What Do My Estimates and Invoices Say About My Professionalism?
When I first started my photography business, I didn’t have any clue how to estimate pricing to a prospective client, let alone how to make that estimate professional looking and protective of my rights and needs. And obviously I had no clue how to create an invoice either, so safe to say my professional appearance was lacking to the most important people.
After freelancing for the past 5 years on my own, while still not perfect, my process is significantly better than it once was, and I’m hoping this post will give you some help to improve your paperwork skills to impress your clients. If you’d rather listen to this content, check out my podcast episode where my co-host, Robert Huskey, and I go over these same details; https://open.spotify.com/episode/3lhSyep54Lf5Q28letRflD
First off, let’s address why this is even a topic of discussion. Some photographers might say “all I need is a price for an estimate and a total for an invoice, why make it more difficult than it needs to be?”. Well, at it’s core, that’s pretty true. All a client really cares about is what you’re going to cost, and after the fact, what’s the total due. But just because a client will zoom past all the terms on your estimate and go straight to the bottom dollar first, doesn’t mean they won’t appreciate the effort and thought put into the totality of the project. Keep in mind, an estimate is often the first point of communication you’ll have at establishing a relationship with the client, and an invoice may often be the last point of communication, so why not make a good first and last impression?
Essentials to Estimates
So let’s dive in shall we! Let’s start off with the elements of a good estimate. Here are some essentials to either include, or consider when drafting your first estimate;
- The word, “estimate”. That’s not meant to be funny. Many “pros” don’t include the word estimate. You need the client to know what this document is.
- Contractor and client info; email, phone, address, point of contact
- Timelines: Detail the scope of the project. How long will it take to complete. How long for deliverables to be sent?
- Itemized fees: This is the pricing breakdown. I like to be specific so my client understands exactly what they’re paying for. Some other photographers like to give just 1 tidy number, and that’s fine too so long as you have a consistent method in which you get to that number and can articulate the breakdown if they ask. My basic categories for determining fees include the following: Creative fee, Scouting fee, License fee, Retouching fee, Per Diems and Reimbursements.
- Creative Fee (labor): ex. $100/hr for 7hrs
- Scouting and Casting Fee (if applicable): applicable to bigger projects or anything where the artistic vision would require more attention to detail and preparation. Do you need to spend an entire day casting the right on-camera talent for a campaign?
- License Fee (usage): This is the most ignored area and that is of growing concern to me. If you ignore the license, you are effectively only charging for labor. Your intellectual property has tremendous value and should be respected. I consult FotoQuote software to determine license rates.
- Retouching Fee (if applicable): ex. $10/image or $50/hr or whatever your rate may be.
- Per diem: Daily allowances for employees traveling for business. Can still apply to contractors or short term workers who are paid a daily rate for their work, rather than an hourly rate or a salary.
- Reimbursements: This is an approximation at this point because you have not yet purchased anything. You are estimating what production costs will be for the project. If you are anticipating production costs or expenses, it is fair to propose payments as you go. Maybe the client will front the expenses, but maybe they won’t. Consider the following you may be responsible for expensing up front:
- travel expenses (most common) such as flights, luggage fees, car rentals, ubers, hotels, parking rates and gas mileage for personal car (.54c/mile per IRS)
- additional talent hired by you; i.e, assistants, MUA, Hair, Wardrobe, 2nd shooter, digital tech, etc. Think about having the client pay each person directly vs you paying them. Tax implications. Do you want to be responsible for 1099s?
- locations; studio rental, location permits, changing rooms, makeup facility, etc.
- catering: food, beverage, etc.
- Cost of additional hours or requests: I love adding this because it sets terms for your client that abuse of your time will come at a cost. Don’t let your clients off the hook without letting them know the cost of requested overtime. Having a rate upfront avoids that uncomfortable conversation on site about additional payment. If it’s in your estimate and they agreed to it, you’re good to go and can invoice them afterwards. Everyone wins!
- Projected total: An estimated total of the production.
- Payment terms: Hopefully you set the terms if someone is asking for your rates, so how fast do you want to get paid? I always suggest faster payment for positive cash flow. Examples include; 100% up front, 50% up front, Net 15, Net 30, Net 60, Net 90, etc.
- Late fee terms: Let your client know that you’re a pro, and you should be respected like a pro. Have a late fee term clearly written on your estimates so they know exactly what they’re getting in to. Ex: 5% late fee if payment not received 30 days after the invoice date.
- Contractual terms: I like to throw in my contractual template here so in one transaction, the client will know everything I’m requesting. I’ll provide clauses that reiterate usage rates, clarify Indemnification, Liability, Kill fees, Acts of God, etc.
