When I was in school (and this has been many moons ago) we received a notice of the date when picture day was, usually a month in advance, and were sent home with an information packet.
This packet (along with a consent form to take photos) contained different print packages the parents could purchase. There were several options of 8x10s, 5x7s, wallet sizes, etc. And in my later years, options for background colors, retouching, or other effects.
The package was selected, if any, the payment was enclosed, and returned to school on picture day. All students present at school that day were photographed for the yearbook regardless, unless for some reason the parents did not want their child photographed. About a month later, we received our completed portrait packets at school to take home.
If I remember right, retakes were also scheduled about a week after the packets were received. I think there was a small nominal fee for a retake, but I can't be certain. Over the years, I seem to remember that there were several different local photographers taking the pictures. I'm not sure how that process worked, if there was some kind of bidding for a contract involved or what.
As a parent myself now, it's pretty much the same for my kids.