Tuesday, April 11, 2017

Budgeting Equipment Replacements

People do taxes because they have to, but many fewer people do budgeting for annual repairs and replacements.  Every creative business relies on a set of tools to get an idea from thought form into a tangible form that can be sold.  Computers, cameras, paints, brushes, pencils, paper- all just a part of being a creative.  Whenever I do pricing consultations, one of the things I often encounter is that people aren't planning their equipment upgrades and replacements as part of their overhead costs and costs of doing business.  Yet, these tools are as essential as having a website, phone, or email to serve clients with.

If you haven't been in business long enough, the best clue about how often you'll need to replace something is in the warrantee information.  If you're buying a computer or a camera and even an extended warrantee won't cover that piece of equipment beyond three years, than you know that you'll need to expect to replace it after three years because even the company doesn't think it will keep working well after that.   If you have budgeted to replace equipment based on warrantees, you'll never be surprised by a tech failure- because it will already be in your budget.

If you happen to keep a piece of equipment beyond its extended warrantee, than either you aren't using it very often, or you happen to be lucky.  Most professionals use their equipment twice as much as the average user, which means getting closer to that warrantee guarantee quicker as well.  Here are a few quick actions you can start taking to better budget for your equipment replacements:

Take Action Now:
1. Create a spreadsheet of equipment you need to do your job
2. Record the price, serial number, month/year each piece of quipment was purchased
3. Record the warrantee expiration date based on your date of purchase
4. Tally replacement costs for each year based on warrantees
5. Create a monthly equipment replacement budget to help plan for costs

Here's an example of what that equipment budget might look like for a professional photographer:
- 2 Pro Cameras - $7,000 - Maximum 3 Year Extended Warrantee / 36 Months = $194.44/mo
- 1 Pro Level Computer - $3,000 - Maximum 3 Year Extended Warantee / 36 Months = $83.00/mo
- 3 Pro Lenses - $5,000 - Maximum 3 Year Extended Warantee / 36 Months = $138.88/mo
Even if we just account for these three essential things,  photographers who budget ahead know that they'll need to set aside around $417 every month for their camera, lens, and computer replacements.  Or if you prefer to look at it in another way- if you shoot 30 jobs a year, $167 of each job needs to be banked for the use of just these pieces of equipment.

Previous related posts on this topic:
How Much Does Each Click Cost?
Photography Overhead Costs (or Why Photography is Expensive)
Why $300 Should Be a Professional Minimum

Anne Ruthmann is a professional photographer in New York City. With over 10 years of success as a full-time photographer in weddings, portraits, editorial, and now architecture and interiors, she spends any extra time she has helping others find smart solutions to business problems. Stay in touch on Instagram, Twitter or Facebook.

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