rent of your telephone, salary of your helpers, postage, advertising, bad accounts, etc.

The only things that can be left out of expense are actual materials that go into the making of photographs such as films, paper and mounts, also new equipment that becomes a part of the studio investment. But a reasonable amount should be charged to expense each year for depreciation of this equipment. We even think that chemicals should come under the head of expense as it is almost impossible to determine the cost of chemicals for any one order of photographs.

When the total of all studio expenses for a year is known divide this total by the total amount of your business for the year - your gross sales, including both cash and charge sales and you will have your percentage of overhead cost.

What this percentage will be depends upon your volume of business and your profit. We will suppose your overhead cost for a year was 35%, your cost of materials 40% and your profit 25%; how, you may say, is this going to help you figure close on a big job and make you sure of a small profit or enable you to determine prices for new styles of work that will give you certain profits.

We will explain both problems. On the big job we will assume you will be satisfied with 15% profit. You go into the matter thoroughly and find that the materials for the big job will cost you $480.00. You know your overhead is 35% and you want a profit of 15% making 50% so your cost of material must represent the other 50% of your selling price. Therefore if 50%= $480.00, 100%= $960.00, which is the price you must quote to pay 50% for materials, $480.00; 35% for overhead, labor, etc., $336.00 and 15% for profit, $144.00.

In the same way you can determine the price you should ask for any new style of picture in order to make any profit you choose to make. We will assume you want a 35% profit just to show the figures.

Your overhead cost is 35% and you wish to make a profit of 35% leaving 30% for cost of materials. We will suppose the cost of materials for the particular style of pictures figures $8.00, which is 30% of the selling price; 100% would be $26.60. In the same way any selling price can be figured once the overhead cost and cost of materials is known.

Portrait Film Negative, Vitava Print By Louis E. Allen Rochester, N. Y.

Portrait Film Negative, Vitava Print By Louis E. Allen Rochester, N. Y.

The figure of 35% for overhead cost is rather high unless one is working on a small margin of profit and trusting to volume of business for volume of profits or is operating a very expensive studio and doing only a small amount of high priced work.

Of course the ideal business is one that does a good volume of fairly high priced work at a moderate expense, but such conditions do not always exist.

Knowing costs, however, is always conducive to better profits as one does not long continue to make any one grade of work at less than a profit when the fact is clearly indicated by figures. Know your costs and sell accordingly.