How Not To Starve As A Starving Artist 1: Cost, Pricing & Profit
Some of the most important things to learn in order to be successful in the Artistâs Alley are proper pricing of your work and how to allocate and control costs for producing your items. Itâs necessary to set prices at a level where items will both sell and turn a reasonable profit. (If you think artists making profit on their work is somehow wrong or excessive âthereâs the door. These posts are not for you.)
1. How much does it cost you?
Divide the total cost of production by the amount you produce.
You arrive at the total cost of production by adding the cost of making each unit, supplies used to make it, and the cost of the labor to produce it. Divide that cost by the number of units you intend to make.
The cost of making each unit includes things like production supplies, labor, prepress and printing. The easiest costs to calculate are production supplies. Pricing supplies like paint can be tricky-what I normally do is keep track of how many hours of use it takes to use up a supply, and divide the purchase price of the supply by that. For any other supplies, divide the number of pieces (such as paper, canvas, framing) by the purchase price of the whole.  Note: Whenever your cost per unit for a given supply is less than one cent, count your cost as a penny.
Price of Supplies/Quantity Purchased= Material Cost per unit
Add up the unit cost of each of the supplies used for the total supply cost.
It sounds fairly simple, but itâs easy to forget to pay yourself properly for your time as well as the material cost of the item. You wouldnât work for free at McDonaldâs, you shouldnât work for free as an artist. This is especially crucial if you make craft items, where you cannot make multiple copies without additional effort. Keep track of the time it takes to produce a completed work and set yourself a reasonable hourly or piece rate. For example, if a painting takes ten hours to complete, and youâve decided to pay yourself $10 an hour, the cost of labor for that painting is $100. You will need to charge more than that if you plan to sell the painting in order to make a profit on your time. Just try to remember to keep your labor costs reasonable lest you price yourself out of your market.
Hourly Rate x Hours to Make Base or Single Unit = Labor
The total cost to make an original item you plan to sell would then be the labor plus materials. Letâs say I am going to make prints of that painting I mentioned. The high-quality giclee printer I use for prints costs $2.85 per 8.5 x 11 print. The mat, backing and clear bag I use to package the print costs $1.50. The cost to reproduce the painting is $4.35 per print.
Weâve already determined that the cost of labor is $100, and Iâve determined that it cost me about $10 in paint and paper to paint it. I will divide those numbers by 100. That means that the cost of labor is $1 and supplies for each print is $0.10. Keep in mind that these are one time costs that will be paid for once your first run is sold out if you are doing a publication, producing a print or creating something that can be reproduced cheaply once itâs been created.
Because we do not pay for prepress, I do not incur any costs there. The base cost of the prints is thus $5.45, even though I am only paying $4.35 to get the prints produced. The upfront monetary investment I will need to make for 100 prints is $435-to repay myself for time and supplies I will need to make at least $545, meaning I need to make even more than that to turn a profit. This is important to keep in mind to avoid shortchanging yourself by underpricing.
Cost of Supplies = $0.10 per piece
Cost of labor = $1.00 per piece
Cost of reproduction (includes prepress, materials, packaging, etc.) = $4.35 per piece
Cost per unit = $4.35 + $1.10 = $5.45
Total cost = $5.45 x 100 = $545
2. How much do I mark up the price?
This varies by the cost of the item, intended market, and common retail prices for the type of item. The bare minimum you should mark prices up is 1.5 x the cost of the itemâand only do that for low-cost/time investment promotional items. 2.5 to 3 x cost is more common and gets you a more fair price.
Keep in mind the prospective audience and what they expect. If you are selling fanart or quick character/portrait commissions, the audience is less likely to pay higher prices unless your work is of exceptional quality. The customer is likely to be more interested in collecting pictures of their favorite character or themselves and will not pay a premium for niceties such as matting or high quality printing. They will also compare prices and will probably seek the best price possible for the quality of work.
