Saturday, December 30, 2006

How much to charge??

There is nothing that puts more fear in the heart of someone starting out selling their work than to begin to figure out what to charge for their work. And it is hard to find good advice. But in the end, that may be because only you can know what you put into the work, and what you want or need to get back financially.

I find that there is no simple answer to the question either. It needs to be approached from many angles. You need to fully assess your costs....labor, materials, packaging, overhead, etc....before you can know how much you need to make. And once you do the math, this will only give you a starting point to establish a wholesale price. This is probably where many beginners go wrong. They will take this wholesale price, and sell their product at a retail show for a wholesale cost. Thngs may seem to be going swimmingly at first. Sales are brisk. But after awhile, they may start to wonder why they are working so hard, but making so little. They may be covering their expenses, but not much more. Or, a shop or gallery approaches them about selling their work, and lo and behold, there is no margin in the current price structure for either the shop or the artist to make any money.

There is a myth that you can't make enough money selling your work wholesale, and that you are better off selling it retail...because you will get a higher price for your work. The reason it is a myth, is that these calculations do not factor in the time and expense associated with selling your work retail. To do a show, you will spend at least a day packing up and organizing for the show. Then you may have to travel several hours or more to the show, and spend several more hours setting up your booth and display. The next day or several days will be spent selling. And then everything needs to be packed up again, brought home, and unpacked and organized again. A three day show may consume close to a week's worth of time out of your studio. Can you pay yourself for this time if you are selling your work at wholesale prices? Or are you assuming you don't "need" to get paid for this time? Retail shows can be a valuable learning ground to assess your work and people's reactions to your work. But you need to price your work appropriately.

Once you have begun to understand the money you "need" to make, it is necessary to look at the market from the other direction and figure out how much people will pay for your work. If pricing is part art and part science, this is the art. Gut feel and intuition are as effective as anything else. Polymer clay artist Elise Winters had an interesting perspective on pricing in an interview with Alison Lee in a Craftcast podcast (September 11, 2006)., Elise talked about how part of her pricing calculation is at what price she is willing to part with a piece. Gallery owner, and former ceramic artist, Nancy Markoe recommends getting together a group of friends, who might be representative of your customers. Ask them for pricing suggestions. Or if you belong to an artist's guild, perhaps you can do an anonymous pricing exercise.

All of these will give you a ballpark idea of what the market might bear for your work. And you can look and see what work that might compare to what your own is selling for. Then you need to look at your costs, and any expected mark-up from wholesale (ranges from 2 x's to 3 x's), and determine if you have a viable product. When in doubt, you might be better off underpricing by a bit if you can manage it. It is easier to move prices up than down. That may seem counter-intuitive. But the craft market is different than Walmart. There is a limited supply of what you produce. If demand exceeds supply, there is not always a way to change the balance other than by increasing the price.

There is no doubt that the hardest decision you will make at first is how much to charge for your work. You will likely agonize over it. With three years into this process, I wish I could say I price my work with confidence. But no. It is always a challenge to find the right balance, and doubt is always around the corner. I would not be surprised if I felt the same in five or ten years time. The only thing that is clearer to me, is just how complex this issue can be.

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