40 Questions Blog Series: Question 10 – How do I price my work?


Of all the questions that I am answering in this series, this question isprobably the most asked by artists. You can have the best productor best piece of art for sale at a show, yet if it isn't priced rightyou are shooting yourself in the foot. Even if you thinkyou know the answer to this, humor me and read on as you may find abetter way to price your work, giving you more money down the road.


Question 10: How do I price my work?


There are several ways to answer this question. Each type of art form(due to production time, materials, etc.) is different and should behandled differently when it comes to figuring a price formula thatwill work for you. Some do the “guessing game” method, pick aprice out to thin air and I have even known some artists do a “goingrate” price that changes from show to show. I personally feelchoosing one of these methods never gives the artist a “true”value of the work and your time. I cannot tell you how many times Ihear how people quote a number and do the “three or five times mycost” method. The one method nearly everyone should use is themethod where you add the cost of all your materials to the value oflabor and then add a fixed profit margin to arrive at a sellingprice. The formula looks like: cost of materials + labor + fairprofit percentage = price.


Now let's define cost of materials, labor, fair profit percentage and thedifference between wholesale and retail price.


Cost of Materials. One way to look at cost of materials is bydividing it into direct costs and indirect costs that is best summedup as expenses. Direct costs are your fees for raw materials such asnails, wood, earring backings, thread, clay, etc. Indirect costs areall the subtle fees you never really consider as a cost such asinsurance, canopy, computer and printer expenses, cost of yourworkplace (heat, lighting, machinery, and so on). It is the indirectcosts that folks never seem to factor into their costs.


Labor. This is something that can vary from one medium to another. Thetime to make a quilt verses making a simple pair wire wrapped ofearrings will be drastically different. Don't forget the time ittakes to create your product, time you take to design your work,networking... - all needs to be factored in too. Figuring out yourlabor costs starts with tracking your time. Factor in how much timeit takes to make a prototype as well as allowing time to answer phonecalls/emails, eat, etc. When you have figured the time it takes tomake one piece, figure out how much time it takes to make 10, 100 orhow many you can do in an hour – photography and two 2D art may bedifferent, but the idea can still be applied because we all stillhave to devote time to assemble, paint, frame, make labels, package,and so on. Divide your cost for labor by how many pieces you produceto find your labor cost per unit.


Fair Profit Percentage. Don't confuse labor with determining yourfair profit percentage. Covering your cost of materials and laboris great, but you need to make a profit to keep the bill collectorsaway, this helps in determining your wholesale price. More onwholesale price later... Determining a fair profit percentage canbe determined by doubling your labor and cost of materials (thishelps for those who do fine art) or tacking on a $1 to $5 (lets say)to each unit. This is more or less up to the artist – there is noreal formula for coming up with a profit percentage, especially foreach medium.


Wholesale vs. Retail price. When you use theformula of adding cost of materials with labor and profit percentagesyour ending price is actually your wholesale price, not retail price.To know your retail price, you double or triple it. Now look atwhat fair market prices are by visiting retail shops to see how youfair. If you are on par, congrats. If your cost is too high, startlooking at ways to cut costs such as making multiples at one time tocut labor costs or find better bulk prices for your raw materials.If it is too low, price your work a little higher – nothing wrongwith giving yourself a little more profit.


Lastly, far too often people sell their work at the wholesale price, don'tlet this be you. You're shooting yourself in the foot if you do thisbecause you are not factoring in the cost of selling your work (overwhat you consider labor costs) – paying for your time selling atshows or wherever else you sell your work. Remember, a retailer addsabout 2-3 times on top of the wholesale price to make their profit. If you are at an art fair or craft show you are acting as a retailer.If a retailer comes up to you at an art fair (retail) show and isconvinced they want to sell your work at their shop, they'll ask foryour wholesale price. If you are selling your work at your“wholesale price” at a retail show, game over because you cannotgo any lower. No retailer wants to sell your work at 2-3 times theprice you are selling at a show, there is no incentive for them tomake a profit. See where this becomes a problem? Not only are younot making a profit, but no one will want to sell your work too.Finding the right pricing for your work is more of a science than itis an art form. It is apart of the business side of running your owncraft business. Finding the right price – where you are coveringall of your expenses and making a profit too, will mean thedifference between loosing money or breaking even to becomingindependently wealthy.


Do you agree or disagree with this? Have a question? Post it using thecomment button. Question 11 will cover 18 ways to increase the valueof your work, another blog post you can't afford to miss!

