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Photo Biz: Do Your CODB to Create Your Pricing

I was talking to a photographer friend of mine last night she’s always asking me for pricing advice. I usually tell her to charge her daily Cost of Doing Business (CODB) and then mark it up from there based on the scale of usage.  She told me she’s never calculated her CODB and I scolded her big time. I told her they next time we meet, we are sitting down and doing this together. As I refresher, I thought I would write this blog post and hopefully you find it helpful.

Being in business as a photographer, you have to know your CODB, because that’s how you set your Baseline Creative Fee (BCF).  If you take jobs that are below your CODB, you are operating at a loss. You should also do your CODB every year to make sure you’re staying on track and to set sales goals.

In a very simple formula, this is how you calculate your CODB:

(YOUR SALARY + YOUR EXPENSES) ÷ SHOOT DAYS PER YEAR = DAILY CODB 

Fortunately, there’s an easy way to calculate your CODB and it takes less than 30 minutes to do. You will need two things: Your Profit & Loss Statement from last year and NPPA’s Online CODB Calculator. If you use accounting software like Quickbooks (PC / Mac) or AccountEdge (Mac), it’s really easy to generate you P&L report. Make one and print it off. Then click over to NPPA’s Online CODB Calculator.

For this exercise, I’m using some numbers that I would consider to be average for an emerging photographer in a medium market (i.e. not NYC or LA) and is making a living solely from their photography. This photographer wants to make $50,000 a year, has a small office, no employees, no family to support, and someone who shoots a mix of editorial, commercial and stock. Let’s assume they will shoot 50 billable days in a year (that’s around 4 shoots a month).  Here’s how there CODB breaks out. Note: CODB should be calculated on business expenses, not shoot expenses. So leave out any reimbursed expenses like assistants, travel, food, etc.

Click to Enlarge

If we plug these numbers into our formula, it looks like this:

($50,000 + $44,930) ÷ 50 = $1,798.60

$1,800 is their CODB. So, if this photographer shoots any job that pays less than $1,800, they are losing money. Pure and Simple.

So, now that we know the photographer’s CODB, here are some methods to create a fee structure.

Creating a Fee Structure Based on CODB

It’s been my experience that every assignment is different and your fees need to flexible to accommodate the needs of the job and your client’s budget. I have found three good ways to create your creative fee:

  1. A Day Rate
  2. A Sliding Scale Per Shot Rate
  3. A Project Rate

There’s no one way that works better than another. If the number of shots is very specific, a per shot rate works best. If the number of shots is unknown, but you’re going to be on location for 10 days, then a day rate is more suited. If the shoot is documentary style project where you’ll be shooting a small number of times over various weeks, then a project rate makes more sense.

Using the example photographer’s CODB of $1800, your Baseline Creative Fee (BCF) would be:

  1. $1800/day
  2. $450/shot*
  3. $1800+/- project

The day rate is pretty straight forward. You shoot three days, you charge for three days. The project rate is trickier to figure out because you have to predict how much time you will spend doing the project. Make sure you get as much info before you start shooting. *The per shot rate would get very expensive if you did 20 shots in a day. So, that’s why I do that on a sliding scale:

Price Each Rounded Range
1-3 Shots $450.00 $450 $450 $1,350
4-9 Shots $315.00 $325 $1,300 $2,925
10-14 Shots $252.00 $250 $2,500 $3,500
15-20 Shots $226.80 $225 $3,375 $4,500
21+ Shots $204.12 $200 $4,200+

Using any one of these methods is how you create your Baseline Creative Fee (BCF).

Baseline Creative Fee + Usage Fees

I like to think of the BCF as your local rate. The usage included with that rate would be something like the following:

Use in any marketing materials distributed to a targeted audience. Includes use in printed brochure, catalog, annual report, public relations and sales material. Also includes electronic (PDF) versions of the original printed uses. Use in any web and electronic media for advertising and promotional purposes including website, web banner ad, promotional email and mobile ad.

Side note: check out PLUS Packs if you need help writing your usage terms.

The usage above is basically everything a local client is going to use your photos for. If they do advertising as well, you may want to charge a little more, like 10%.

There are four basic types of clients: Local, Regional, National, and Global. Here’s how I would handle the usage fee markups based on a BCF of $1,800.

