Is Your Art Priced Correctly?

by Carolyn Edlund

Are you making money with your art? Or could you be losing out?

 

Is Your Art Priced Correctly? Or are you Losing Money? Tips on being profitable at www.ArtsyShark.com

 

I recently spoke with a fine artist who indicated that he wasn’t going to sell his art through galleries any more, and so he planned to reduce the retail price of his work by fifty percent. He wanted to sell his art directly to the customer, online and also at art fairs and festivals – but he had made a crucial mistake.

Clearly, he had failed to consider that he now must step into the shoes of the gallery, and take over the activities that are necessary to making sales. If a gallery acts as your representative, they provide the physical and/or online space to show your work, promotion and marketing activities, follow up and more. How did he plan to pay for his booth fees and travel to art fairs if he cut his prices in half?

Many artists have problems pricing their work, and are not quite sure whether they are actually making money. Whether you are splitting the retail price with a gallery or not, you must understand your costs to come up with a base price that assures you are profitable. Then, you can move on to actually setting a retail price.

Let’s take a look at a basic pricing formula that any artist can use to be sure they are actually making money:

 

Basic Pricing Formula for Artists. Make sure your prices are profitable - read about it at www.ArtsyShark.com

 

Overhead. Your overhead can be defined as the regular costs of your business. These may include studio rent, your power bill, phone bill, any fees connected with your art website, etc., and are generally considered a “monthly expense” item. When you come up with that figure, you can determine approximately how many pieces of art you make per month, and divide by that number. If you make different types of work, some of which are more time consuming than others, you can assign a larger portion of overhead costs to them.

If your overhead is $400 per month, and you normally make 40 pieces of art which are similar, you can apply $10 overhead cost to each piece. But if half your art is larger and takes more time, you might calculate that those should have $15 of overhead in the price, while smaller pieces have $5, for example. As you take a close look at your expenses, and what you make, it may become apparent that your overhead is a clear percentage of each work of art. I have heard of artists who calculate 15% overhead in the price of each piece of art they make, but that may not be the right percentage for you. Do the math and arrive at the number that fits.

Materials. These costs are just what they appear to be. Canvas, paint, stone, paper, clay, or whatever you use to construct your artwork. Analyze materials costs for typical pieces that you create and see if you can come up with an average cost to assign to a size or type of art – this will make it easier to calculate.

Labor. This refers to what you are earning per hour, and you will determine this number. What would you earn if you had a “regular” job? What do you feel your time is worth? Add this number into your formula. If your calculated price ends up way too high, you may have to adjust your hourly labor cost downwards – but it will give you an idea of what you are earning.

Profit. Profit is what helps your business to run, and is not what you put into your pocket after a sale or at the end of the show day. It is money that enables your business to stay afloat, and keeps your cash flow going even through slow periods. You may use profit to take a workshop or course, buy a piece of equipment, or invest in products and services that will help you grow your small business. I suggest artists use a figure between 20% to 30% profit in their pricing formula.

Add these numbers for any given piece of art, and you will arrive at what I have termed the Bottom Line Price for that piece. This reflects the “artist’s share” or amount you would receive after the 50% gallery commission is taken. If you are selling your art directly, think of this price as the 50% of the retail price you earn for making the art; the other 50% is what you pay yourself for taking over the gallery role yourself – because you must also get paid for marketing and selling your art, and cover all related expenses, such as booth fees, advertising, etc. Plus, when you are out selling your art to the public, you lose studio time, and that also has a cost.

Does this mean that the retail price of your artwork should be double the Bottom Line Price that you calculated? Not necessarily. The prices that you charge for your artwork will be determined not only by what the market will bear, but where you fit into the market, including your experience and your sales history. When you make this adjustment, you may find that your labor is worth considerably more than you think, or it may be less.

The importance of doing this exercise is to let you know where you stand with regards to the costs of making art, and what you need to charge to stay in business. If it turns out that the price you come up with is higher than what the market will bear, you may want to consider how you can reduce your costs to bring prices more in line with what you are able to charge.

One of the benefits of knowing your Bottom Line Price is that you can come to understand your costs well, and be able to set a price for your work by the square inch or square foot. This enables you to price your work quickly and accurately, or quote a commission while you are speaking with a client, knowing that you are making money and not making a wild guess.

Pricing your work for the retail marketplace at twice the Bottom Line Price means that if you do decide to work with a gallery, then your prices will remain consistent, which is important.

Once you know what it costs you to make art by using the results of this formula and your research, then you can move forward confidently knowing that you are profitable, and not losing money when you sell your artwork.

