Pricing is a major component of the marketing mix.
If a market is efficient, the price of a private commodity equals its marginal cost, i.e. the cost of the last unit produced. Many markets are not efficient. In this case we need to add some inefficiency rent. The more a market is inefficient, the larger would be the rent captured as profit.
How do we compute the costs of online delivered photos? The list of costs includes:
- The cost of the photo itself, in terms of the image file produced.
This adds up to the time spent in filming, transportation to the site, and/or staging, depreciation of the technological equipment such as computer, cameras, lenses, tripods, filters, etc., models, time spent in post-production editing and assembling. It pertains to the photographer. Therefore, we can assume it equals zero for the distribution agency, as contributors receive royalties.
- The cost of having the photo files online.
This includes hosting, domain, and maintenance fees, as well as the cost for coordinating, editing, tacking care of the customers, and accounting fee.
- The cost of having the photo easily found in the cyberspace.
This cost pertains to ensure visibility of brand and products on the Internet. Thus we have costs for marketing, advertising, editing newsletters, blogs, social network pages, fora, and analyzing the results of the campaigns.
When archival photography (i.e. analogical old photos
) comes about, the first cost on the list is different from the case of new digital images. Digitalizing paper photos
includes costs for hand scanning (fragile!), archiving, keywording, translating, editing and optimizing the images.
Once the photo file has been produced at whatever cost, and been stored in the online archive, the cost of the newly added image tends to zero for digital photography, as it is only related to the enlargement of the hosting space. The same number of workers will be able to manage the growing number of the images in the library. Also promotion costs do not change as function of the number of images added to the library.
In the end, as pure guesswork, I would figure out the marginal cost of a stock photo to the distribution agency, to be somewhere between $0.05 and $5. The cost of a newly added photo decreases as the number of images in the archive increases, and increases as the promotion costs increase. Quality also plays an important part in the pricing game.