In our previous post we looked at how various traditional licensing models – as well as a new hybrid licensing model we developed for our LicenseStream service – affect pricing for photography. This time, we’ll look at the licensing model most favored by top photography pros – Rights Managed (RM) licensing. The pros favor this model because it maximizes the opportunity for the creator to ensure fair payment based on the value of the image to the client.

Depending on the client vertical to whom you are licensing an RM image, the pricing will vary.  When addressing an average price per image for RM images, it is best to break it down by client segment: Editorial (book publishers, magazine publishers, newspaper publishers, broadcast TV, etc.); Corporate (in-house corporate design, corporate websites); and Commercial (Advertising and Graphic Design).   For the purpose of determining an average price per image, we’ll look at the Editorial, Corporate, and Commercial client segments.  

• Editorial:
  When licensing an image to an editorial end user, pricing is typically based on how, where and for how long it will be used.  Bear in mind that the image is not being used to sell a product in an editorial instance.  However, it is being used to tell a story.  While you will not obtain the larger fee you could expect for an image used to sell a product, you should be compensated fairly.  A majority of images for editorial usage appear inside a publication at less than a ½ page. If a photographer is selling his or her work directly, a good average book rate per RM image within the editorial industry would be $200 - $300.  While it does not sound like a lot, there is a great potential for large volumes of imagery to be used within editorial projects.
  
  The other very important point to understand about editorial RM pricing is that almost every publisher has set rates they will pay for imagery – all below “market value.” However, editorial clients use a ton of images, so it is in the best interest of the photo agency or photographer to agree to the rates.  Editorial clients rarely “commit” to certain levels of volume around these rates, but if you are agreeable to them, they WILL visit your site and license your content when they can.  If you do not agree to their rates, you can be fairly certain that they will not visit your site at all.  Their average set rates would come in lower than the above noted price, probably closer to $125 - $175 on average – sometimes lower.
  

• Corporate:
  As corporations try to cut costs, they are pulling in-house a lot of “below the line” design work. As a result, that Annual Report or bill stuffer that used to be farmed out to an ad agency or design firm today is typically designed by an in-house corporate team.  Most of these folks come from the advertising world and are familiar with being creative and sourcing imagery, but may not be used to working within a strict budget.  You will find that finance people are actually involved upfront in negotiations with a photo supplier and will (similar to the editorial clients) require set rates for their work.  As with editorial clients, corporations typically repeat the way their images are used, so it is easy for them to require set rates. For example, they may only produce 36 brochures per year.  So every time they use an image, it will be in a brochure.  They are more likely to negotiate these rates with you upfront to fit within their budget before their creatives can start searching for images.  Once they set rates with a handful of suppliers (although sometimes it is as few as 1-3 suppliers), they know how much the photography is going to cost and their creatives may go only to vendors with whom the finance people have negotiated deals to source imagery.  It is very rare that larger corporations will not have a list of such “preferred vendors.”
  
  As for pricing, rates for corporate work reflect the fact that the way companies use images falls somewhere between editorial and commercial uses. Neither are they (arguably) really selling a product as they would sell one in an ad campaign, nor are they simply telling a story in a book or a magazine article. A good average price per image for corporate usages could range from $350 - $500.
  

• Commercial:
  When licensing an image to an Advertising Agency or Graphic Design firm, it is extremely important that you ask a LOT of questions.  Never quote a price for a multi media advertising usage until you can actually see the ad and understand how hard your image is working. How critical is the image to the success of the campaign.  Is it the main focus of the ad? In other words, is your image what ultimately will sell that product?  If so, raise your price!  A good average price per image for advertising is $1000.  A GREAT average price per image for advertising is $1500.  When someone wants to license an image to appear on a billboard in New York City’s Times Square, you will charge quadruple what you would charge to have it appear on a billboard in Podunk, USA – why?  Because more eyes are going to see the image on the Times Square billboard, it is working harder in New York City than it is in Podunk.
  

We hope this in-depth review of licensing models and how they affect pricing has been helpful. Please feel free to let us know if there are any aspects of applying these licensing models that we have not addressed.