Step 1: Business Plan
Start with a plan! There’s more than one place to start at, but we recommend that you start with what most excites you. After working with many customers and advising them on the best starting point, we realized that the best way is to start with the bottom line:
How much money can I make by doing this? Want to discover the answer to this question? Check out our first Video on “How to Start a Successful Photo Booth Business” with Eli, Foto Master’s director of operations.
Your first step is to estimate your potential profit by breaking down your expected income as well as expenses that you’re bound to have. Let’s start with the income. Here is a simple formula to help you calculate your expected income:
Average Rental Price per Event × Number of Events
This formula will give you a good sense of the profit you will be able to make. Here’s an example:
If I charge $1000 per event and I’m working 5 events a month (which means 60 events a year) the total income will be $60,000.
In order to increase your bottom line, you can either do more events, or charge more per event. Let’s take the same example of 5 events a month while charging an average price of $1,700 per event. With the same number of events I will achieve a 6 figure annual income of $102,000.
Remember, the price is not just an arbitrary number. Every increase in pricing comes with the expectation of providing additional value. Charging more is great, but make sure you back it up with more value.
Some companies charge $2500 or more on average per event and wouldn’t even consider a gig for anything less than that, while other companies charge $500 per event.
There is nothing wrong with either one of these companies, the market is HUGE and with every year there is an increase in the volume of events, with new vertical markets added that will want to rent a phot booth such as shopping malls, restaurants etc, servicing new needs. Many will look for the cheapest option, while many others will look for the best option and some will go for the in-between. It’s very important that you decide what type of company you want to have before starting your new photo booth business.
As you recall from the formula that I presented at the beginning, we explored the option of increasing the revenue by increasing the average rental price per event. Another way of increasing the revenue is to do more events. How can you do more events? Here are a few factors that can help increase the number of your events:
- Value proposition
- Sales skills
- Organized system to keep track of your leads and customers
- Photo booths at your disposal
If you have an effective, good marketing strategy, a fair pricing structure and a single photo booth to offer, supply and demand will help you decide how to increase your bottom line. If your photo booth is overbooked, which means that there’s more demand for your services than you can supply – you will either want to: Increase your pricing or purchase another photo booth to be able to supply the increasing demand.
Last but not least are the expenses that must also be taken into account with your business plan when calculating the bottom line for your business. A great way to approach it is to start a spreadsheet and write down the fixed cost of the business. Some examples of expenses to take into account:
- Average gas cost per event
- Yearly LLC registration fee
- Yearly state tax
- Storage cost for your equipment
Keep in mind that when you’re just starting up there are many ways to save on cost. For example:
- You can take calls from home saving you the office rental cost.
- If you have an in-house storage or garage you can save on warehouse storage cost.
- You can operate the booth at events by yourself instead of hiring an attendant.
You can save on a lot of these expenses at the beginning, and as your business grows – you can start delegating, building a team, move to an office with storage and scale up.
How to Make Real Profits with Your Photo Booth Business
Getting to the truth of the matter.
Here’s a fact: Not every photo booth company will generate the same income. Here’s another fact: Even if two different companies generate the same income they will not enjoy the same profit. Why is that?
Let’s have a look at the following example: A photo booth company that charges $1000 for a four hour gig works out to $250 per hour. Sounds like great money right? Certainly beats a day job. However, if you miscalculate the expenses that come with it, you risk working for free.
When you look at the amount of money a photo booth company charges from the outside – it looks incredible, and you’re smart enough to know the difference between income and profit, but unfortunately there are some entrepreneurs that get into the photo booth business and find themselves spending more on expenses than they originally planned to.
Having said that, it doesn’t mean that this kind of profit is not attainable. The main reason some photo booth companies don’t see enough profit is due to the cost of running inefficient equipment, the cost of refunding a party due to lack of support, the cost of designing overlays, the time it takes to configure a workflow, the cost of constantly producing new marketing materials, the cost of consumables and quality props.
That’s why it makes sense to purchase your photo booth from a company that has the best-designed, efficient hardware, most powerful software that has everything you need built-in and 24/7 support services. By following this logic, you are lowering your costs, so you end up walking away with the maximum profit. Win-win.
So What Does It Actually Cost to Run a Photo Booth Company?
Let’s take our previous example: a hire fee of $1000 for a four hour event.
These are the costs you can expect to incur when you hire out your photo booth:
- Wear and tear on your photo booth
- Custom templates and animations
- Wear and tear on car/trailer/van
- Booth operator/attendant
- Printer media
- USB flash drive
- Wear and tear on props
- Mobile internet
On top of that, you may have your fixed costs of running a business such as a storage space and unexpected expenses that should be taken into account like the rare cases of having to issue a refund.
