Friday, February 19, 2010

Invoicing, Licensing, and Keeping track of sales.

It's time for the boring and annoying part of running your own business. Finances.

Making that first sale is hard enough, but when you have a client who wants you to perform a job, what do you do?

For starters, I use a program called BlinkBid.  It quickly and easily lets me generate my usage terms for the images, list all my expenses, and will make creating invoices, and estimates incredibly fast.  It then tracks your usages, so if you have a photo with a 1 year usage license, it will give you an update when the photo is available to be sold again.  A lot of money can be made through repeat sales and smart tracking like this.  All your finances will be stored in the software, so come tax season (UGHHH!) you will be ready to report profits and expenses in a snap.  I highly recommend this program to any professional photographer.

Just to be clear, usage license's are the rules that restrict (or doesn't) where the client can use the photo, what they can use it for, and how long they get to use it.  Unrestricted and Unlimited usage is the ability for the client to use the photo anywhere, and create as many copies as possible.  I don't recommend unrestricted or unlimited usages unless the client is going to pay a lot for that purpose.  Discuss usage terms with your client, and when you find out how many copies they are printing/running, and for how long, it will help you set a solid price.  BlinkBid has options menus for applying all of the various available restrictions making these easy to establish.

Now on to that first job...

The very first step is establishing a price.  Pricing is covered in this article (here).

Create an estimate for the client and include in that estimate your price based on: client's needs, usage rights/licensing, company information, and any other details that are pertinent to get the job done.  Try to place all your fee's up front so that you are not surprising the client with them later.  Hidden fee's will make clients less likely to ever work with you again.

Now the ball is in the client's court.  If they are good with the pricing, it's time to get the job done.  If not, discuss terms with them, maybe change restrictions to lower the price, or if you priced high, offer them a discount for their first job.

After the job is finished, but before product delivery, it's time to send your invoice.   Definitely wait until you are sure what all the expenses in the job were before creating the invoice.  You don't want to lose money due to poor tracking of expenses. It's also bad to deliver the product before invoice.  The client could scam you that way!

Once the client has received the invoice, keep track of how long they have had it.  BlinkBid has built in timers that tell you how long it's been since the invoice was sent.  It also has a fee that you can add to the invoice so the client knows it will cost more after a certain amount of time.  Kind of like a late fee.  Most people don't want to pay, and WILL put payments off until the last possible minute.  Just because you have sent an invoice does not mean you will be paid anytime soon.  Follow-up with e-mails like "I was wondering when I can expect to receive my check?  It has been a few weeks since I sent the invoice".  This is a nice way of reminding the client that they need to get on this.

The job is still not done when the check comes.  Now you need to record it on your profits sheet and keep track of the check stub if there is one for your tax purposes.  If you have BlinkBid, just click receive payments, click transfer to actuals, and you are done.  BlinkBid will really make your life easier, but there are other great programs out there as well such as fotoBiz.  However, we all must start somewhere, and if you are not making enough sales to justify purchasing the program, you can create everything through Microsoft Word templates for Invoices, and Estimates.  And use Excel to record expenses on gear along with earned profits.

Your first year or so of business will likely end up being a loss in profit.  Camera gear is expensive and clients are tough to establish so quickly.  This will help you with your taxes so don't expect to pay too much until you are becoming profitable.

Hopefully this is helpful, I know I would have liked to learn all this when I started.  Please comment below if you feel this article is missing any vital details.

That's the BUZZ for Today!  Please check back soon for more.


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