In response to the previous post titled, "Pricing Your Work - Without Ripping Yourself Off?" Kathryn Faulker wrote in a comment: "Thanks Harriete for all this great information. I realize that I've never even considered overhead when pricing my work. A question: Once the new pricing is figured out, should I re-price the work that's already in galleries?"
Good question Kathryn, but I don't think there are any easy answers and a ton more questions.
- Was your work selling well at its current price?
- Was it within a price range at the gallery/store such that raising the price will still fit the marketplace?
- How much were you considering raising your price?
- What is the perceived value of your work? (Listen to the podcast for a discussion on perceived value.)
Unless you are really in hot demand, I can't recommend changing your prices overnight. It wouldn't be prudent.
But now that your consciousness has been raised, you should begin to adjust your future pricing formula to include overhead expenses and overhead labor. Perhaps you can't leap into the new pricing, but you can start shifting in that direction.
In the next five days,
1) Can you add up your overhead expenses for the past year or some time period?
2) Likewise, add up your overhead labor. How many hours you spend each week, cleaning your studio, preparing materials, working at your desk, selling at a show? Start coming up with a estimate for how much overhead labor is involved in studio maintenance. How much time is spent selling your work whether online, at a show, or managing your inventory and shipping to a gallery.
3) Then, can you rationally allocate the overhead to specific artworks? An example might be the time it takes to photograph each piece, including PhotoShop the image. If you have your work professionally photographed, then you have an out of pocket overhead expense when paying your photographer for his/her time.
Next week, I am going to suggest a couple of ways to divide up your overhead so you can add this to either each piece/item/artwork or your hourly wage.
Including the full overhead costs presents a real dilemma. In my opinion, most of the work out there in the marketplace, whether online or at stores/galleries, is under priced....especially in comparison to a business-like pricing formula. However, the current economy makes raising our prices rather difficult. Pricing art and craft is also dependent on perceived value and reputation, both nebulous factors.
One other major factor is that too many artists and crafts are confusing "cash flow" or "gross revenue" with "net profit." Listen to the PowerPoint presentation and the podcast. Francesca Vitali says she arrives at a show (with no money) and leaves with cash in her pocket. The fact was that her work was seriously under priced because she included no overhead expenses in her formula. The error was compounded because her pricing formula did not pay her a high enough hourly wage.
Stay tuned for further explanation.
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