Pricing Your Work

I refer you to this reading about pricing your work.

Let’s start with pricing your work:

This article is a really good one and I agree with a lot of what they say, It’s very comprehensive. Art Business has another good, if a little dry, article about selling and 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
+ Overhead 40.00
= 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

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)

Where:

  • 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.

 

20 thoughts on “Pricing Your Work

  1. It’s comforting to know that it is ok to include other expenses other than ones directly relating to the studio space, time, and materials used: bus pass. As you begin to establish yourself, does market value go up? When do you know to increase pricing? With any business I was told that I shouldn’t expect to break even sometimes within the first few years starting, is that the same in the art world?

  2. I learned what overhead expenses are and the difference between fixed and variable expenses are and how that all plays in to pricing work. My question is how do you know if works are not selling whether they are priced too high or if I just haven’t found the right person to sell to? What if I second guess my pricing and lower it and then everything is selling but I’m not breaking even?

  3. I learned that I have DEFINITELY been underpricing my work for a very long time, but now know the correct formula for going about selling work for the correct price. I am actually left with the same question as Leanne: How do you know when it’s appropriate to start raising your prices on work?

  4. To learn the correct pricing of work formula is something I learned in this reading. What I want to know more is would you want to figure in taxes into the formula at some point?

  5. Never thought about other budged items outside of what went into a piece, such as the bus pass in the example. Are there any things that I should avoid factoring into the price of a piece? Could things such as monthly rent and food costs be factored in, or should those be avoided?

  6. This was helpful as I struggle so much with pricing, and I (foolishly) get frustrated with it and undershoot the price. It’s really nice to know that I can create a price that’s keeping more than just hours and material put to use in mind. I’m curious where the line falls between counting in pricing factors that help with breaking even, and counting in unrelated or superfluous things that increase price increases?

  7. I have never felt that I’m pricing my work correctly, it’s usually underpriced. It’s nice to know that I can add in expenses like travel or gas and not feel guilty about it But when do you know you’re overpricing your work or you just haven’t found your target audience?

  8. Depending on what you make, and the quantity of your output, you should also be selling at least half of everything that you produce within a six-month time period was something that stood out to me in the GYST article. How do we get the galleries and art consultants to take us in as we are fresh out of college and considered a “high-risk” investment?

  9. Learning about fixed variable and overhead prices was interesting. It helps break everything down into a formula to price work. How much should an artists intention and want for their work to be accessible for a certain group play into the price?

  10. I learned not to sell myself short (literally) and to figure out how to make a 30-40% profit off of my work. However, I still have questions about how to address customers who deem my prices too high and how to engage customers in the idea that I need to make a good profit off of my work to stay afloat and grow my brand.

  11. Looking at the break down of costs from daily life to directly related expenses quickly put things in perspective. I am a sucker for the “do what feels right” method, especially if it is for a friend. Recently I agreed to do several commisions for a price that left me with less than the minimum wage, not including any other factors. It is a lot harder to argue with a mathematical formula and I look forward to using these.

    Can we go over the collectors discount and how that affects the artist? Does that end up undercutting the original price? Does the gallery take 50% of the deal getting 5% less or does the 10% come out of my share solely?

  12. The caculation formula here is quite important and really helpful. Though I find it could be more difficult for digital artists to price their works, especially for the assets they made that could be reused and reproduced easily.

  13. i never thought about adding in the price for making sure your work gets to where it needs to be as well as time spent into making…collectors discount is something i want to hear more about, it confuses me a little.

  14. Considering doing math is not my strong suit, the equations and charts were really helpful in explaining how to price your work. At what point in your career is it appropriate to deny any negotiations or discounts? Does your level of flexibility in negotiations also an indication of your level of confidence?

  15. The formulas are so helpful! I have been using them to help budget for my senior show this semester and HOLY COW it makes it so simple!

    Is it wrong to separate aesthetically nice work and conceptual work as far as pricing? I have some work that I feel is nice and people may want in their homes, but it’s not as sentimental or conceptual as some of my other work. Is it wrong to price these two bodies of work differently?

    • Great question! No- it’s totally not wrong to have two separate price points. You should do it- just keep it really clear. Brand those two lines separately- like (Gap, Old Navy and Banana Republic- same company- different price points). However you end up doing it, you will have to do something to pay the bills. If you can make “nice” work as you say, that is more sale-able- go for it. I have a friend who has two etsy sites. One site for the more expensive “conceptual work” that ‘s a part of her brand, and another site, where she sells a totally different line of “fun” work. That is her bread and butter. This has the benefit for her that she is always in the studio- keeping up her skills.

  16. This reading was very helpful I have always thought that valuing your time and effort was a huge part of pricing work. These formulas are super useful and i’m definitely going to use them plan and track all my future expenses.

    What should I do if I have a piece with a calculated price that multiple people have turned down?

    • You have an option of trying a slightly lower price, or simply waiting to find your market. I suggest trying a little of both. Get the work out there as much as possible, and also consider lowering the price a little. Never sell your work so low that you kick yourself for it later. Those gut feelings are important to pay attention to.

  17. The formula for pricing your work is super helpful. I will definitely be using this in the future. Although calculating in expenses and labor is helpful, what if you genuinely think this price is too high for the audience you want to be selling to?

    • Good question! If you think the price is too high, then lower it. This process is really about helping you find out what your work is worth. Try to trust the numbers, and gain confidence in the fact that what you make has real value. I would suggest doing a combination of both. Never sell something for a price you kick yourself for later, but if you are willing to take a small loss so that your work gets out there, do that.

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