The Portrait Mill and Mini-Session Business Model.

[Tamgerine]

I’m kind of a nerd. I like business! I like to sit around and think about business. If photography is my steak, then business is the delicious A-1 sauce I slather it in. So here is a long post about some nerdy business thinking I was going today!

So something came up on my Facebook feed a day or so ago, and it was another of those “mini session” posts wherein everyone comments how they can’t believe anyone could make money charging those prices, and they were surprised to see it was a well established studio with good quality products. Of course, the goal of a mini session is to upsell the customers into a higher priced package. Someone operating entirely on the pricing from the mini session would never succeed.

It got me thinking about my old job at Picture Me! Portrait Studios (owned by CPI Corp). I worked for them for about two years back in 2007-2008 when they were still Wal-Mart Portrait Studios and as a manager I helped several studios through the re-branding into Picture Me! I said to myself today*, “Now here is a business built entirely upon the mini session business model!” Pull the client in for a loss leading package and upsell them with additional portraits or products. Likewise, Picture People is a similar company.
Basically, how it operated was I took seven photographs. The first photograph was for the cheap package and usually a standard pose with a promotional background like holiday or whatevs. Then I would take six good photos and try and sell them higher priced packages. At any time they could leave with JUST the promotional package or nothing if they so chose.

However, CPI Corp has long since been bankrupt, even when I was working there, and is fraught with problems. Yet Picture People, with almost the same sort of mini session model, has moderate success from what the research I have done shows. At least, they’re not failing like CPI is.

So why is it that when presented with two similar business models, one corporation succeeds and one is in the process of crashing to the ground?

Is it an internal issue? CPI Corp definitely has some serious internal problems including a CEO dismissal, fines for not filing their annual reports, and improper listing standards for the New York Stock Exchange. Maybe, that could definitely be it. But not being internal, I can’t really speak for that. So lets not factor that in for now.

MY major complaints while working there was being underappreciated, underpaid, cheap customers, and the fact that the company ONLY cared about the bottom line and my managers just didn’t understand that no family was going to drop cash for the 249.00 package of their kid in their Halloween costume when Christmas was right around the corner. But EVERY major company has bad bosses, unhappy employees, and cheap customers. Is that really the cause of an entire companies failure? I don’t think it is.

They don’t require previous photography experience for their employees, so a better talent pool doesn’t really factor into it.

I think the failure of CPI vs. the success of Picture People comes down to key three factors.

1. Outdated technology and service systems. The entire duration I was there we were shooting film, and this is in 2007. You could see your results digitally, but you didn’t know what you were really getting because the digital camera and the film were different exposures. So not only did it take at a minimum of three weeks to receive a portrait order, if it was wrong or messed up you had to order a reprint from the laboratory and wait another few weeks. If the shot was wrong? Re-shoot, wait another three weeks. Meanwhile Picture People was handing the portraits to the customer in an hour or less, and could reprint on the spot no problem.

On top of that, any technological updates to the system in place would require a massive overhaul of training, equipment, and sales procedures. I believe that any large scale business should be modular in order to stay competitive – that is, you take a piece out and put a different piece in its place, rather than replace the entire system. CPI Corp has since gone digital, but I have no idea how long it took them or to what cost.

2. Disparity between pricing structure, target market, and location. Picture People and CPI have somewhat similar pricing structures. In my day at CPI sheets were 10 each. Right now they’re 20, with Picture People sitting at 18 dollars a sheet, with collections around the same prices. They have similar prices but Picture People has advantages that CPI does not – better location, target demographic, and customer experience.

Picture Me! primarily has their locations inside Wal-Mart, targeting Wal-Mart customers. Do I have to say more about that? While Picture People has their locations in upper scale malls and outdoor boutique-like shopping centers. Similar pricing structures, but one corporation has an entirely better position to hit a profit-sustainable target market from.

Experience. While the Picture Me experience is akin to dragging your children to a, well, Wal-Mart, Picture People just offers a better visit overall. I went there once with my husband. The VERY first thing they did after we got our portraits taken was to carry out a wonderful looking framed collage of sepia-toned photographs. I wanted it the second my greedy little eyeballs rested on it no matter what the price. Why? Because not only did I love my portraits, but they were now tied entirely to the special day and memories of the entire experience I shared with my husband.

Who has a special experience going to a Wal-Mart? Friggin nobody. Basically, I believe Picture Me is attempting a pricing structure and branding ideal that it cannot profit from while directed at its current customer demographic and location.

