August 29, 2005

[-- My thoughts and prayers are with everyone who is in the path of Hurricane Katrina.--]

Two weeks ago I started a dialogue about pricing. If you missed that issue, you can read it by clicking here.

I think I could cover this topic every week and still not have all the right answers for you. There are just too many variables to have a formula that works for everyone.

BUT . . . There is a formula. I honestly can't say I know of anyone who uses it, but I think it's valuable to try it at least once. Without doing it, you might continue to operate without knowing where all your money is going. It's called "Actual Costs Pricing" and goes something like this*:

Step 1: Keep track of overhead costs.
Studio rent or mortgage Insurance Advertising Utilities Professional fees Transportation	Dues & publications Postage Photography Materials Education

Step 2: Figure out overhead costs per each work.  To be calculated on an annual basis:
Overhead Costs ÷ Number of Works = Cost of Overhead per Work

Step 3: Calculate cost of individual piece. 
Sales Price = Cost of Overhead per Work + Labor + 10% profit margin + Commission + Framing

Step 4: Evaluate
Are you pricing so that you can make a living? Or are you giving your art away? Adjust your prices and get them settled so you can move on to more important things.

Here's something else to think about: Do you prefer to give your best collectors "discounts" or "savings"? See what one artist had to say and offer your comments at ArtBizBlog 

NOTE:  *This is a conflation of pricing guides by Caroll Michels and Constance Smith. Michels leaves out the 10% profit margin and framing costs in her formula, but suggests you price work at a few hundred dollars over what you actually want for it. Smith suggests you price at least one work, perhaps one you feel most strongly about, well above the others. 

• See Caroll Michels, "How to Survive and Prosper as an Artist" 
• Constance Smith, "Art Marketing 101: A Handbook for the Fine Artist"