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Pricing Your Work - What is Overhead?

During the Professional Development Seminar program titled, Not Just Another Pricing Lecture: A Dialog About Pricing Your Work, the subject of overhead came up, over and over when discussing how to price your work. 

During the discussion with the audience, there seemed to be some confusion about what is included as an expense under the term "overhead". Since most pricing calculations need to include "overhead" along with labor and materials to figure out the wholesale price, this is a significant factor.

Harriete Estel Berman flattening tins in her studio. Most artists and makers understand that their wholesale price needs to include overhead but seem to "forget" all the overhead costs that are less obvious. This is especially true if they are still working in their kitchen, extra bedroom, garage, or basement. Yes, in that case, their overhead is less than if they rented a studio or storefront, but they should still include something in their pricing structure for future rent, utilities, etc. to create a realistic pricing structure. If you don't do this, your prices will be artificially low and you will never be able to put money aside so someday they can move out of the kitchen into a more business-like setting.

Harriete Estel Berman looking through her wall of tins. Here is a suggested list of expense items that are often overlooked but should be included in Overhead.  It is not meant to be comprehensive, but to help artists and makers realize that "yes", they do have overhead expenses.

Rent for your studio (if you don't have a studio, save money for your future studio.)

Office expenses: printer, printer cartridge, paper, computer, software, pens, magic markers, tape, boxes, stamps, mailing envelopes, thumb drives, stationery.

Utilities: electricity, water, heat, telephone (business line,) internet access, trash, recycling.

Harriete Estel Berman working in the studio in front of her wall of tins. Insurance: business insurance, Workman's Compensation (if you have employees.)

Depreciation on equipment either for your studio, shop, or office. (This may include your camera, photography equipment, or computer.)

Shop/studio supplies  - Generally these are items that you need to fabricate your work such as brushes, drill bits, or gloves that do not go directly into a finished piece of art or craft, but are necessary expenses to keep your shop/studio running to produce new work.

Advertising: Photography, postcards, business cards, advertising,  fees for online social networking sites.

Studio benches in the studio of Harriete Estel Berman. Travel expenses: Keep track of your mileage, hotel, airfare, conference registration, and food.  (The I.R.S. allows a fixed amount per mile that changes every year. Look online for an update.)

Exhibition and Shows: Application fees, booth fees, salary for an assistant, lights, shipping (work to shows.)

Professional Expenses: Dues, Membership, classes, magazines, books, accountant, lawyer.

Taxes: Social Security and Medicare for your employees, Sales taxes, etc.

Share some of your overhead expenses with others and list them as comments.

Next post: Pricing Your Work - Overhead Labor and Manufacturing Labor.

...there is a difference.

This post was updated on January 15, 2022.