How much does it cost you to make your work? What are your expenses? How much money do you need to make? How much is your time worth?
How much would someone be willing to pay for your work? Many individual artists, writers and creative ventures in general have a tendency to drastically undersell their work and their time. If you shift your perception of pricing your work as a means of making ends meet and gear it toward communicating the quality and value you offer, you may find yourself much better positioned in the local, national and global art markets. Cleveland may be a more affordable place to live than other cities, but it doesn't mean what comes out of it should be any less valued.
What happens when you undervalue yourself?
1. What have your total sales been in the past three months?
2. What has your total revenue been in the past three months (your total sales, less your fixed costs (rent, utilities, etc.) and variable costs (materials, time, rental costs, etc.)?
3. Are you underselling yourself? If you increased your prices by 10% each year, would you drastically reduce your customer base?
4. If you increased your rates even more, could you break into any new, higher-paying markets? What would they look like?
5. Could you compete in those markets? What would be your niche?
6. Could you develop or maintain some lower priced offerings of your creative practice while increasing the prices of your high-value creative works? Which ones?
7. Would the labor intensity of the low-cost, high-volume work make up for the value of keeping your prices low? Would it help or hurt your bottom line (and what does it do for your own health and well being)?
8. How much work and at what prices would you have to sell in order to make a comfortable living (based on your own definition)?
Create a pricing sheet: List every item you identified in your "products and services" list.
Assign a price to every art work or artist service you intend to offer.
Segment products by product lines. Do the prices you have listed match what the audiences for that product line?
For example, "bread and butter" items (low-cost to you, easily made items, that many people will purchase) should increase your potential profit the more you sell. "High-end" or exclusive buyers may may rely on price as an indicator of value, so it will be critical not to undersell yourself here. "Whole sale" work that you will sell in bulk to a retailer will need to allow the retailer to make a profit off their individual sales. Conversely consignment options will need to accommodate the percentage the owner will take when your art sells. Artistic services may require you to set an hourly or daily rate, or you may choose to set one fixed price for that service based on the preferences of the people hiring you.
Are other artists forced to lower their own prices to match yours? Is that good or bad? These questions relate to your direct effect on the local art/music/literary economy. By lowering your prices, others are forced to lower theirs to keep their market share. Ultimately, new customers you would have gained by reducing your price will likely go back to buying the lower-quality, lower-cost work. Likewise, increasing your prices and valuing your work may allow others to do the same. In time, you are contributing to driving the local art market up or down.
What people are willing to pay for your work is also affected by demand, or the number of people who want it and how much they want. So, for example, let's say no one else is offering anything remotely similar to what you are creating, and a ton of people want it. Demand is high. Supply–or the amount of items, seats, copies or time you are selling–is limited. Price should much higher in this case than if, for example, you have a warehouse of inventory or never-ending supply of work and only a handful of people who want to access it. This is not an excuse for giving your work away for free, but may be an opportunity for selling in bulk or at very low cost. When should you offer free goods or services?
The beauty of what you do is that your work is always one of kind. "High-quality," "creativity" and "local" are all great selling points. Everyone, however, has competition. Without diving too deep here (the Marketing session is next), there are some pricing tricks you can use to convey how you are different without lowering your rates. For example:
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