 

Comments

  1. I am a full time childminder and part time artist. I earn £3.50 as a childminder in the north of England, and if I put my prices up people go elsewhere to get the better deal. I think a child is much more valuable than a piece of art work. Childcare is physically and mentally exhausting. We have to constantly update training course, advertising is essential in any business, and do the bookkeeping, run the house and my family of 3 children alone, no extra help or staff, no breaks. If I take a holiday no holiday pay, no retirement fund. Nobody rants on about childminders under charging. We make no profits. I sell my art cheap and fast and earn the same amount as I would earn from being a childminder as I cannot see how my time for painting which I find relaxing after work would be worth more than the care of the 2 toddlers I have just cared for. I only just break even every month. I worry if I put up my prices for my art nobody will buy it and I would be worse off than I am now. I don’t have the lifestyle to take the gamble.

    • Thanks so much for your comment, Emma. Your story isn’t unfamiliar, because many artists have another job and make art part-time. It seems that you are clear about the prices for your artwork only paying expenses, and that you are not making any money. If you were depending upon your art income to pay bills or support a family, you would have to take a very close look and recalculate your prices.

      Still, I would suggest that you revisit your prices. Are you pricing your work out of a sense of fear that items won’t sell? Are you building value into your offering, and seeking to cultivate an audience? Are you following up on interested prospects, and existing customers through email marketing, social media and other methods? That can make a huge difference, both in driving sales and also building the confidence you need to price your work profitably.

    • I know how you feel, I’m finding it hard to price and worry about charging too much, for something I enjoy. But then I took a walk around an affluent suburb, looking at the prices of things in independent honeware and gift shops. You”ll see that there are plenty of people who will pay high prices for things from non chain stores. I saw digital prints selling for $90 , so realised I should put a higher price on my original work. Think about raising your prices for your art with a certain type of customer in mind. Generally people who buy original art understand the value of something handmade and unique and expect to pay for it.

  2. Do you suggest adding the state tax to the total after finishing the calculations?
    What about booth fees for a show? Would you advise to spread that around on the pieces like say the studio rent?
    I know now that I have been under pricing them according your guidelines. I don’t for instance add a over head or account for profit. I am going to change that this summer. Thank you so much for your article!

    • Thanks for your questions, Jayashree. Any sales tax would be added to the retail price of the art if it was sold in a brick and mortar store or gallery (or it would be added to the purchase by you if you sell your work in person to the customer) but that will vary and is not part of your price calculation. Tax is always over and above retail price.

      You also asked about booth fees. The “bottom line price” referred to in this article is what you need to charge just for making the art, not selling it. In my example, it would be about 50% of the retail price of your art. The other 50% of the price must be charged because of the costs and work involved in selling your art, and booth fees would be part of those costs.

  3. At what point do you reduce your prices if a piece doesn’t sell? You’ve already got “sunk costs” and at some point, a couple of pieces are just gathering dust. I have an MBA and an emotional investment in my work, too, so sometimes it’s hard to just let the “kids” go, ya know?

    • Thanks for commenting, Nancy. I think your question relates to a couple of issues – one that has to do with pricing work emotionally, which can be a big mistake. Just because a piece of art is important to you does not mean that your customer values it in the same way. If you are emotionally attached, you may want to keep that piece in the “collection of the artist.”

      You don’t say whether you are selling any art, most of your art, etc. but seem a bit concerned about a few pieces that are “gathering dust”. Are they older works that don’t reflect your current style? Is there a reason they don’t fit in with the collection that is selling? Do you feel that your work was priced properly to begin with? Have you had consistent sales, and have your prices increased?

  4. Thanks for this article , you have given me lots to think about.

  5. Astrid Davidson says:

    I am retired and have been painting for about 5 years. I have painted about 35 paintings. I add five cents a square inch each year to my painting prices. I sell my paintings for considerably less than those that I consider are better skilled and more experienced . I am told by some that I “undercut other artists”. I fail to see that because I don’t think people buy paintings because they are cheap but because they love them. Please comment.

    • Astrid, Are you selling your paintings quickly, and are customers making comments that they are getting an amazing deal? If so, maybe you should consider raising your prices. And if it is the case, you may not only be “undercutting other artists” you might be cheating yourself out of income.

  6. Carolyn, I hope it is ok to ask this here….I really need some advice on this pricing issue….A company wants to use one of my images in their logo. He has fallen in love with one of my small paintings with an image of a Greek fishing boat – the original painting is still available online at £95 GBP. I also have prints and canvas reproductions listed on my website of this image. I have no idea what to quote them for this logo use or how to proceed…..Do I sell them the original painting and ask for an amount on top? Do I sell them a digital hi res copy and keep the original? If so – how much to charge? (Im not a designer so they know they will need to find their own graphic designer to make it into a logo) Thanks So Much for any help you can give me.?

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