When you’ve sent in your estimate, the client will look the information over and either accept, reject, or counter the estimate. Each counter will null in void the previous estimate. When both sides agree, it is best practice to have both sides sign the document and provide copies to both parties. This becomes the contract to refer back to.
Essentials to Invoices
Assuming the job is finished in spectacular fashion, now is your time to collect. The great part about invoicing is that if you have set up your estimate appropriately, you don’t need to do much accept change the word “estimate” to “invoice” and update the production costs. So ultimately, the only things you need to change or add on your invoice are the following:
- The word, “invoice”. Again, simple, but often ignored and super important you make the distinction that this is a payment notification.
- Invoice #. Have a system that works for you. Mine is the date of the invoice sent. Example; 05232019.
- Total net amount due. Adjust the actual costs of what the production required and have a total amount due.
- Payment due date: Based on your payment terms.
- Where and how to send money. Amazingly, a lot of creatives assume the client knows where to send the money to, but it is often times not articulated clearly. Let your client know exactly where to send the money and how. For example, if you’re taking paypal, they need the email address connected to it.
Additional Tips on invoicing:
*Tip #1: Cloud Accounting Software
I highly recommend paying for an online accounting service that will catalog your estimates and invoices and eliminate the need for you to build brand new ones for every lead you get. I personally use Freshbooks and love the service they provide, but there are other options like Honeybook and Quickbooks out there. I love being able to save templates so it takes me just a couple minutes to build an estimate for a new client or a new job, and it transitions into an invoice in one click. The other thing I love about it, is that it keeps track of the time passed on your invoices and sends reminders. So if you set Net 30 terms, it will automatically notify the client of payment due at day 23, day 27, or whatever you decide to set. Since the software acts as a buffer, you don’t seem like the pushy collector, especially when you send late payment reminders. These services can automate that and lessen the personal blow to a client, as they are receiving the collection notice on behalf of the contractor, not directly from the contractor.
*Tip #2: Offer multiple payment options
Checks are very common, and still one of the big ways I receive payment. But I have opened up my business to accepting more methods of payment, just in case the client prefers one over the other. Credit Cards, Paypal, Direct bank deposits are other viable options that can allow you faster payment. Only stating 1 method may not be the preferred method of the client, so you are limiting the speed and ease in which you receive payment. Here’s a direct quote from Freshbooks’ website, “According to a 2017 study by Paypal Canada, small businesses that accept online payments, in addition to an offline revenue stream, reported an average revenue that’s more than double the revenue stream of businesses that don’t accept payments online. Additionally, Freshbooks research indicates you’ll get paid 11 days faster when you accept credit cards online.”
*Tip #3: Offer discounts for early payments for anchor clients
Anchor clients are your big clients that you do a lot of repeat business with. Consider offering discounts for anyone you have an ongoing relationship with and a steady stream of projects. This incentives faster payment and rewards their business.
*Tip #4: Upfront deposits
If a client (especially a new one) hires you for a multi-day project, or something that requires significant upfront costs on your part, I would highly suggest requesting up front deposits. Let’s say you’re going to do a fashion shoot over 3 days in which you need to hire crew, cater food, and set locations. If the payment terms are initiated by the client and set at Net 60 for example, you’ll have increased your chances at negative cash flow for 2 months due to the production costs you’ve incurred. Consider offering a 25/25/50 option for your clients, in which 25% is paid up front, (that will allow you to pay for assistants, digital techs, locations, etc.), 25% at the end of the job, and then the remaining 50% at Net 60. This is a reasonable compromise to at least offer your clients.
*Tip #5: Late fees
When a client sees an interest rate on an invoice, it incentivizes them to adhere to the payment deadline. Don’t feel like you’re being too pushy here. This makes all the sense in the world for there to be a deadline for payment.
*Tip #6: Simplify your language
Don’t assume that every lead or client will know what terms like Net30 means. You may be hired by someone who has never worked with a photographer before. Consider the following quote from Freshbooks “We may think we’re being business savvy when we use payment terms like “net 30” or “upon receipt” but these word choices may be more confusing than professional. FreshBooks’ data suggests that writing “30 days” vs.“net 30” will get you paid more often and faster. It’s more effective to use exact terms such as, “Please pay within 21 days” so the client is clear on when it’s due.”
Ok folks, that’s going to wrap it up for today. I hope you implement some of these strategies in your own paperwork going forward. Good estimates can help make life easier for you and your clients, and that is always a good marketing strategy for client retention. Again, if you’d like to listen to the Media 1099 podcast where we discuss this exact issue, please check us out on Spotify here; https://open.spotify.com/episode/3lhSyep54Lf5Q28letRflD or go to your favorite podcast listening platform and type in “Media 1099”. Thanks again everyone!