Usage fees are what the client pays to use your images. FYI The term ‘licensing fees’ is interchangeable with ‘usage fees’. The client purchases a ‘license’ to ‘use’ the images. You’ll also use the term ‘usage license’ when referring to the actual license they purchased.
Think about when you want to purchase a stock photo from a stock website. Some photos are considered royalty-free, where you don’t have to spell out the use, and some photos are rights-managed, where the agency (or photographer) controls the use the buyer is allowed. Generally in commercial photography you will be extending usage rights to your clients, so the licensing (‘stock) fees fall under the rights-managed category.
This can be a confusing area for new commercial photographers (and new-to-photography clients), who assume all photography work is ‘work-made-for-hire’, in that once the images are created, they become the property of the person or company commissioning the shoot. e.g. the legal owner of the images is the person/company commissioning the shoot.
This is not the case. At least not in the U.S., where the bulk of ad work is done. The photographer is the legal owner and copyright holder of the images, regardless of whether they were paid for their time to create them or not.
Very few established commercial photographers sell their copyright, because it’s totally unnecessary, which I expand more on below.
You can look at usage fees like royalty payments. But because you can’t track the use of a photo the same way you can track the playing of a song, the client pre-pays for the estimated future usage. Both parties- photographer and client- work together to try and determine what that usage is/might be.
When determining usage fees, your client’s goal is to maximize usage, and minimize fees. Your goal is to minimize usage and maximize fees. Your collective goal is to come to a happy medium.
A growing trend in the industry is for clients to ask for unrestricted licensing in perpetuity.
The vast majority of clients will never need unrestricted licensing, because they will never take advantage of most of the usage that licensing type includes, which is everything from ads on the side of busses, to displaying the photo in a tv show scene, to printing on mass-produced mugs and t-shirts. ETC.
So what ends up happening is clients ask for usage they don’t actually need. The frustrating part of the state of the industry is that although clients ask for this (massively extensive) usage, usually they don’t intend to pay any more for it than they would a restricted one-year usage license.
Sometimes though, with some clients, they understand the value of what they are asking for when asking for unrestricted global licensing in perpetuity, and they intend to pay for it, even if they know they’ll probably only ever use the photos for three or four things. These are usually companies with very deep pockets, and these situations don’t happen very often, but they do happen. And every photographer has the right to decide if they will extend unrestricted usage licenses, and if so, for how much.
Those same big companies also nearly always expect (and pay for) exclusive-use licensing, which means they are the only company that has the legal right to use the content, with the photographer retaining the right to use the images for promotional purposes only.
Often they don’t have the budget to pay for exclusive-use, in which case photographers can say they’ll do exclusive-use licenses on just the content the client licenses, and the rest of the content from the shoot can be licensed to clients in non-competing industries.
This is a great way to bring a project’s cost down.
Photographers have total control over how a license is written, and every license should be tailored to the needs of each client. It’s always a negotiation, with (ideally) both parties coming together in the end with most of their needs met.
For information on actually calculating usage fees, see our article 8 Great Resources for Calculating Commercial Photography Usage Fees. You may also find our article on How to Calculate Commercial Photography Fees helpful.
Calculating usage fees is part math, part science and part magic.
But when you do it right, you can generate substantial revenue for your business, as big brands will pay tens of thousands of dollars in licensing fees on a single photo shoot. We go in depth on this in our Business of Commercial Photography Course, teaching you how to maximize your revenue and be paid well for the value you contribute to corporate bottom lines.