Some may say that the case of having to refund a party comes with the greatest cost, because, not only that you don’t get paid for the job you were hired for, you run the risk of having your reputation damaged. This is why Foto Master offers a HUGE, unparalleled 24/7 support team to have you covered all day, every day with any question or concern before, during or after an event.
The next thing you will want to take into account is the time and money you invest in customizing assets for your client’s event. If you are creating assets like photo layouts and/or animations from scratch, then the time and money involved can be valued from $20 and quickly get above and beyond $100. For that matter, this is why Foto Master’s software has a huge variety of ready-to-go workflows, layouts, presets, animations, overlays and other assets built-in.
One of the most frustrating things will be to lose a gig to competition because your software can’t provide the feature requested by the customer. This is why Foto Master’s software is built to keep you ahead of the curve and your abilities limitless. Our team of support professionals can also help you find and choose the best solution when your customer requests something out of the ordinary. Consult with us free of charge and we will guide you towards bringing your client’s wants into reality.
Last but not least, isn’t it nice to get leads without increasing your marketing budget? With Foto Master’s Lead Distribution Platform (LDP ) you can get exclusive leads and convert them into bookings without the added marketing spend! This is another big advantage for generating a higher profit on a yearly basis.
If you take all the events you serviced throughout the year and calculate all your savings using Foto Master services, you will be able to see the results in the nifty graph below that shows the difference in average cost per event.
But Wait – here’s More!
You also need to have a good handle on the fixed and recurring costs of running your business.
- Admin time and wages (i.e. paying yourself)
- Pension and taxes
- Storage rent or office space
- Vehicle and business registration
- Consulting and accounting
- Office supplies
- Phone and internet
- Marketing materials
- Website hosting
Let’s assume for example that these costs amount to $1,000 a month (and you need to decide what to pay yourself as well), and we also assume that you only manage to get 60 bookings for the year, here’s the breakdown:
Tip: The Photo Booth you choose for your business will affect your profit in a big way. Efficiency of operation makes a huge difference.
The point of this information is not to scare you out of the idea of starting a photo booth business. Like any industry, there are a lot of pitfalls to watch out for. Fortunately for you, we have seen them all and learned the hard way. Foto Master has been designing, manufacturing and developing photo booths and photo booth software with the express purpose of helping people, like you, start successful and profitable photo booth businesses since 2011. We are at your disposal! Go ahead and leverage our experience.
Let’s assume that you’re just starting out and you go out to 5 events a month, meaning 60 events a year. If your average fee is $1000 for a 4 hour event, your yearly income adds up to $60,000 a year. Now let’s look at the annual expenses and the expenses per event to calculate your potential profit per event:
You hire a booth attendee for $25/h. You want him to arrive early just in case so you will hire him for 7 hours, adding up to $175 per event.
With 60 events a year, something is bound to go wrong, and if it does and you weren’t able to fix the issue quickly – you don’t have a choice but to issue a refund to your client to protect your reputation and brand name (which will still get a hit if you couldn’t execute the event). Using Foto Master’s powerful software, quality hardware and 24/7 support can reduce the chance of having that happen to you.
In our example, we’ll assume that 4 out of the 60 events were such cases, where you tried your best but you were not able to solve the problem quickly enough to please your client. By using a reliable software, well designed hardware and having the technical support by your side when you need it can prevent you from needing to issue a refund. If you don’t have these assets – you might be looking at a loss. Let’s assume you’re not using a Foto Master products and services and you had 4 events that required refunds a year – 4 events like these add up to $4,000 saved with Foto Master.
When you launch your business, you want to add photo and video marketing materials to your website. If you don’t have the video shooting and editing skills, you will have no choice but hire a professional videographer or purchase ready made marketing materials from a vendor. That may cost you ~$500 for a good professional video. With Foto Master you don’t need to invest so much in the extra expenses because you get those completely free of charge! 5 such videos a year can add up to $2,500 in expenses or savings.
Depending on your marketing strategy (more about that in the next step), you may need to spend advertising money for every lead. With Foto Master, you can get several leads a year with no extra spend using the free Lead Distribution Platform that we’ve created to send exclusive rental leads your way. For every lead you end up winning and booking you get can get $1,000+ added to your income without those expenses entailed.
Clients have different needs, some may want a specific type of experience with the booth, some may want a different one. If you’re using a software that can answer every client’s needs and is not limited to one feature or the other – your potential to book the event is higher. Being able to answer “yes” to a client’s request can mean another $1,000 in your pocket.
Want to be able to offer new layouts and animations to enhance the user experience of your client’s guests? Want to be able to offer versatility for your repeat customers and not have to pay for every custom animation you source from a vendor or for every template? With Foto Master – you don’t have this concern. Your software includes over 400+ professional animations and over 325 templates and counting. Having a wide variety of designs to offer and choose from will save you from having to spend so much money on animations and templates.