7 Ways for You to Confidently Price Creative Work
I feel some artists will vehemently disagree, and I’d love to hear your opinion on this, but I’m starting this post with a potentially controversial assertion:
Success depends on sales.
I’m happy to share my argument for why this is true: If there’s not enough revenue, then any project is unsustainable regardless of its artistic purity. The best art is ingenious, honest… and profitable.
The challenge is getting paid enough to make it worth the effort while not pricing yourself our of the market. If you can make money doing your art, your creative endeavours become more and more exciting. So this post is about pricing your art.
Why talk about pricing on a productivity blog?
If the price is wrong, the project won’t make money, and the art is financially unsustainable. The more income we receive from art, the more time and energy we can devote to it. We expect to make more money when we are more productive, but more revenue also opens new channels for productivity. More money means more resources to do the art you envision.
Don’t give away your power with a premature price quote
I’ll start by sharing my own failure in pricing my design work…
I used to make up a price while talking to a potential client about a job. Excited to get new business, I wanted to please the client and close the deal fast. I plucked a number out of the air trying to impress the prospect in front of me. A recipe for disaster. My new-found client quickly became a problem that cost me money. I would get angry and resent the client for taking advantage of me, but really I had no one to blame but myself.
I was giving away all my power by committing to a price before I thoroughly understood the project. Taking time to think though pricing helped me develop my creative business into a career. It forced me to consider all the factors involved, how to earn profit, and what dangers to avoid.
Price your work ahead of time so that you’re not on the spot trying to pull a dollar value out of the air. If it’s a custom project, give yourself enough time to prepare a formal quote for your client.
Price clarity creates client confidence
Knowing the price you charge for your work is critical to being paid fairly. Being vague about pricing tells the prospect that you don’t consider your creative work a business, and you don’t believe in its worth. It invites haggling because a client can see that you’re struggling to find a price.
Be able to state your base rate when asked. This might be an hourly rate or a minimum project rate. Your base rate allows the client to respond to your pricing before you do a lot of work quoting. Let them know that you’ll take a few days to prepare a quote for them that factors in the custom deliverables of their project.
Price yourself out of work
What if you raised your prices and some clients stopped working with you?
That would be a good thing. We ought to be pricing yourself out of some jobs. I don’t have the resources to take every project that comes my way, and neither do you. Price establishes income, but it also helps us focus our attention on the right clients. The ones that pay fairly and appreciate our work.
With more experience we outgrow smaller projects and difficult clients. I like to pass the work that I’m not going to do to other people I know that are just starting out, provided that they do good work. The clients appreciate me replacing myself and so do my colleagues who get their business.
Never compete on price
There are commodity products, like groceries, that we are happy to comparison shop for. A can of soup is almost the same from one brand to the next so we choose the least expensive one. But unless you’re Andy Warhol, a can of soup is not art.
Creativity is unique from one artist to the next. Your unique value as an artist means that you never have to compete on price. I’m not saying that price isn’t important to the client. Just that a client will pay more for the unique value you bring.
The corollary is that if they aren’t paying, it’s because they aren’t seeing your unique value. That’s a marketing issue. Let’s get our prices worked out first, and figure out how to market our work another time.
Seven price calculation strategies
Below are seven models to help you with pricing. Work through at least a couple of them to find a price-point that is right for you and your clients.
1. Price based on costs
It’s important to know your costs so you are sure you not losing money. Here’s what to do to calculate your costs:
- Make a complete list of all your expenses per product or event.
- Organize the list into two categories: fixed costs and variable costs:
- Fixed costs are expenses that are always the same, like a sound man who charges you a flat fee for each show, or your per-unit printing costs for each book you self-publish.
- Variable costs are the items that change, such as the amount of gas it takes to drive to the gig, or, the shipping costs of each book sold.
- Once you have all your costs listed, add them up.
Your total cost number is the amount you have to earn to break even. It’s important to know this because this is the real number you need to earn to work for free. If you are making less than your costs, you are not working for free. You are paying to work.
To “keystone” means the seller doubles their wholesale price. You can assume that if you are paying $100 for a product in a retail store, the retailer got it for $50, and their supplier paid $25 from a manufacturer who’s cost to make it was $12.50. See how the price doubles each time the product gets moved from person to person? That’s keystoning.
Keystoning doesn’t apply easily in art. If you are selling a book and it costs you $5 to print it, you could sell it for $10, but that doesn’t account for your time and effort, which is much more valuable to the reader than the printing.
Where keystoning is extremely useful however, is for figuring out your personal dollar value in your creative process. Ask yourself the question, “If I were to pay someone else to do everything that needs to be done to get this art to my audience, how much would that cost?”
Let’s say you hired someone else to do everything you do:
- paint your painting for you
- perform at your show
- administration, like phone calls
- book shows
- manage your online networking
- design your posters
- etc. etc. etc.
