Data – that’s the difference between a guess and an informed decision. As a photographer, the sustainability of your business relies heavily on your ability to evaluate its financial health and overall success. Here are three of our firm’s favorite Key Performance Indicators (KPIs) for photography businesses:
1. Revenue Growth Rate:
Monitoring your revenue and its rate of growth helps you assess the pace at which your business is expanding its revenue streams. It helps you identify trends, measure the success of business development efforts, and make informed decisions to drive revenue growth and overall financial success. A positive revenue growth rate indicates that your photography business is attracting new clients or generating higher fees. Consistent revenue growth is a positive indicator of the overall health and success of your business.
How do you calculate it? ((Current Period Revenue - Previous Period Revenue) / Previous Period Revenue) x 100
2. Cost of Goods Sold (COGS) as a Percentage of Income:
COGS represents the direct costs associated with producing and delivering your photography services. It includes expenses such as photography equipment, props, editing software, printing, and packaging costs. Monitoring COGS is crucial to understand the profitability of each photoshoot or project. Monitoring this percentage over time helps you to identify trends, make informed pricing decisions, and optimize the financial performance of your photography busines.
How do you calculate it? (COGS / Total Income) x 100
3. Average Sale per Client:
The average sale per client measures the average amount of revenue generated from each client. It provides insights into the value and purchasing behavior of your clients. Monitoring the average sale per client helps you identify high-value clients, track client loyalty and repeat business, and evaluate the effectiveness of your upselling or cross-selling strategies. By focusing on increasing the average sale per client, you can enhance your revenue streams and maximize the value derived from your client base.
How do you calculate it? (Total Revenue / Total Number of Clients During a Speific Period)
Remember that these KPIs should be tracked consistently, compared against industry benchmarks, and analyzed in conjunction with other financial metrics. Regularly analyzing and reviewing these financial KPIs will provide you with valuable insights into the financial performance of your photography business, enabling you to make data-driven decisions, optimize your pricing and marketing strategies, and ensure the long-term financial success of your business.