Developing a pricing strategy in the arts requires as much art as it does arithmetic. And both parts are equally important. After all, the value of a creator’s work isn’t in the cost of the raw materials. It is in the experience, the expertise, and the skill added to those raw materials. And it is in the feelings, emotions, and experiences that affect the reader, or the viewer, or the audience member. But there is no math formula for that. There is no explicit mark-up percentage that captures emotion. It is subjective.
So, I’m giving you permission to ignore math—not forever, and not completely, but just for a bit while we talk about a pricing framework to capture more than just the math. This framework includes four components: Costs, Customers, Competition, and Competencies.
Costs are easy, so we start with them first. Calculate the actual costs—both direct and indirect—that go into making work. Direct costs may include supplies, materials, costumes, sets, equipment, payments to performers, or payments to assistants. Indirect costs are costs that are not necessarily associated with one work of art, but rather those that apply to all works. These may include studio rent, utilities, or costs to maintain a website.
The biggest issue when it comes to cost is failing to account for all the costs you actually have. We’re pretty good at estimating our direct cost—supplies, materials, and even things like rent or equipment. But we tend to be pretty bad at remembering costs like insurance, annual filing fees for the business, continuing education, and costs for research or networking. If you are going to spend time calculating costs, make sure you calculate all of them.
Costs matter. But don’t stop there. After all, arithmetic is only one part of the framework.
The next piece of the framework is customers. Think about who you serve with your work or your time. Both someone’s ability to pay and their willingness to pay are important. If you are a performer, and you serve theaters bound by union rules, the theater may only be able to pay a specific amount. If you are a visual artist who creates both original work and prints, customers who want original work may be willing and able to pay considerably more than those who favor prints.
You may have some information about what your customers are willing and able to pay already. If you’ve sold works at various price points, received feedback from gallerists, sold music or plays, or negotiated with customers for fees, all that information helps determine what customers are willing and able to pay. The more you get to know your customers, the more information you’ll have about the price range they see as reasonable. Their perspective matters because without customers, works stay in our studios.
The third piece of the framework is competition. There is something special about the arts industry: Competitors are often friends, and vice versa. Competitors provide support, encouragement, motivation to strive for excellence, and lots of great information. Think about who your customers perceive as your competitors. Who else is doing what you are doing? Or, who else is doing something similar to what you are doing?
It’s important for you to be aware of the price landscape for your competitors’ work. It will help you understand how your prices compare to others and the range of what seems reasonable in the field. That way, you can very clearly explain why your prices may be higher (or lower) than others.
And remember, your customers may not know or understand the nuances of what distinguishes your work from others—including those you may not view as your competitors, such as hobbyists or amateurs.
Of course, the reason your prices differ from others—including amateurs and hobbyists—is due to the real value you add to the work. So that means you’ll have to get really good at explaining the true value of what it is you do. And luckily, that’s the fourth (and perhaps the most important) component of the framework.
Your competencies are the traits that make you the most special, capable, qualified person to be doing what it is you do. The real value you add to the world comes through your competencies, and it is your competencies that drive the price for your work more than your costs, your customers, or your competitors.
So, focus on describing your competencies (and valuing them appropriately) as part of your pricing strategy. Some of them are related to your art: your technical skills, your training, or your experience. But others are related to your professionalism: your flexibility, your ability to meet deadlines, your ability to finish work quickly or process changes quickly. And some of them are related to you as a human: the connections you make with your customers, the way you support your competitors, or the mentoring you offer to others.
Spend some time brainstorming your own competencies; and if this is a challenge, ask your peers, mentors, or favorite customers for help. Sometimes others see the value we provide more clearly than we see our own value.
This framework comprises four components that inform the prices you set for your work or time: Know your costs (including direct and indirect costs) to make sure you are charging enough; be aware of your customer’s willingness and ability to pay for your work or time, plus any limitations they may face because of funding rules or priority constraints; be aware of what others in the field are charging and how your work is unique; and focus on describing your competencies well, emphasizing them as you build a pricing strategy that works for you.
Join author Elaine Grogan Luttrull on ArtsU Thursday, April 2, 2020 at 3:00 pm ET for a Supporting Individual Artists Coffee Chat exploring creative pricing strategies for artists. Missed the live broadcasts? Register any time for on-demand access.