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Comments

  • Don - I soooo wish I had the answer. What makes it so difficult is that a watercolor artist and potter (for instance) work on two completely different levels. I think the best way to approach this however is look at your training and education - start there. If you are self taught, you might not be able to collect the same amount as one who graduated with an art degree and studied with the masters. However if your work is completely new - you invented it! - then this pulls some weight too. Looking at how long it takes you to create your work is another thing to look at. Are you able to "work smarter and faster" you can get twice as much work (or more) for what you were doing originally. I have known artists that work for an hour and then pack up all their supplies to then have to set everything up again (and so on) - all wasting time, yet adding that to "their wage time". I love your idea though of thinking about how much would you be worth if you bought yourself. What some people don't know about me is I, myself, set up different wages for different things I do. I don't "pay myself" the same from the time it takes me to create my own potpourri as I would print and label my packaged products. I take an hour to set up all I need to do to print, cut and label my own labels - that is one wage. The time it takes me to do 2-3 potpourri blends (in 1 hour) is a different wage - something I charge a little more on. Then there is the other time devoted to production efforts. This makes things a little more palatable. I hope this sheds some light...
  • Heather - first of all I am SUPER sorry to hear about your bad luck. I can truly sympathize with you - and I know I am not the only one. My only suggestion is that you may want to keep testing the market with the price you set (I do have an exception too though...). You mentioned the show might not have been the right arena for what you sold - this is BIG! Finding your target marketing audience is key and it doesn't happen over night. It happens with trial and error. While you were at a "St. Pat's Beer Fest" don't rule out a high end wine fest. But all in all, if you consider yourself a fine artist - stick with fine art shows, and then go from there. I too didn't have success at a art/craft show that had a very active beer garden, however last year I did a wonderful wine festival (that really promotes local artists - tying it with a juried art fair) and they weren't wino's or lushes that I thought would be present, nice artwork was flying and it was one of my best shows ever. That was my experience though, you may have yet a completely different experience. But once you find your niche - with both selecting of shows and prices - don't change it!
  • Tested the waters on pricing and sank! Had a show this weekend and sold a few note cards. I pulled all price tags this morning and are really looking at having show tags for different area’s. Has anyone done that? I had so many people in the booth but the prices just scared the heaby jeabies out of some people. (It was a festival of green beer, which I will comment in another area.) Question: Do we sell artwork in different parts of the country that have different price structures?

    The only thing that did well was the 275 business cards that people were clambering for! (I put a painting of a crab on the front and the contact information on the back)

    Here are the prices and need help!

    Original Oils
    12x12
    Gallery Wrap 2” thickness
    Painted on all sides.
    $125

    Had one artist came buy and said, “I have done this show for 2 years and got skunked. You can’t sell art to a man dressed in a leprechaun outfit with a green beard drinking green beer! The green is in his pocket!

