Pricing & Negotiating: Stock Licensing

Jess Dudley, Wonderful Machine

Licensing: Web Collateral use of up to three images for two years

Photographer: Southeast-based portrait specialist

Agency: N/A – Client Direct

Client: The philanthropic arm of a recognizable consumer brand

Here is the estimate:

A seasoned portrait photographer came to us looking for assistance pricing a stock licensing agreement for a large corporation interested in using three existing images on the “.org” website of their philanthropic division. The shoot had originally been commissioned by an editorial client for a piece about the subject’s philanthropic endeavors and organizations, so before determining the value, we first had to review the original commissioning agreement to ensure the photographer had the ability/permission to license the images to a third party. Even the most favorable editorial agreements typically include an embargo period which may prevent one from licensing content for a reasonable period of time after publishing and some of the least favorable editorial agreements restrict licensing in more substantial ways. As it happened, these images were available to license, so on we went.

The difficulty with determining the value of any licensing, as it is all so subjective and project specific, is figuring out an anchor price from which to adjust, based on the various contributing factors. At Wonderful Machine, we use a tried-and-true benchmark that sets the baseline cost for collateral use (“Collateral” use is when the work appears in or on a platform that the client wholly controls and produces, such as a company website, annual report, brochure, or social media profile, and is intended to promote a commercial product, service, personality or brand) of one image, for one year, at around $1000, and additional images licensed for concurrent use should be worth about 50% as much as the first image. We also use a pricing model that assumes a doubling of the duration of use should increase the worth by about 50% more than the initial duration value. These “rules” can break down really quickly, as general rules tend to do when you move too far from the baseline. In this case, however, we were still very much within the tolerances.

Pricing this project out based on these guidelines would set the value of the first image at $1500, and each additional image at $750, for a total licensing fee of $3000. With this anchor in mind, I began factoring in all of the variables that apply upward or downward pressure on the value. Much like estimating licensing fees for a commissioned shoot, valuing stock requires you to consider the prominence of the client, scope & duration of the requested use, and the importance of the content to a given “campaign.” But you also have to consider the uniqueness of the subject matter, availability of similar images in the marketplace and the prospects & costs of recreating the content (or very similar content).

These images didn’t depict the client’s products or services in any way and the subject matter wasn’t terribly unique – the images were lovely, straightforward, environmental portraits of the subject in her workspace. Although the content didn’t make these images unique, the availability of similar images, or lack thereof, did. There were very few stock images available in the marketplace. This applied upward pressure on the value of the images. Also, reshooting was pretty much off the table because of the subject’s scheduling constraints and general aversion to being photographed. This, combined with the general inconvenience and uncertainty of commissioning a new shoot, meant that we could push past any reshoot “price ceiling” that may typically apply. So not only are existing images rare, but creating new photos would be a tall order. Again, this pushed the value up. The license was limited to web collateral use which tugged the baseline number down (our guideline is based on both print and web). But since the client is an arm of a name-brand multinational mega-company, the value jumped, even though the particular arm of the organization is 100% philanthropic in nature.

The intended use of the pictures was informational, almost editorial. The client was interested in the images because the subject ran an organization that relied on the client’s products and services to further the organization’s core mission of doing some form of good in the world. The client was basically writing a case study about how they’d partnered with the subject to help her to do good. Additionally, this was one of many such case studies on the client’s website, meaning it was valuable to the client, but not mission critical, exerting downward pressure on the value. Finally, the case study could be effective with one image, but three would be slightly more impactful by offering a touch of variety. If the client had been requesting images that each featured a different founder, we’d be less likely to drop the additional image rate quite so much, if at all. All this to say that our usual price breaks for additional images would be appropriate.

Taken together, I felt the upward pressures were more significant than the downward pressures. Accordingly, I added 50% premium to the baseline rate ($3000) to account for the additional value, setting the quote at $4500.

RESULTS/HINDSIGHT:

There’s an opportunity to push the envelope a bit when pricing stock because, in most instances, the photographer has more leverage and is dealing with a captive audience. In this case, I may not have pushed the envelope enough, as the client quickly accepted and returned the signed quote. Even though the photographer was happy with the fee, I still wondered if perhaps there was a little dough left on the table.

If you have any questions, or if you need help estimating or producing a project, please give us a call at (610) 260-0200. We’re available to help with any and all pricing and negotiating needs—from small stock sales to large ad campaigns.

Wonderful Machine

There Are 2 Comments On This Article.

  1. Another thought provoking insight into estimating photography. Thank you Jess, Wonderful Machine and Rob for providing a real-world resource for helping to determine market value.