  • Local Web & Marketing Usage: $1,800
  • Local Ad, Web, & Marketing Usage: $1,800 x 1.1 = $1,980
  • Regional Web & Marketing Usage: $1,800 x 2 = $3,600
  • Regional Ad, Web & Marketing Usage: $3,600 x 1.5 = $5,400
  • National Web & Marketing: $1,800 x 10 = $18,000
  • National Ad, Web & Marketing Usage: $18,000 x 1.5 = $27,000
  • Global Web & Marketing: $1,800 x 20 = $36,000
  • Global Ad, Web & Marketing Usage: $36,000 x 1.5 = $54,000

So, there it is in a nutshell. Please remember, this is a guide and it’s more to illustrate that doing your Cost of Doing Business is vitally important to being in business. Use this example as a way to wrap your brain around what your creative fee should be and why it costs more for Pepsi to use your photos than it does for the local mom & pop shop. There’s always room to negotiate, too. Don’t live and die by these numbers.

I will say that ever since I standardized my pricing, I’ve gotten more jobs that pay better. It’s also made creating estimates a lot easier, because I charge what I need to charge to stay in business. I also feel good about passing on jobs that don’t pay my CODB, because that gives me time to market to jobs that will pay 10 or 20 times my CODB.

Have  a great weekend and DO YOUR CODB!!!

37 Responses to “Photo Biz: Do Your CODB to Create Your Pricing”

  1. Andy says:

    How many days per week do you work? $1800 overhead for a “day of shooting” is ridiculously wasteful if you only trying to net $50k in salary.

    I think you’ve mixed up “week” and “day”

    • Hey Andy, these numbers aren’t my numbers. I just made them up to illustrate a point. If you look at the overhead figures, I’d say it’s average for someone based in a small city. Your overhead may be a lot lower if your in a small town, so your daily CODB would be lower. But if you live in NYC, you overhead is going to be much higher as well as your salary needs.

      I did the calculation based on 50 billable days a year, so around 1 shoot day a week. Some photographers (like photojournalists) will shoot upwards of 150 days a year. Some photographers (wedding photogs) shoot more like 25 days a year . So their daily CODB would be lower or higher respectively.

      Let’s assume the overhead is the same for a photojournalist and a wedding photographer. Here’s how they would calculate their Baseline Creative Fee:

      Photojournalist: ($50,000 + $44,930) ÷ 150 = $632.87

      Wedding Photog: ($50,000 + $44,930) ÷ 25 = $3797.20

      So the photojournalist needs to make at least $632.87 per shoot to make their CODB. A wedding photog needs to charge at least $3797.20 to make their CODB.

    • Also, since you asked, I work 6 to 7 days a week year round. I shoot maybe 50-75 days a year.

  2. Lincoln,

    This was a nice refresher. Thanks for sharing.

    S

  3. Thanks for sharing this interesting and very informative post – too many photographers just don’t understand the need to know how much it costs them just to take their lens cap off.

    As a result, they end up taking anything that comes along, trying to beat out their competition based only on price, and settling for inferior rates, simply because they need the money at the time (an understandable but still wrong thing to do in my opinion).

    Of course, we also need to add to these numbers that cost of goods sold (appropriately marked up as well). Unfortunately, again, so many photographers freak out at the resulting fees that they really need to charge, because they lack the confidence needed to present the fees properly, or even ask for them.

    Thanks for posting this – I’ll share this with my other readers too.

    • I totally agree. I feel like the more photographers know how to run their business profitably, the better off the industry will be as a whole. Thanks for spreading the word.

  4. Donna says:

    This is great information! I’m at a turning point in my life, and I think this is the information I needed to move forward! Thank you!!

  5. Paul Barnes says:

    At $1,800 a day you would bill $450,000 for a 50 week shoot. This seems very unrealistic. Your formula expects clients to pay for your downtime. Again unrealistic.

    Perhaps a formulae that takes into account “post-production” time?

    You are asking clients to pay for your downtime. Actually this is very common in any fee structure, such as lawyers, doctors, etc. but as costs grow this fee setting method helps cause hyper-inflation.

