A lot of us, in our creative enthusiasm are undervaluing our work. worth and brand value. I would always remember that the most important part of being a successful business is the importance of a brand. Once a brand is established, the brand position will determine the pricing that you can command. It will have less and less to do with your costs, and more to do with your brand.
Establishing a brand is about constantly working towards this single goal. But even to start building a brand you first need to know your costs, to determine a pricing point of view. So once you know this, you can use the costing as a one step at a time stepping stone towards establishing a brand. Identifying your cost is a large part of the exercise, many of us miss out on small things that are important and hence under-cost ourselves, leading to lack of profit and hence other spiraling effects.
I would split my costs as Fixed Cost, Variable Cost and Opportunity Cost.
Fixed Cost: Is cost of your gear, accessories, marketing cost, rent, salaries, EMIs distributed over a period of time. For example camera body can be distributed over a period of 3 years.
Variable Cost: are project specific like travel expenses, location expenses, team hire charges, additional rental charges for gear, editing charges, printing charges, other requirements.
Opportunity Cost: is where you feel you have a expertise advantage for the genre or project, and can charge a bonus extra to this project.
Once you have your cost, you can arrive at your own pricing strategy by adding profit as you feel fit, based on your perception, market trends, total value of the project in a long run. For example, a project is guaranteeing you a longer duration of work, you would want to tweak your prices due to reduced pitching, marketing costs.
The creative field is a word of mouth industry. What you do, will spread to other people, So if you allow deep discounts on your offered price, people will get to know, and if you stick to your guns people will know :) This will decide how they negotiate.
to be cont....