On the other hand, collectors and art enthusiasts prefer to buy matted work and may avoid lower cost items that they perceive as âcheapâ and without lasting value. They expect archival quality materials. They are unlikely to do much price comparison-they know what they want and expect to pay higher prices for it.
I am not making a value judgment on which is better. Both have their place. I will state from experience that the two audiences rarely cross over-most artists attract one type or another, and itâs rare that the audience that buys one type of art will go for the other unless they form an emotional attachment to a particular piece. It is a good idea to have items that appeal to both on your table, but save your best efforts and highest investment for your primary audience. Therefore, itâs important evaluate your work objectively before you price it. A good tip is to compare it to work of similar quality and see what that work sells for.
In this example, I know from experience and research into art buying trends that people will pay a higher price for quality matted work, and that my work appeals to those buying art for artâs sake. At the conventions I go to there are less collector types, so I canât expect to make a high volume of sales. I do have leeway to price higher than someone doing fanart. I will invest in matting my prints and mark up the cost 300%(3x)âthat gives me a cost of $16.35.
That isnât a price I would want to charge at a convention, however. The change is a pain to deal with in the environment of a convention, and makes the sale take longer. My least problematic price options are to charge either $15 or $20. I am going to charge $20 to start.
Price = $20
Why charge the higher price? Wonât you sell more if you charge less?
Iâve noticed that over the past decade, my print sales at cons have become very consistent, despite changes in price, print quality, etc. The images that sell the most are the highest quality work, exhibiting the most technical skill. I do not sell fanart, so I know that people are not buying the work solely because it contains a favorite character. My audience are collectors who are interested in that specific piece, and they are willing to pay any fair price I charge. $5 of extra cost is unlikely to influence their purchasing decisions in most cases. $20 is more than fair for a quality art print at a convention, especially when properly packaged with a mat and clear bag to protect the work. The higher price gives me a more comfortable profit margin and gives me room to run sales and give discounts without hurting myself. I sell a lower volume of prints by choosing not to sell fanart; by pricing higher, I can maintain my profit at a comfortable level where I can afford to continue selling art at conventions. I will show you how important that is in a moment.
3. What is my real profit?
In theory the following is my total profit:
100 prints x $20 = $2000 total sales
$2000 in sales â $545 in costs = $1455 profit
That seems like a lot of money, doesnât it? It would be really great to get all that at once. Except that you donât, most of the time. This is the part where a lot of people screw themselves, aided and abetted by people who think that greedy artists make lots of money when they should give their work away for free. Pay close attention to this next part-this is where you find out why many artists work other jobs.
5-10 prints per con x $10-$20 per print = $100-200 sales
$100-200 sales â $27.25-54-50 in costs = $72.75-145.50 profit
For example, I can expect to sell somewhere between 5-10 copies of a print per convention. So my hypothetical print can net me a profit of $72.75-$145.50 at a con. Sounds great, right? Problemâconventions are rarely free. Average cost is about $50 per table. Now add in food, travel and accommodations. My personal cost for attending conventions, where I share rooms & travel costs and largely bring my own food, is about $300 each con.
Wow, there goes my profit. Woo-hoo, the decadent life of the bohemian. I covered the price of a pizza party one night of the convention.
In reality, I usually have 3-4 prints that sell well at a con, or we sell comics, etc. Thus, letâs assume that I had 4 identically priced prints that sold 7 copies, for a total of 28 sold, and I sold none at a discount. Profit on that is $407.40.
28 prints x $20 per print = $560
Base cost of prints= $5.45 x 28 = $152.60
$560-152.60 = $407.40 profit
$407.40 profit on prints â $300 convention costs = $107.40 actual profit
If I charge $15 a print, the math looks like this:
28 prints x $15 per print = $420
Base cost of prints= $5.45 x 28 = $152.60
$420-152.60 = $267.40 profit
$267.40 profit on prints â $300 convention costs = â$32.60 loss
If I had charged $15 a print, I would have lost $32.60 on the convention. Even if the convention had been free, I would only have brought home $267.40 as opposed to $407.40. That $5 difference is likely inconsequential to the customer, but makes a big difference to me and my ability to carry on working as an artist. I may be able to charge more in the future without hurting sales, and that would get me a better returnâthat takes experimentation and record keeping over time.
