Art Pricing II – Art Business Decisions

Know your expenses

If your art is your business, you need to have a good overview of your expenses. By knowing that, you can know how much you need to make to breakeven and to make a profit.

In part 1 of this series I talked about a base price. That base price is not chosen randomly. Based on your expenses you need to figure out how much you need to make to cover those expenses and then some more for profit.

For me, expenses include paying for my domain name, webhosting, email service to use that domain name, art materials, marketing materials like business cards and event materials (canopy, banners etc), tools, insurance, admin etc.

Knowing what that is, you can figure out, if I make $X on a painting, how many should I sell in a year to cover my expenses. More strategically: How many do I need to sell to not just make breakeven, but to make whatever profit I want to make?

Creating income

You could gamble on selling one original painting for $50,000 if that’s your yearly goal, but more realistically you figure out how many pieces you can realistically paint in a year. How many you expect to sell within a year. How much should you then get for your paintings? That will get you closer to that base price. Over that you need to add any cost of materials, packaging and maybe commission. How does the price look now? Would your customer pay that or do you need to adjust? In that case, do you need to increase yearly production to be able produce and sell more? How can you do that without giving up quality? Do you need to add other revenue streams? If so how and what?

These are all important business decisions. It’s an ongoing process called running your business. There is never a single, final answer.

Choosing creative freedom over business

This may not be how you envisaged being an artist. Maybe you’re more idealistic, maybe you just want to create your art, regardless of cost, profit and demand. That’s OK, but then you need to be prepared to supplement your art career with other income streams (a different full-time job). There’s nothing wrong with that. In fact, that’s how a lot of the most progressive artwork is produced, sometimes with dramatic success, far beyond those of us who try to immediately run art as a business.

I’ve read a few times that if you do that, ‘art is just your hobby’, I disagree, you can be a professional artist and still supplement your income with other jobs. I think most artists do one way or another.

This is the great thing about art, the freedom to be an artist however you want. In fact, the way many folks in the corporate world often look with jealousy at my freedom as a commercially minded artist, I feel a pang of jealousy when I meet the artist who truly creates what he or she wants, without the constraint of commerce, especially when they are as successful as I dream to be….

In part III of this series I will talk about how I price my commissioned airbrush and custom paint jobs…

 

Pricing Art I – Paintings

Pricing your paintings

What is a good strategy for pricing my paintings? The question of all questions for artists. I’ll start with one of the wisest lessons my dad taught me when I started working with him:

“In marketing, pricing is not based on the manufacturing cost of an item, but it’s driven by whatever the fool is willing to pay for it…”

 I can prove this with wo words: Fidget Spinner. ‘Nuf said.

The Banksy factor

On my last trip home to Holland I visited a Banksy exhibit at the Moco museum opposite the Rijksmuseum on the Museum Square.

Some Banksy pieces have sold for over $1M, yet my guess is that in terms of time to create the painting, making the stencils and doing some research may have taken him a day or so and actually spraying the painting (much) less than 1 hour. Material cost is minimal. Maybe I underestimate or overestimate, only Banksy knows. Point is that there are plenty of paintings by well-known artists, that took months to complete, but fetch less or the same price at Sotheby’s than a stenciled and sprayed piece that could be finished in time before the cops catch you putting it up on a wall. Time and materials are not necessarily a guideline for the value of a painting.

The pricing of a Banksy is not representative for most artists.

Who do you sell to?

When you start out as an artist, many seasoned artists will tell you not to underprice your work. They want to make sure that the value of art is not spoiled by low cost pieces, but I’ve always wondered if that is such important advice. Who buys a piece of art, because it’s cheap or on price alone? When you’re at a point that you’re selling originals to collectors, I’m pretty sure your prices will reflect that. Most of us are not.

The question is, who do you sell to? Art collectors are known to value certain pieces higher and spend more, but how do you get their attention? If you sell to the general public like many of us artists, most customers have a much tighter budget. They are often more inclined to pay smaller amounts for a nice art print. In that respect, you also compete with the commercial stuff you can buy at home stores. For someone who’s just looking for something pretty to put on the wall in the kitchen, a painting of several thousand dollars just isn’t in the budget.

Commissions and other cost

Another issue is the cost of exhibiting your work. An online gallery like Saatchiart.com may take a 35% commission and require you to pay for packaging for shipping. A lot of brick & mortar galleries will take 50-60% commission. Even in the cooperative gallery I hang my stuff I pay a monthly amount of $65 and 20% admin cost for each sale. You don’t want to be yoyo-ing with your prices. To your customers it looks like you make it up as you go along, but it could also severely piss off the dude who paid 50% more, because he bought your piece in a gallery vs straight from the trunk of your car. So for your original pieces you need to consider the amount you are willing to take for it (base price) and then add the possible commission and any other cost to it (50%). That may take you past the amount you think ‘the fool’ – my dad talked about – will pay for it, so you may need to adjust that down or perhaps the higher price is the correct value and you were actually pricing your work too low…

Establishing base pricing

For the base price, I do have a ‘system’. I figured out what I would be willing to take for one of my paintings. This shouldn’t be some gut feeling amount, but a careful consideration what you need to make to give your business enough cash flow to flourish (your nut). I then take the surface dimensions of that painting (length x width). I divided that base price by the square inch surface of the painting. Now I have a per square inch base price. Every subsequent painting I make I work out a base price based on its size. I do price differently for oil paintings vs. acrylics, because I’ve noticed that many galleries price acrylic paintings lower than oil paintings. My price per square inch is higher for oil paintings than acrylics.

So now that I know my base price and I figure out any additional cost and commission I think I have a pretty good method to price my work by. Now let’s hope someone finds it who loves it enough to pay the full price for it…

One important note to make: I don’t consider art buyers fools, and neither did my dad. The person who buys art is paying a carefully calculated price for a handmade piece of art that they can enjoy lifelong and by generations to come.