    • Hey Paul, I think you might have misread what I was trying to get accross. The $1800/day rate is based on shooting 50 billable days in a calendar year. If a client wanted to hire me to shoot for 50 weeks, 5 days a week, 250 total days, then I would probably do a project rate. Using the demo numbers above, the CODB for 250 billable days is $380/day. But since your giving up your life for a year, I would probably charge a flat project rate of $125,000 – $150,000 to cover your overhead and pay a nice salary. I’d want to get paid monthly, too.

      This is all hypothetical. A 50 week job is highly rare. It’s wiser to base your CODB on the realistic number of shooting days you do in a year. Office days, post production days, vacation days, etc., should be excluded from your calculations.

  6. Hello,

    Thanks for your post; I have been fighting with all these issues for a long time, trying to find a way to standardize my pricing and trim creating estimates!
    The way you explain your usage fee scale seems practical but is unclear to me ( and I understand that each case is different, negotiable, flexible…etc)

    First, in case of a day rate job, you would add your usage fee to your BCF correct?
    so for a 2 days job you would add 2 BCF + 2 usage fee rate?

    Now, are your usage fees per day, per job? whatever the number of images shot on that day/ job?
    How do you price usage of individual shots; like let’s say the clients decides to use 3 for marketing out of 10 shots that day?

    Same questions regarding advertising usage…

    Great site by the way; anybody you would recommend as a web designer?
    Thank for taking the time to answer!
    Dominique

    • Hi Dominique,

      It’s up to you, but I typically don’t separate out my usage fees from my creative fees. I just have the one fee to rule them all. Sometimes, a client will want the option to buy additional usage and I’ll line item that out.

      As for day rates, I generally don’t do them. But, hypothetically, if your job was local, then I would charge your BCF for 2 days. If your job was national, then I would ask them what their budget was, what the shots would be used for, and how many shots you would be delivering. Every job is different, so my formula isn’t perfect for every situation by a long shot. It’s just a general place to start. Maybe you do your BCF for 2 days and then add in an appropriate usage fee based on the number of shots you deliver and what the shots we’re going to be used for. Use the per shot rate method to find that. If the job was an image library situation and the exact number of shots was unclear, do a rough guess of what you would shoot in a day realistically and come up with a fair price based on the usage. If I shoot architecture, I maybe get 10-15 shots in a day. If I shoot lifestyle, I’ll get 20-30 final shots in a day. It all depends.

      I’ve been doing this long enough to know there’s no perfect answer and no real easy way to do it. Just find your starting point and go from there. Photo assignments are affected by supply and demand just as much as anything. If you’re in demand, you can charge more. If you’re not, then charge less to get new work. Just don’t go below your CODB.

      Oh, and editorial pays squat. I will shoot below my CODB for an editorial gig if I think it’s good for my portfolio. If it’s not, I’ll pass.

    • Also, for web designers, Arutai Studios (arutai.com) is great for custom solutions. Or you Graph Paper Press (graphpaperpress.com) makes awesome WordPress templates for photographers. My site is loosely based on their Modularity theme. Glad you like it!

  7. Hi,
    while there is sound advice in your model I think it is a very dangerous strategy for new photographers.

    One shortcoming is that the number of billable days is inversely correlated on the daily rate.

    The other is that while is it clear that ex post any day spent for earning less that the associated cost of doing business is actually money given to the client there are situation were it may make a lot of sense of doing so.

    Namely increased experience, more connections that will lead into referrals. These elements are critical for a starter.

    I’d say that while one has to plan enough financial resources to maintain the start up phase till sustainability the controlled variable should be the number of paid shootings in a given time lapse and the price should be as high (low) as possible to ensure that amount of shootings.

    A strategy should be worked out on how to raise this price till the desired value.

    L.

    • Hi Luca, I agree with you that young photographers need to start somewhere and that sometimes you will shoot below your CODB in order to get experience or portfolio work. Also, many young photographers will also work as assistants, which usually pays less than a typical CODB. In the end, money is money and you do what you need to do to survive. But as your business grows and you become solely dependent on shooting to sustain your income and grow your business, you absolutely have to set your ground floor and say I can’t work for any less than this. The sooner you do it, the better off you’ll be in the long run.

      If, no matter what you do, you can’t get paid your CODB, then you either need to lower your overhead & salary or seek out a new profession.

