Pricing your art
By Christy Nicholas (www.greendragonartist.com)
PRICING: The eternal question! There are so many methods (including just blind guessing), but no one has a true answer to this. However I have some ideas to pass on.
I’m a tax accountant as well, and the formula SHOULD be as follows. For anything you sell, take your costs of making it, your own hourly wage for creating it (times the number of hours spent on the project) and then add your overhead. Double this for your wholesale price, double THAT for your retail price. While this works fine in theory, in real life, this isn’t always easy to figure out.
First, what hourly wage should I choose? That’s up to you. What would you be comfortable making, doing this for a living? $10? $30? $50? I find I charge less for items I do less ‘creating’ on. Make sure not to make the biggest mistake, and underprice yourself out of any profit. $2 an hour is NOT a decent wage!
Second, what’s overhead? That’s the costs that aren’t directly related to creating your pieces of art. It includes the cost of traveling to shows, the jury and art show fees, the cost of the tent and tables, your meals while at the show, advertising, business cards, website fees, etc. It’s very difficult to figure out, especially when you are first starting out. After the first year, you can add up all those expenses, and divide by the total hours you spent making art – and that is your hourly overhead fee. During the first year, however, you need to estimate it in some way.
For instance, say you spent $600 on your setup (tent, tables, display stands, cloths, etc.). Then you spent another $300 on findings, clay, embellishments, all your stock. You plan on applying on 4 shows this year, and each one will cost $100 in fees, and $50 in traveling expenses and meals. You spent $50 on business cards, and $50 in website fees.
So, your inventory cost is $300, and you kept track of what item cost what, so you don’t have to prorate, or apply a percentage. Item A cost $10 and you spent 10 hours on it (at, say, $20 an hour), Item B cost $50 (and 20 hours @$20 an hour).
Your overhead is a total of $600+(100+50)*4+50+50 = $1300. You estimate that you will spent about 500 hours making the art you currently have in stock, so your overhead cost per hour is $2.60.
Item A has the following costs: Item B has the following costs:
Direct Cost $10 $50
Direct Labor 10X$20 = $200 20X$20 = $400
Overhead 10X$2.60 = $26 20X$2.60 = $52
Total Cost $236 $502
Wholesale $472 $1004
Retail $944 $2008
These are guidelines, of course, not set in stone. They reflect absolutes and estimates, not the real world. You also have to look at your market, your competition, and your cash flow. If someone next door to you is selling the same item for 30% less, you won’t sell much.
You should also take into consideration the economy. Art is considered a luxury, and therefore, one of the last things people are willing to spend money on in a tight economy. That doesn’t mean there isn’t anyone out there that will buy your stuff – just that it may be harder to find those people. Geography also matters. For instance, I lived in north Florida for many years, and did many shows there in the more rural portions of the state. However, when I moved to West Virginia, and started doing shows in urban Pittsburgh, I found that the amount people were willing to pay for my art was much higher. It stands to reasons that people in, say, New York, will pay more for art than those in, say, Zephyrhills, Florida.
Another thought to consider is when or if to change prices. I have found that it is much easier to increase them than to decrease them. Why? Think of this. You are at one show several years in a row. One year a loyal customer buys a bracelet at $75. The next year she sees a similar piece for $60, and is upset because she could have waited and gotten it cheaper. Or, she sees it the next year at $85, and is glad she got it when she did. Would you rather encourage your customers to buy now, or wait until later?
Pricing can be a very organic, difficult process – but this should give you starting guidelines that you can then mold (pun intended) into your personal situation. Good luck, and good pricing!