I refer you to this reading about pricing your work.
Let’s start with pricing your work:
There are a couple of articles with even more links that I highly recommend. Julia Galloway’s Field Guide speaks specifically about selling ceramics for those of you involved in that media. She has a number of interview and further links to follow. Even if you are not in ceramics, there’s some really useful stuff about how to go about the process of pricing.
Now, most of what you need to know is in these articles. Something I did not find much mention of is asking yourself what is your gut instinct? I have found that if it feels right, it usually is.
Of course pay attention to your costs and overhead, and yes ideally it would be great to attach an hourly wage to your work. You definitely want to take the gallery’s cut into account as well, since they are going to take about 50%, but when you’re first getting started, explore what feels right. What feels like a fair trade to you for all of your work and your time? That is the price that will be your starting point. Not very scientific I know but that is the only way I know of for you to sell your work and have it feel right to you.
There is another small thing I want to mention to those of you working in craft media especially. This advice is good for all makers, but I have found that those working with craft media are particularly susceptible to this problem. It is so easy to undervalue your work. I implore you, for the sake of all your peers, and all other artists out there, do not undercut your prices. By saying to the consumer that your work is worth less than the materials, time and facilities it took to make that work, you communicate that art in general, your media more specifically and your work in particular, are are actually worth-less. This about those two words together worth less. It is OK to be humble, to acknowledge that you have a long way to grow, but when you sell work for a fraction of its actual worth, you actually undermine the work of the artists around you. China is doing that for us already. Have you ever heard someone say “$35 for a mug?! I’m not going to pay that!” I have, too often. I actually did the math once, I figured out the time it took to make, fire, glaze, fire again, plus the cost of materials, and $35 works out to pay a potter about 1/2 the current minimum wage. So, do yourself and your fellow artists a favor, stand up for what it took to learn your skill, for the heart and soul you poured into the making of it, and price your work at least at the market value.
Setting a price and sticking to it!
I also want to mention that it is important to keep your prices consistent over all or your sales venues. If you sell through a gallery at one price, you should sell in your other venues at that same price. Otherwise, you may undermine your own sales. It is OK to discount older work, but be sure that you make that clear.
You should also check your contract with any gallery you are working with. If they decide to discount your work- find out how that discount will be divvied up. Galleries should always ask for permission before doing this. There is often a 10% collectors discount when working with an agent or gallery- so this is common contract language.
Cost Plus Pricing
|Cost of materials||$50.00|
|+ Cost of labor||30.00|
|= Total cost||$120.00|
|+ Desired profit (20% on sales)||30.00|
|= Required sale price||$150.00|
Many manufacturers use cost-plus pricing. The key to being successful with this method is making sure that the “plus” figure not only covers all overhead but generates the percentage of profit you require as well. If your overhead figure is not accurate, you risk profits that are too low. The following sample calculation should help you grasp the concept of cost-plus pricing:
Used by manufacturers, wholesalers, and retailers, a markup is calculated by adding a set amount to the cost of a product, which results in the price charged to the customer. For example, if the cost of the product is $100 and your selling price is $140, the markup would be $40. To find the percentage of markup on cost, divide the dollar amount of markup by the dollar amount of product cost:
$40 ? $100 = 40%
A good average markup is between 30% an 40%
Overhead Expenses. Overhead refers to all non-labor expenses required to operate your business. These expenses are either fixed or variable:
Fixed expenses. No matter what the volume of sales is, these costs must be met every month. Fixed expenses include rent or mortgage payments, depreciation on fixed assets (such as cars and office equipment), salaries and associated payroll costs, liability and other insurance, utilities, membership dues and subscriptions (which can sometimes be affected by sales volume), and legal and accounting costs. These expenses do not change, regardless of whether a company’s revenue goes up or down.
Variable expenses. Most so-called variable expenses are really semivariable expenses that fluctuate from month to month in relation to sales and other factors, such as promotional efforts, change of season, and variations in the prices of supplies and services. Fitting into this category are expenses for telephone, office supplies (the more business, the greater the use of these items), printing, packaging, mailing, advertising, and promotion. When estimating variable expenses, use an average figure based on an estimate of the yearly total.
In summary, fixed expenses are the same every month – such as rent. Variable costs increase or decrease, depending on how busy the business is.
Formula: Materials + Labor + Expenses + Profit = Wholesale x 2 = Retail
Break Even Analysis in economics, business, and cost accounting refers to the point in which total cost and total revenue are equal. A break even point analysis is used to determine the number of units or revenue needed to cover total costs (fixed and variable costs).
Break even quantity = Fixed costs / (Sales price per unit – Variable cost per unit)
- Fixed costs are costs that do not change with varying output (i.e. salary, rent, building machinery).
- Sales price per unit is the selling price (unit selling price) per unit.
- Variable cost per unit is the variable costs incurred to create a unit.