  8. Thanx so much for sharing this – I haven’t looked at anything else but this artical reading it over and over and saving it on my phone so I can confidently ask for a industry standard rate :D yay! I’ve calculated my CODB and think it’s still quite affordable and in line with my fellow graphers – thanx again for sharing Lincoln!

  9. Eduardo says:

    Read your answers to all comments so far but still confused about how you calculate the Usage Fee or what it includes.

    Say you’re shooting for a restaurant’s menu. This may take you half a day to a full day, so you charge, using your numbers, $1,800.

    I understand that you can call those $1,800 either your Day rate or your Creative Fee.. they’re the same, right? as the creative fee would be your codb, time and talent for the shooting.

    Then comes the usage for your images. And here’s were I get confused. When you say, for instance, Local Ad, Web, & Marketing Usage: $1,800 x 1.1 = $1,980…

    1) Do you mean you’ll charge $1,800 (creative fee|day rate) + $1,980 (usage) = $3,780 ? And, will that include that you give the usage for all images created during the shooting (thus delivering all images to the client)?

    2) Or, $3,780 is your creative fee plus the usage for One image on Ads, etc.?

    3) Or, you only charge $1,980 and that includes your Creative Fee and the Usage for all images created during the shooting?

    4) Or, you only charge $1,980 and that includes your creative fee and the usage for only One image?

    Gracias,
    Eduardo

    • Hi Eduardo, happy to clarify. It’s been my experience that any job you shoot for a local client, the rights need to be pretty broad. I don’t want to micro manage their usage and they want the freedom to use the photos however they to. The Creative Fee can be a day rate, a per shot rate, or a project rate. I don’t split out my Creative Fee and Usage Fees, unless the client requests a line item for optional additional usage.

      In your example, if I was shooting for a restaurant and they didn’t know they number of shots they wanted to get, then I would charge them $1,800 for a day of shooting. If they wanted to add on advertising usage, I would mark that base number up 10% and charge them $1,980 total. So the additional fee would be $180 more for all the shots.

      If the restaurant knew how many shots they wanted and only one or two were going to be used for advertising, then you could go the per shot route and charge different rates. For example, 4 shots with web/marketing usage and 2 shots with web/marketing/ad usage. It would be 4 shots x $325 and 2 shots x $350, total of $2000.

      These formulas are not an exact science, more of guide to help you come up with your price. Ultimately, it’s up to how you want to spell it out and put it in your estimate. You also have to keep in mind what the market will bear and how complex the job is.

      • Eduardo says:

        Muchas gracias!

      • Jeff Singer says:

        So it’s better for a client to call you and say they don’t know how many shots they need. That way they can get 15 shots for $1980 versus 6 shots for $2000

        In situations where they don’t know the number of images, I figure out what a fair per image rate would be. Then, based on what fee we come up with for “the day”, i’d say “up to N images”.

        • jane says:

          Thanks Eduardo for asking those questions and thanks Lincoln for the answers. It helps clarify some questions I had in my mind as well when I read it.

  10. Lincoln!

    Terrific post, thanks so much, I will share with all my fellow photogs!

    AND I love your work, your portfolio is CHOCK full of thoughtful images. There’s a certain quiet, street-photog, observer quality. At the same time, the compositions and content offer enough to make one linger and search deeper…well done!

    –Rob

  11. Narayan says:

    This is a great example (and eerily close to my reality). Although, the amount your example has for taxes would equal only 5% self-employment tax (how sweet would that be!). With a 15% self-employment tax that number should be about $13,500… this would bring the creative fee closer to $2000. It sure would suck to not be expecting that tax bill!

  12. Lincoln –

    While it is always a good thing to calculate your estimated CODB, how many days you will be shooting assignments is very difficult to guess so the CODB is always an estimate. Your example might be good for local clients but it would be a disaster on the national or international level because it does not take into account the usage fees (i.e. what the images are used for).

    Images used for advertising cost more than images shot for an editorial assignment. Some images require extra gear or expense to create and therefore command a higher price. If a photographer doesn’t understand usage right and the standard fees charged for such rights then they are massively shooting themselves in the foot. I would highly recommend fotoQuote or Jim Pickerell’s book “Negotiating Stock Photo Prices”:

    http://www.jimpickerell.com/guide.asp

    For the really big jobs you charge your day rate + plus the usage rate or if the usage is huge, like “5 years unlimited exclusive usage” then the usage fee often becomes your overall fee no matter how many days it takes to shoot, as long as it is within reason.