Add it up and divide the total cost by the quantity of items or shows you produce. Now double that number and you have your keystone retail price. The keystone price includes your costs for outsourcing all the work involved, plus profits (50% costs/50% profits). This number may surprise you. It’s likely a lot more than you are currently charging.
Your keystone price is a great goal to strive for. If you can sell your art at this amount, your are ready for huge growth, and it’s time to start outsourcing all the tasks that distract you from your creative process and focus on what you do best. Your art.
3. Market Value
It’s good to know the standard price for similar art. If everyone else is charging $500 to do what you do, then you’ll likely experience some pressure to keep your price under $500. But the great thing about art, is that we’re not competing on price as I mentioned earlier. The more your audience gets to know your unique value, the more you can charge. Market value is a benchmark. Not a limit.
Do some market research to find out what clients are paying for similar work to yours.
4. Price based on perceived value
People will pay for the value of the intellectual and emotional experience that your art provides: the perceived value. Experienced as a connection they have made between your art and a moment in their lives, or, the relationship they experience between you and themselves.
If you have a following, then try marketing to them and increase the perceived value of some of your work. Offer a limited edition piece that only fans can buy. Factors like exclusivity and urgency increase the perceived value.
5. Price as marketing
You might realize that you can’t always sell your art for what you think it’s really worth. At least not yet. Possibly what’s missing is a large enough fan base. So for now, you plan to work for less to build your audience. As your audience grows, you’ll add higher price points.
It sounds like a good idea, but be careful with pricing yourself too low to start with. You’re establishing your worth in the minds of your audience. You’ll likely lose your fan base if you later increase the price of the same type of product dramatically.
Consider stating the full price of the work you are doing. Make it clear that you are offering a great deal for a limited time. When you raise your prices, you are actually just removing the discount, and your future value is already in place in the minds of your audience because of the discounted work you have done early on.
Using your discounted price as a marketing tool should always have a benefit. For example, growing your audience by trading a free gift for them for their contact info. The potential for future engagement justifies a working for free or a lower price now.
6. Price based on target income
This one is great for checking to see if your income goals are realistic based on what you are selling your art for. Especially if you are thinking about quitting your day-job and starting a full-time art career. We’re going to work backwards from your income goal to figure out how much you need to charge for each artistic work you create. Here’s the calculation…
- How much money do you want to earn? (Factor in taxes, insurance, and any other deduction that an employer would take care of.) That number is your “target income“.
- How many hours does is take to create and sell your art? (Factor in the art that didn’t sell, so if it took you 40 hours to make three paintings and you only sold one, then it took you 40 hours to make that one painting.) That number is your “product development time“.
- Once you are a full-time artist, how many hours per year will you give to producing your art? Start with a weekly number. Keep in mind that you’ll need time each week for administration and marketing. Don’t count that time in this number. This number is for your hours spent on your art. Multiply this number by the amount of weeks you will work each year. That big number is your “annual work hours“.
- How many art pieces will you produce per year? Divide your product development time (#2) into your annual work hours (#3). This number represents the pieces you will create in a year, and is your “annual product volume“.
- Calculate your price per piece. Divide your target income (#1) by your annual product volume (#4). This number is the average price to charge for your art to earn your target income.
Some sample numbers…
- How much money do you want to earn? $40,000
- How many hours does is take to create and sell your art? 40 hours per piece/event
- How many hours per year will you give to producing your art? 1,500 hours (30 hours per week x 50 weeks)
- How many art pieces will you produce per year? 37.5
- Calculate your price per piece. $1067
The result is essentially a bare-bones business plan. The person in the example will work 30 hours a week on producing art, make 37 pieces, each worth just over $1000, which will earn him about $40,000 a year before taxes and expenses.
7. Blink rate
My friend James started a consulting practice. He needed to know the right amount to charge for his time. He picked a fairly low hourly rate to start with. Each time he met a new prospect he would raise his rate by $5. He was gauging their reaction.
At first no one questioned his price. It was too low.
After 10 conversation, he had raised his rate 10x for a total increase of $50. Still no complaints about price. So he kept raising his rate.
After 15 conversations, he had raised his price by $75, and some people would say that his rate was on the high side.
After 25 conversations, $125 above his price, he determined his blink rate!
Blink rate is the price that is so high that people literally blink repeatedly in shock when they hear it.
James’ goal was to identify the different types of reaction at different price points. He identified the following:
- The range of rates that no one would complain about.
- The rate at which most people would not complain, but some would.
- The rate at which many would say that he was pricey.
- His blink rate, which would cause a physical reaction from anyone who heard it because it was so high.
He settled on #2 which was acceptable to most clients.
Putting it all together
By experimenting with each of these models, you’ll get a snapshot of your bare minimum price (cost pricing), your pricing goals for a thriving business (keystoning), your place in your market (market value), increased pricing opportunities (perceived value), goal-based pricing (target income), and pricing ranges (blink rate).
A pricing sweet-spot is somewhere in the middle, and hopefully by approaching price from these different models, you find new insight to help you confidently know the dollar value for your work.