In other words, not enough profit to quit the day job. Working full time as an artist is a lot of hard work and takes careful business planning. Even working part time involves a lot of care in order to avoid harming yourself. Itâs worth it to put in the time to figure this stuff out, even though it takes time away from the fun part of making the art.
For example-that $10 an hour wage youâre paying yourself only works if someone else is taking care of your living costs. In real life, if you make $10 an hour and are supporting yourself, you arenât able to buy art supplies. When I do freelance design to supplement my day job, I charge a minimum of $50 an hour, and thatâs to non-profits and friends. Thatâs the real cost of my time-including things like my investment in computer equipment, software, health insurance, retirement savings, etc-in relation to how many hours I can reasonably expect to work in a year. However, that high of a labor cost for an independent, self publishing artist could price you out of the market unless you can make up that one time labor cost in sales volume. So a proper balance against what you are actually producing is important. My decision is to work a full time job that supports my financial needs, allowing me to produce art in my market at a sustainable cost.
Also, note that none of this includes taxes, which become very important if you have any success as an artist. Get a good accountant if you are serious about working professionally as an artist. Even on the hobbyist level you need to be careful and get advice from qualified people.
4. Thatâs a lot to keep track ofâwhere do I start?
Good record keeping is number one. Make yourself a logbook, spreadsheet or some other way of tracking your costs and time expenditure. Make sure to keep records of sales at cons, and note down your impressions of trends and commonalities in your customers. Note your convention costs and how much you invest in items like computer & printing equipment, software and training, as well as displays and art supplies.
Having that information readily available makes it much easier to make good pricing decisions. It also lets you know where to spend your money when it comes to things like training-my graphic arts knowledge saves us a great deal of money and time in preparing our work for printing, and ensures that we have more control over the finished product. That knowledge also lets me determine what hardware and software meets our needs and is the best deal.
Donât be afraid to make investments that will cut production costs or increase sales, even if it means that you technically lose money in your art business that year. Plan those investments for years when you are more financially secure and can afford it without going into debt. Remember-you have to pay interest on debt, and you should include that in your calculations.
This year, we are bound to finish in the red- we made an investment in printing The Apprentice Book 1, which will take a while to earn out the printing costs. I also sunk a significant amount of money into things like a new banner and some display upgrades-we hadnât updated in the last several years, and we need to keep our table interesting to attract customers. With a small investment in giveaway items added to that and the cost of a few equipment upgrades & supplies, we simply arenât going to show a profit this year. Since we have day jobs and are on top of our personal debt, this isnât a problem. These costs will get spread over a long period of time, and we did experience an uptick in sales that could be attributed to the better display and new items.
However, donât upgrade just because something new came out-wait until you have a solid reason why this will increase your productivity or decrease costs in a tangible way. For example, we are preparing to replace our 10-year old scanner which still functions properly; the manufacturer no longer supports it and larger format scanners are less expensive now, justifying the cost with a significant timesaver. We chose not to spend the money until we would be getting a notable improvement in functionality.
Make sure you arenât selling yourself short. If you havenât been keeping these records, start now. Youâll appreciate it later, when youâre not trying to figure out how you can afford to go to print and still keep the lights on.
P.S. You may have noticed that earlier in this article, I mentioned that I expect a lower volume of art collectors at the cons I frequent, which begs the question of why I attend those conventions. The reason is that while there is a lower overall volume of art collectors there, they are more likely to purchase my art specifically and I have less competition. I will elaborate more on this in my next post on this topic.
How Not To Starve As A Starving Artist 1: Cost, Pricing & Profit was originally published on Kumate Works
