One of the wisest men in business I know is Jim Collins. No, not that Jim Collins. (although, I hear he’s pretty smart too. 😉 I’m talking about the CEO of my long-time client Pictage. Jim was brought in as CEO almost two years ago. I will not go into details about the changes he and his team have made over the past two years because 1) to honor his genuine humility, and 2) I just don’t have the time. 🙂 But, if you’ve been a client of Pictage for three years or more, you know. But, In light of the blog posts I wrote this week about the bleakness or brightness of the future of our industry, I recalled some wise words Jim mentioned during his keynote address at the 2010 PartnerCon in New Orleans. Jim made a few economic points that really bring to light a positive and encouraging way to look at this business and what’s happening. Three of his key take-aways were:
1. The Axiom of Supply and Demand: Jim literally gave a mini-economic 101 course during his presentation. One key point he made was the idea of the economic axiom of supply and demand. He shared that an axiom is a statement that is always true, and that there are very few economic principles which are axiomatic. One of them is supply and demand. When supply goes up, and demand goes down, prices will fall. Period. Right now, in this economy, that is what we’re seeing. Supply of photographers (and for that matter videographers) is going up and demand is going down. Prices will therefore fall. All the bitching and moaning and groaning you do about photogs who lower their prices to get them to raise them again will be like (and I’m quoting Jim here) “trying to push a river back up the hill. You’re fighting an economic principle against which there’s no winning battle.” There are things you can do to protect your pricing, but trying to get others to change theirs via peer pressure won’t work.
2. There’s Hope: For the first time in the course over the last year, a significant number of photogs entering the business are over the age of 40. Why? Because they’re getting laid off from their day jobs. When that happens, they fall back onto those things they love, i.e. photography, videography, etc. But what’s happening is that these guys who are used to working a day job will realize that running a photography business is hard! Eventually, as the economy rebounds (which it always does), many of these guys will go back to a day job. Supply will decrease. And as discretionary income increases, demand will also rise. And when that happens, prices will rise again.
3. Ride it out: in light of #1 and #2, Jim shared that the right strategy is to ride it out. And that doesn’t necessarily mean lowering your prices. There are those out there who “buck the trend,” who set themselves so far apart that they themselves become a rare item, are in low supply, and therefore can sustain pricing. Jim talked about experiential differentiation – creating that experience for your clients that sets you apart. What are you doing to offer this in every aspect of your business? He also talked about visual differentiation – what is unique about your work that sets you apart. Do your photos (or videos) look like everyone elses? Or does your work stand out?
Ultimately, you must find a way to differentiate yourself. If you don’t, you will be stuck competing on price. And when that happens, there’s another economic axiom you should remember: when you compete on price, those with the deepest pockets win.
So, ask yourself, what are you doing to ride it out, differentiate, and not succumb to these economic axioms?