Understanding your business costs

Most of us have a fair idea of our estimated revenue or income for the upcoming year. We know roughly how many weddings we’ll shoot and what our average prices will be. And as the money comes in, it also goes out in the form of costs or expenses. Generally speaking there are two types of costs – variable costs and fixed costs.

Fixed costs – as the name would suggest – are fixed, you incur these costs or expenses even if you don’t shoot any weddings. Examples of fixed costs are business insurance, website costs, subscriptions and dues, studio rent (the essentials you need to run your business).

Variable costs vary with the amount of work you are doing. So the more weddings you photograph the more you’ll spend on albums for example (assuming you’re selling albums!).

It’s critical to understand both your fixed costs and variable costs. Let’s say you’re working on your pricing for packages, ¬†you’ll obviously factor in the costs of the products included (variable costs) but it’s also important to think about the costs of actually running your business (fixed costs).

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