Today we are happy to publish a guest post from Robert Kneschke. Robert Kneschke is a successful microstock photographer (link to his Fotolia portfolio), popular german blogger and author of the book “Stockfotografie: Geld verdienen mit eigenen Fotos“. We always enjoy reading his excellent blog and are happy to count him amongst our Stock Performer users.
The following article is the first part of a two-part series in which Robert looks at the impact of increasing his Fotolia image prices. He has given us permission to translate them to English for our Stock Performer readers. Thanks Robert! We will be publishing the second part soon too. Stay tuned and enjoy!
“The Effect of a Photo Price Increase on Fotolia” by Robert Kneschke
Fotolia photographers can, under certain circumstances, choose the starting price of their images. The standard price for the smallest size is 1 credit. Those contributors who offer their images exclusively or part-exclusively on Fotolia, and who have reached the ranking Bronze, have the option to set their image’s starting price to 2 credits. Non-exclusive contributors enjoy the same freedom once they have reached the Smaragd ranking. For those exclusive or part exclusive contributors who have reached Silver ranking (Saphire for non-exclusives), the price can even be set to 3 credits.
Contributors with this choice often ask themselves whether it is worth it. Will increasing the price bring more revenue? On the one hand, an increase will bring you more revenue per download, on the other hand, it could lead buyers to purchase cheaper images of similar content leaving you with no revenue.
I decided to test this in March with two of my photos. On the 1st of March I increased the price from 1 to 2 credits of two new images which have had good sales so far. Doing so doubled their price overnight making them twice as “expensive” (if one can call microstock images expensive). I wanted to see how sales for the images would develop with their new prices. Here the results:
The blue bars display the image’s monthly revenue on Fotolia. The red line indicates the evolution of downloads (i.e. Sales). The bar furthest to the right is for the month of March, the month I carried out the price increase. You can clearly see that the price increase more than doubled my income with respect to the previous month (it was a 115% increase in credits). Most amazingly, in March alone, the picture earned more credits than in all previous 5 months combined! Additionally, the download count increased too, although not as strong as in previous months (26% more sales in March than in February).
The second image displays a similar pattern. In this case, revenue “only” doubled (73% more credits). Downloads showed an increase too, although not such a strong increase as in previous months (7% more downloads with respect to February).
What do these numbers tell us? The bottom line is that this was a successful experiment. I was able to considerably increase my revenue with these two images, even my sales weren’t as affected as I had expected. Even if downloads had remained constant, my revenue would have increase anyways, since revenue per download is higher. The trustworthiness of these numbers is reinforced by the fact that these two images already have 3 digit download numbers, therefore random variations do not play an important role.
The statistical analysis of my sales was done with the helpful microstock analytics tool Stock Performer.
On top of this analysis I made another interesting observation: I had expected, as other photographers had, that an increase in image price would result in buyers purchasing the next smallest available size of the image: instead of buying S, they would buy XS; instead of buying M, they would buy S. Even if buyers did display such behavior, I would still have a revenue increase, since each “Downgrade” (except from XS to S) still brings in more revenue with the new pricing than with the old one. The following table displays in green a price increase despite a size downgrade and in red a price reduction together with a size downgrade:
Luis Alvarez, co-founder of Stock Performer, kindly performed a more detailed analysis on my data to find out how sales were distributed amongst purchased sizes before and after the price increase (this size analysis will soon be available automatically for Stock Performer users). Here the results displayed graphically:
The top graph is for the “Thumbs up” image and the bottom graph for the “Studying students” image. The blue bars display the distribution, in percent, of purchased sizes for February. The purple bars display the same for March.
Viewing these graphs clearly contradicts my original expectation: buyers did not buy smaller sizes after the price increase, on the contrary! They bought the larger sized images instead. Why this is so is not yet clear to me. It could be that “bargain hunters” (for instance bloggers and similar) stopped buying the images and instead buyers with bigger budgets or looking for bigger images for print remained the ones who bought these images. That would explain the shift to more sales in the larger sizes, but it does not explain the increase in downloads. Perhaps Fotolia ranks images better on the search results, when they have higher revenue potential?
All these results imply that it is financially better, at least short-term, to increase the price of your images.
Nevertheless there are two important factors to consider, which have an impact on these optimistic statements.
First of all Fotolia’s ranking status: Fotolia contributors earn higher commission rates the higher ranking they possess. That can be seen clearly on the above table. Commissions start at 20% and go up to 46%. However, your ranking depends only on your download numbers, not your revenue. As seen in our experiment, increasing your image price will reduce your download rates. That means, that increasing your price will slow your downloads and it will take you longer to reach your next Fotolia ranking, thus delaying your commission rate increase. So my advice to you: Increasing your image price makes sense mainly for non-exclusive photographers who already have attained Smaragd ranking and for exclusive photographers with Gold status or more, since the increase in commission rates when passing to higher levels are not as high and going from one ranking to the next usually takes longer at these levels.
Secondly, the search algorithm plays an important role: together with other factors, the download count of an image determines how good its position is on the search algorithm results. The more often your image appears in the top search results the more often it will sell. That is especially important at the beginning of the image’s lifecycle and can decide whether it will become a bestseller or not. Additionally, Fotolia offers buyers a filter which helps them find cheap images starting at 1 credit. Your 2 credit images would not appear when such a filter is applied. That’s why I would only increase the prices of my images, which have already proved themselves, meaning they already have a healthy number of downloads. On top of that, I suspect that the ratio between views and purchases worsens when the price is increased, which could have a negative impact on the positioning of such images in the search results. These are assumptions I will have to observe.
What are your experiences with price changes? How about on other agencies?