    Happy Day!
    Heather
  • For me, the hardest part of all this is in answering the question, "What is my time worth?". In my case (and, I'm sure, man y of you, the only labor cost involved in my business is "me". There is no other labor. So, I have to decide what my time is worth per hour, per piece, or some such formula. Similar to an old saying, "If I could buy "me" for what I'm worth and sell "me" for what I think I'm worth, I'd be a millionaire! It's just been difficult for me to put a number on this. I'd be interested in hearing how some of the rest of you have addressed this question.
  • Whether we short change ourselves on materials, our talent/creativity, or something else we really don't take into account (for our prices) it happens and it happens right under our noses. The nice thing is prices are not set in stone! They can change, however there is still the super fine line of what is too much and too little so our customers will buy from us too. This is why it is very important to look at the market around us, we can't just hibernate in our studios and pull numbers out of the air. Just because something high end may easily sell in NY City, it might not in Lansing, MI and this example (among so many others out there) is why I think the topic of pricing is one that can be discussed all day long for months on end, there are no real wrong answers/questions nor are there cut and dry easy answers.
  • I have to agree with Heather. It is sad but true - I also underprice my work. I have been in business for 5 years and am still learning the most efficient/effective way to make money doing what I love. However, this year, I did increase my prices as they are way too low - that is the black and white of it. It seems every two years I get mad enough to do it - this is hard, time consuming work that I am passionate about. Passion does have its price, doesn't it? Take a long, hard look at what you do and listen, truly listen to what your clients are saying.
  • Awesome comments all. I wanted to add an addendum, something I completely failed to mention, yet kinda suggested by Michelle B., I think . When dealing with some raw materials the prices of some of the raw materials can change without notice. I would like to think the price of metals (gold, silver, copper), gemstones, some (or maybe all) types of wood, for examples, are linked to the way of market demands. I learned this when I went to a gem show with a fellow jewelry - really opened my eyes! Based on this, you may want to mention to your customers (wholesale or retail) that your prices might be subject to change - BUT EXPLAIN WHY, stating "this is a suggested retail price". No one wants to be cheated, thinking "oh they're rising their prices just to get more money out of me, but doesn't look like it is worth half that amount". The days of bargaining are on our door step - after all this is SUPER common in the antiques arena. If you have a person who is pretty much sold on a piece, yet really antsy about the price, take them aside and let them know you don't do this with anyone, but since "I see you might be a collector" I can take 10% off the price as a "show discount". This might be just enough to get them to shell out their cash. It is better to let something go at a very light discount, then wait and wait and wait for the right buyer to come along. Just some food for thought. I aim to talk more about this down the line when I get into customer service tips.
  • Aside from getting rejections I find pricing one of the most challenging conundrums. first I have to decide on my hourly rate of which I have a few. For instance my rate for stringing a strand of pearls is lower then for doing one of my enamels or metalsmithing work. I add materials x2.5. 2.5 seems to cover the rapid changes as of late in the metals market. If I do a commission the price I quote is now only good for two weeks. After that time they will have to be requoted. The reason...I had given a quote to do a pair of gold hibiscus flower earrings with rubies to a client. It took him two months to decide to go for it and in the time the price I had quoted was what it cost me for the gold. Listen learned. I honored my price and grumbled to myself the entire time. I also make sure that my prices will make me happy if I'm going to wholesale a piece. So I have my wholesale price and my retail price. And yes my prices are the retail prices at the show so as not to compete with my gallery clients. I've had some galleries triple the wholesale price which in jewelry it is common to triple key although that's not part of my formula. I don't mark my prices up to meet their price in that case.
    I was reading Heather response and remeber liking the 100% income with little overhead and then realized shows are full of overhead. The transportation, motels ,food days going to days doing the show and going home. And the days out of the studio time lost not being able to work. Which you really feel at a bad show. so is is much different than the gallery expense probably not. And less risk. At least you don't have to worry about the weather.
  • Good stuff, and words to live by.
    Equally as important is to have work at several price points. As a fine-art nature photographer, I have "bent" my low price point in order to conform to the market, i.e., what I see other photographers charging for similar-sized work. These "entry level" buyers are a bit more price-conscious, and (as Heather mentions) I want to be able to capture them by pricing fairly aggressively. I tweak my mid- and (especially) high-level price points (for my large photos on gallery wrapped canvases) upward to make up the difference. Buyers of large works are going to be (somewhat) less price-conscious. And finally, I offer everyone on my mailing list some sort of discount coupon (the exact nature of it varies from mailing to mailing) to encourage repeat buying and upsizing.
  • Michelle,
    I'm here with you on this topic! I am also treading the waters trying to price artwork. I am an oil painter that has a very difficult time trying to price work. The difficulty is working with galleries vs the show circuit. I finally came up with something that is based on size and I will vary if the quality of the piece is good or not so good. The 2/3’s. For galleries I take the show price $100 and add 2/3 so $80 which comes up to $180 and I make $90 after it sells. I am ok with the $10 difference.

    My biggest fear is going to a show and being priced too low. I look at the income of my family and sometimes say I wouldn’t pay $1600 for that painting! But, in the right location of a higher income-I work with a gallery in a tourist area and he sells a $800 painting faster than a margarita to Nell’s in Florida in the winter after a show!

    Do I have a degree’? No. Have I won any major shows? No. Do I have a client base over a zillion? No. At 44 I am still new to the show circuit but own a gallery and do artwork in the side. I really like the idea of 100% income with little overhead vs a location with 10% gallery income after expenses. The premise still is true in or out of a gallery: A professional looking booth, artist and artwork will deem a good client. Does this client gaze between a horribly thrown together booth or a neat well tagged booth that screams above all “I am a professional and should be paid for it, I have worked very hard and feel the sticker price is appropriate.” ?If your work is flying off the walls – here’s your sign….Remember America is a little sick financially we need to be understanding the prices we had received in the past will not apply now. That small purchase client today is next years winner when they have the money.

    Happy Day!
    Heather
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