3. Cannibalization. I think this was the biggest factor in the downfall of CPI. Cannibalization is when a company offers a newer or different product or service that takes away from its own other product and services, or when it is location related. Picture People currently has over 170 operating studios in the US. Wow, that’s a lot! But compared with the fact that CPI just closed 365 of its under-performing studios in one blow, and has a couple thousand more to maintain? 170 isn’t looking like much. CPI took their demographic and stretched it into oblivion by saturating the market with locations, effectively spreading their customers out so thin until every studio was under performing because they were all cannibalizing on each others customers. Instead of one profitable studio having 10 customers a day, 10 under-performing studios got one customer a day.

Wow this is becoming long, almost done here!

So the final question is, can someone profit off of mini sessions, even though everyone wants to hate on them? I say absolutely. As long as you hold true to your branding, target demographic, strong sales techniques, product quality, customer experience, and keep that overhead low!

I would love to get other people’s opinion on this analysis, and to know if they’ve attempted mini sessions that work for them. If you disagree, then all the more interesting the conversation will be!

Also, don’t buy stock in CPI Corp.

 

[MLeeK]

I say absolutely. As long as you hold true to your branding, target demographic, strong sales techniques, product quality, customer experience, and keep that overhead low!

Stock tip much appreciated... LOL!
Personally I am not a mini session hater until I see someone doing them for $25 and including a digi or 8x10 and wallets and... Then they just drive me nuts and I want to teach someone about their business and profitability.

I think you hit the nail on the head with the statement in bold. THE IF being the big factor.
There is also one more factor I think belongs with your IF: WHAT demographic you are working in. If you are working in the same demographic as Wal Mart as a custom photographer and selling minis like theirs you can't profit.

We are also a bird of a different color too. Our overhead is more and we don't have the advantage of that instant gratification that on-site printing offers at Picture People... We also don't generally offer the instant proofing that they do, although I see that as entirely possible.

IF you are running $50 everything and the kitchen sink mini's? No. You can't profit. You have to be within a demographic that allows you to have pricing that you CAN profit from. If your target market is on the budget side of things? It's going to be hard as a custom photographer to profit.

If you are running minis that are priced appropriately within your demographic AND it's a demographic that values your product/brand you can succeed wildly.

We all need to know our cold hard costs for a day of shooting, including the time that goes into it behind the scenes. If you have a good grip on your cost for a day you know what your minimum is to break even. You also know what your time limits are and how many sessions you can take in that day. You then price the sessions appropriately and profit. Then you also hope for the upsell!

I have a friend who is running mini's right now for $400 and it includes the hi-res files. She'll book 10 of those. And she will book every one of them. $4000 minus cost of doing business of about $1000. Not bad.
She knows her target market and that's a hell of a deal for them-and for her.
I know another photog who is running fall mini's for $100 with 5 digi files and 5 8x10 prints of those files. She'll book a lot more than the first one, but she will book all of her sessions. Her CODB is probably quite a bit lower than the other as well (MUCH lower end everything), So... She's looking at maybe $2500 with a $500 cost. Not too bad for a day. Her average session is NO WHERE near $2000 or even a quarter of that. She only ever does 2 sessions per regular weekend day. She's banking on that cheap mini.

 

[Derrel]

What type of SALES presentation are these two companies running? How do they actually SELL, and what do they sell? Another thing--the idea that lower-income people will not spend much on photographic portraits in my experience is mistaken; the lower the socio-economic class, the more they tend to value family, and extended family, and portraiture. Affluent customers often spend less on portraiture than working-class or even poor people. Of course, that's when customers are educated about what it is they are buying, and when the sales staff truly understands their products and their pricing, and knows how to emphasize the value proposition of large prints, and canvases,and portraiture as a way to chronicle family life.

Frankly, companies that sell portraiture "by the sheet" are crappy companies. Low-ballers that sell portraiture as a commodity, and compete on price, and throw profitability and upselling right out the window. Honestly, it makes very little sense to even give two 'whits' about companies that sell family portraiture, "by the sheet". That's just...stooooopid...

 

[Tamgerine]

What type of SALES presentation are these two companies running? How do they actually SELL, and what do they sell? Another thing--the idea that lower-income people will not spend much on photographic portraits in my experience is mistaken; the lower the socio-economic class, the more they tend to value family, and extended family, and portraiture. Affluent customers often spend less on portraiture than working-class or even poor people. Of course, that's when customers are educated about what it is they are buying, and when the sales staff truly understands their products and their pricing, and knows how to emphasize the value proposition of large prints, and canvases,and portraiture as a way to chronicle family life.

Frankly, companies that sell portraiture "by the sheet" are crappy companies. Low-ballers that sell portraiture as a commodity, and compete on price, and throw profitability and upselling right out the window. Honestly, it makes very little sense to even give two 'whits' about companies that sell family portraiture, "by the sheet". That's just...stooooopid...