    Just my two cents…

    • Hey Michael, thanks for commenting. It’s been my experience that if I use “standard fees” based on fotoQuote or elsewhere, I never get those jobs. So, I just created my own pricing system and I charge what I charge. I feel like the days of very specific usage rights are coming to end. For most of my jobs, clients are requesting really broad rights for marketing, print advertising, and/or online. I just wanted to simplify my fees for that amount of usage.

      Now that I have rep, things are a little different, but I would say overall he’s estimates are in line with my pricing structure.

      I’d also like to say, this guide is more pointed towards young photographers working primarily in a local market. Once you’re at the level of shooting national ad campaigns, your business model changes a lot.

  13. Torunn says:

    thanks heaps, found you via a photo editor and have forwarded to fellow photographers asking the same question ;) I work much the same way, and it works! Totally agree on your attitude not to micro manage usage right for local clients, straight forward and generous image licensing with clear boundaries. Love your voice, both verbally and visually. Thanks again and keep up the good work!

  14. Jeff Singer says:

    I posted this over on APE, but this is where all the action is!

    I guess I never understood how standardizing your pricing will get you more jobs that pay better. Knowing your CODB is important, but it won’t have an effect on a client hiring you or not. Especially in the editorial world. Most editorial jobs are take it or leave it propositions (unless you have a certain name). They call and say “we have $XXX + expenses” or more commonly “we have $XXXX flat fee”. You can usually bump them a bit from there, but not usually anything specific. So, if you know your CODB and that fee is less than that,you can say no… But the client isn’t going to say “oh, that’s below your CODB… Well then we’ll increase it to cover your CODB”.

    And, if it’s a good rate for the shoot but lower than your CODB and you have nothing else going on that day… What are you going to do, say no? (the key to that sentence was “it’s a good rate for the shoot… Obviously you say no if it’s a bad rate even if you don’t have anything else to do that day). It seems like you would especially want to take the job if you don’t have another job opportunity because your business costs (electricity, studio rent, etc) are still going that day whether you take the shoot or not. If you don’t take the job, that increases what you need to make on the next shoot.

    And taking a shoot that’s below your calculated CODB will actually reduce your CODB… If you calculated you were going to shoot 50 jobs a year and your daily CODB was $1000 and you start turning down $800 jobs; well, if you turn down 50 $800 jobs over the year then your CODB would have been $500 which means you should have taken all those jobs.

    • Hey Jeff, I know what you mean about editorial gigs not paying your CODB. I’ve shot a lot of them personally in the past and will probably shoot some more in the future. Most of the time, the shoots are around a half day, so if I can make at least half my CODB, I feel okay about it.

      Unfortunately, shooting editorial solely is no longer a viable way to make a income as a photographer. However, the portfolio opportunities, the exposure to art buyers, and the credibility you gain kind of justifies working at a loss. Plus, speaking from experience, many editorial jobs I’ve shot have led me to regular clients locally and beyond.

      As my career has grown, I now say no to the ones that are just too low and have low portfolio value. But when I was starting out, I said yes to everything. That ended up in me working very hard for not much money. When I set my pricing based on my CODB, I priced myself out of some lower paying clients, but I get paid better from the clients that can afford me. Thus, I make better work and get better jobs from the experience and portfolio opportunities. It keeps going up and up. If you are known as the cheap photographer, you will always be the cheap photographer.

      So, your CODB should be your goal and you should try to get it covered. Also, rather than look at as a daily fee, you could look at it from a weekly perspective. If you bill 3 jobs that meet your weekly CODB, then go for it. It really depends on where you are at in your career. How hungry are you for work?

  15. Nick Girard says:

    Licoln,

    Wow, this is great. I rarely will read an entire post plus all of it’s comments and then also comment, but this topic warranted it.

    As a freelance videographer I believe this post is sound advice for my profession also. I am going to attempt to sit down and figure out my CODB and then create a fee schedule.

    BUT I have one question. I am curious as to how things work with video and usage fees. I never really considered this until reading this post and don’t know how to approach it. 95% of the video work I have done has been used only on the web. Any insight would be greatly appreciated.

    Best,

    Nick Girard

    • Hey Nick, I don’t know much about video, but what I’ve heard is that there are different rates based on your role. For example: a Director makes more than the Director of Photography, but the DP make more than a Camera Operator. I guess if you do your CODB, that should be your day rate for a Camera Operator. Then charge more to be a DP or Director. Maybe DP is 2X your CODB. Something like that. I really don’t know what the going rates are, so it’s hard for me to say.

      I also think that clients typically get unlimited rights to the video, because it only has one or two uses (broadcast or web) and it’s significance is short lived. If a client wants to pull stills from your video for print or web usage, then that’s when you would want to start charging usage rates.

      I’m not sure if your a member of ASMP or APA, but they have great forums on Yahoo and LinkedIn that might be helpful in getting pricing advice. Good luck!

      • Nick Girard says:

        Thanks for the reply! Ironically I just received an email about using some of my photos for some TV bumps and other promotional material. This came unexpectedly and I am scrabbling to figure out how to handle this situation.

        It would be for national broadcast. The photos are of an event. Not sure about the length of use. And I am sure if it is something that should be considered “advertising” or something else.

        Pretty vague, but figured maybe you could give me at least an idea.

        I found that John Harrington charges $2,680.00 for TV Stills, National 5 seconds.

        http://johnharrington.com/dc-photographer/pricing/advertising-photography/

        Seems expensive for my situation though, but maybe I am wrong.

        • Hey Nick,

          I’d look up what Corbis or Getty would charge. It’ll help you figure how to ask the right questions about usage. If you get in a rut, reach out to Suzanne Sease (http://suzannesease.com/) She used to be an Art Buyer at the Martin Agency and so probably knows better than I do. She’s my photo consultant and I highly recommend her.

  16. craig says:

    This is a good basic system. We also track an internal metric of “effective hourly rate” which is basically the cost of the shoot (minus expenses) divided by an estimate of how long it will take to see all the way to delivery including the post.

    I track this on a spreadsheet that segment clients and bids by what kind they are (local, regional, national), keeping in mind the usage. I track bids won/lost/ignored. Patterns tend to emerge with enough data, ie around here, local clients will rarely pay an EFH over $125/hr no matter what the usage is.

    It doesn’t do so well for national campaigns, but for the weekly bread & butter.

  17. Kevin says:

    Look, all this sounds very nice, but let’s get real. The reality for most photographers is make enough to eat and put a roof over their head or get a “real” job. That means WHAT DOES IT COST TO SURVIVE. Sorry, but $94000.00 a year is NOT what it cost to survive. $500.00 for a 1br apt and $10.00 a day for food and a bus pass will get done. You maybe laughing but sorry that is YOUR COMPETITION and they are willing to “LOSE MONEY” in order to live as a working photographer — and also they are shooting at lot more than 4 days a month at $250.00 a day … Don’t get me wrong 50K a year + all expenses paid is a wonderful fantasy that is a reality for a few, but the idea that you are LOSING MONEY if you don’t make that is bull. You are ONLY LOSING MONEY IF YOU ARE SITTING HOME AND NOT SHOOTING AND NOT GETTING PAID. If you are out shooting and getting paid you are NOT losing money.

    • Hey Kevin, everyone has different lifestyles that their business needs to pay for. If you can get by on less, then by all means go for it. The $94,0000 includes $44,000 dollars of overhead (like camera equipment, computer equipment, software, cell phone, advertising, travel, meal, repairs, rental, and so forth. Overhead is any expense you can’t bill for on a job. So any job you get, your creative fee has to cover your salary + overhead. Add those two up and divide by the number of days you want to shoot in a year, you have CODB. If you shoot less than your CODB, you’re operating at loss. And to make up for it, you have to bill more on other jobs or shoot more days. Personally, I’d rather work less days and take jobs that pay better and are more fulfilling.

  18. Jose Tan says:

    Lincoln,

    Thank you so much for putting this down in your blog. It have given me another perspective on how to do my pricing. Really helpful even though I am based here in Thailand where the market is swamped with photographers who ask for ridiculously low fee and clients who don’t have an idea or don’t understand how things should be priced. ;) Anyway, thanks again!

    Jose Tan

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