You know, that is quite interesting! While I did have a LOT of small families who would only buy the promotional 4.99 package once a month, the larger families typically bought bigger packages. A fair amount of these families were Hispanic, maybe it is just in their culture to value the family more, and they find these portraits an extension of that?

As far as sales presentations, the associate was always responsible for selling their own work and sometimes during the busy times we would set it up so one photographer would shoot and the other would sell. I personally hated that because another photographer simply didn't have the same incentives to sell when it wasn't their own work.

How it would work is we would go over the promotional pose, and then review the other poses. Let's see if I remember....We could sell by the sheet at 10 dollars a sheet, or packages starting at 39.99, 59.99, 79.99, 99.99 and then into the 149.99 and 249.99. I actually personally liked the option of selling by the sheet because it made it easier for me to climb the ladder. I had a customer set on the 39.99 but needed extra wallets, well gosh that's 10 dollars and now you're only 10 more dollars away from the 59.99 and getting three extra sheets! Before you know it they're on the 79.99 package. Each package also came with a different amount of poses so we could upsell by prioritizing more sheets or more poses.

We did have larger products like 16 x 20s and canvases, but it was difficult for me to sell those because they were rather expensive in my opinion and adding a 60 dollar product to a customer who wanted a small package seemed hard for me. I'll be honest, I'm not a pushy salesman. I'm into the whole....determining what the customer actually wants and needs sort of thing. I was usually within the top 10 in my district only because I worked hard at taking good portraits and they kind of sold themselves, and gosh darnit, people like me!

 

[amolitor]

My guess is that the lowest price-point places are operating an impulse-buy business, there probably is no "sales" per se, although there's probably some branding activity going on.

If you can get adequate foot traffic past the door, you can adjust the price point as needed to hit pretty much any revenue number you like. The tricky bit is to find the part of the price/revenue curve that pushes revenue up over expenses. Obviously it helps if you can cut expenses to the bone.

 

[Derrel]

I worked at studios in small, not-so-wealthy towns in over 20 years ago...we sold $17,000 to $24,000 of family portraiture per WEEK. Every week. But then we had people who actually knew how to show proofs, and how to actually SELL. An average customer per-sale average per week of between $250 and $350 was considered standard. And this was back when rent for a 2-bedroom apartment or small house was $190-$240 a month. Of course, that's not giving away the damned photography at ten bucks per sheet. Jeebus. It's no wonder company X is going broke. Sounds like it is managed by id'jots who have zeeeeero clue that a photographer's time is too valuable to waste time selling $10 sheets (zOMG, I laugh at that!) instead of shooting. If you''re the kind of "sales" person who is afraid of having customers pry open their wallets for fear the moths might fly out....well, you know...

If you were afraid to sell a $60 print,for fear of over-burdening your customers...well...that's pretty sad. That's just bad business. Bad selling.

 

[amolitor]

I don't actually know what these little guys are doing, but it strikes me that there's probably a market for practically any price point.

Think of it as a manned photobooth, not as a custom portrait business.

There's *some* market at any price point. The question is whether you can generate enough revenue and keep costs low enough to make it work as a business, and it is NOT true that you can make a viable business at any price point. I got no clue if there's a viable business here or not, but you can't just say '$10 a sheet? You can't make that pay!!'. As anyone who jumps in here to explain how they love photography and plan to start a business with their Rebel learns rapidly, it's More Complicated Than That

 

[Tamgerine]

I don't actually know what these little guys are doing, but it strikes me that there's probably a market for practically any price point.

Think of it as a manned photobooth, not as a custom portrait business.

There's *some* market at any price point. The question is whether you can generate enough revenue and keep costs low enough to make it work as a business, and it is NOT true that you can make a viable business at any price point. I got no clue if there's a viable business here or not, but you can't just say '$10 a sheet? You can't make that pay!!'. As anyone who jumps in here to explain how they love photography and plan to start a business with their Rebel learns rapidly, it's More Complicated Than That

There was definitely a market for what we did, and I honestly think they could have maintained that price point if their technology was a bit more up to date and if they hadn't over saturated their own market with studios.

Do you remember the really old original Wal-Mart, before Super Wal-Malt, the ones with no grocery section? There was one left in our district and we had a studio there. A small corner of the store with a pull down background (think stars and lasers) that was only big enough to fit MAYBE two kids on a table and three adults if I squeezed their heads together in a triangle. I liked working there because I knew I would have maybe ONE customer in four days, so I could just sit and do whatever I wanted really. A horribly unprofitable studio, yet they still insisted on keeping it manned with labor and never shut it down for the entire time I worked there at least. It's probably gone by now.