How Much Should I Price My Artwork?

When people say “I can afford this”, they are lying. If you dare to ask, someone will pay for it, but that person may not be right in front of you when you ask.

How much should my time cost? How much should my emotion cost? Does this price fair to me as a creator and fair to the consumer? As an artist, I struggle with questions like these all the time. Two years ago, I realized I have been thinking it all wrong.

When it comes to pricing a piece of work, the mathematical mind says

Price = material cost +  time spent creating it  x hourly rate  + marketing cost + length of the average sales cycle in days x how much do I spend each day on average + any cost of post-sale customer service cost

Your version of the formula may be slightly different, but the logic behind it is the same. When I use this formula, I hate myself. No matter what number I plug into the variables, I still feel I undervalue myself.

In addition to material and time cost, there is also emotional cost, which can be difficult to calculate. Supposed I have to create a design by a certain date. Because of that, I had to postpone the trip to the waterpark with my son. If I had to add a price on father & son time, that can make my work very expensive.

In 2018, I did an experiment. I was selling a draft version of my HappyOki series at an event. I didn’t make a price tag for the artwork. Instead, I ask how much each customer is willing to pay for it. If the customer thinks it is worth $1, I will happily accept it. If the customer hands me a $100, I will take it too. As a result, the highest I received on that day was $25, and the lowest was $5. I sold all 10 of them, and I got about $180. If you do the math, on average people pay $18 for a piece of paper with my design on it.

I was happy with the result, not the $180, but the assurance that I could move that product for $18/copy. With a little background story and Japanese business manner added when I greet each customer, I set the price for a slightly upgraded version at $25. The cash started to come in.

Is $25/copy a good deal as far as a business concern?

Absolutely, that’s 1000% profit margin.

Is that a good idea for me with all the time and emotion I spent on creating it?

It doesn’t matter. What matters is customers are happy to pay $25. As for me, $25 is MUCH less than the emotional cost I put in those late night hours and stress before the deadline. But in the long run, as long as there are people happy to pay me $25 for that print, I will make the money back.

The lesson I have learned is that it is NOT up to me to set the price, it is up to the market. If the price is too low, instead of raising the price or getting upset about the quality of the customer, I should find a different market. We no longer live in a world where there is only one marketplace in town and everyone nearby trades there. When my mom was 14 years old, the family budget was tight. On weekends she took a four-hour bus ride to a remote village to buy a type of locally grown fungus that is valued highly in the city. She will haul them back and sell them in the market near her house in the city.  If one day the products don’t sell well. She loses money, and then she will have to go back to that same market the next day to try again. She had no choice because that was the only market she could buy the fungus, and the only market she can sell without traveling out of town. We don’t live in that age anymore. Within clicks, we have access to so many markets, and everyone is working so hard to build more markets and bring people to them.

By the way, if you have competitions, and you fail to differentiate your products from theirs. You need to deploy other pricing strategies. I will talk about that in a later day.

My pricing strategy is to let the customer tell me how much they are willing to spend on my products, and I find a way to control cost so I can make a profit in the long run. The focus of this blog is to help you build scalable and consistent income streams so you can spend time creating while your business continues to grow. In my opinion, there is nothing scarier than creating expensive masterpieces and then spinning long sales cycle trying to move them. I can’t set my mind in creative mode if I had to worry about when my next cheque is going to come in. If I don’t like how much I am getting paid, I move on to find a better market where I feel appreciated and valued.

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Cash Flow

When I was starting out in the art world, I didn’t know how to turn my creation to cash.  I went to exhibitions, artist meetups, and art markets, hoping to see what other artists are already doing, learn about what works and what doesn’t work, and apply their successful experience to myself. During this process, I met a lot of interesting people. Seems like most artists are following a similar path. They spend a lot of time creating a masterpiece and then wait for someone who will pay a lot of money to buy it, and then repeat. I couldn’t articulate what’s wrong with that at that time, but the marketing side of my brain already told me that wasn’t something I should do.

You don’t starve yourself for days and then eat a big meal, why would you do that to your career?

You don’t starve yourself for days and then eat a big meal. It is a terrible way to live. But many artists are doing exactly that for the career, and that is a mistake for beginners. Producing and selling masterpieces are great, if you are already famous and you know there will be people who will just buy whatever you create. When you are hunting with bare hands, you don’t go for the elephant. Instead, you go for the smaller animals or the low hanging fruits to secure your food source before you aim for something bigger, and bigger, and bigger. One day you will catch the elephant. I am not suggesting artists shouldn’t set big goals. It is important to have big goals, but it is more important to develop a plan that will get you to your goal, step by step.

So what does all this have to do with cash flow?

You need to be creative to become an artist, and you need cash flow management skills to become a successful one.

A = How long you can go without income

B = How long it takes to sell your artwork

If A < B, you are in trouble.

My best seller is the Okinawa typographic map print, and it is going for $10 – $18 USD a copy depends on the store. Store managers and customers have been telling me that the price is way too low and suggest I should at least go for $25. The price hasn’t been changed since its initial release, and when I go to the market, I am the busiest guy in the block. I will be collecting $10 every two to five minutes throughout the entire event, because $10 is a great deal and an easy decision, not to mention my profit margin is north of 90%. One bill for a great product. Customers are happy, and I am happy too. The artist next to me sells $300 masterpieces. A lot of people walk by, some stop, a few ask questions, hardly a transaction. If he sells one, the profit he makes is the same as me selling for 3 hours straight, but I’d rather be getting small wins every two to five minute than waiting for that big win which may or may not come that day. The same financial outcome, completely different level of stress. That is cash flow management.

Cash flow at the beginning of your creative career

If you are starting out, like me, with little to zero capital, how do you get the ball rolling? Have a credit card? Great! Credit cards are great tools. You can spend the money to get supply and on marketing. As long as you can pay back the money within 45 days, you are safe. Many people are afraid of using credit card to fund their business. For obvious reasons.

What if I can’t pay back the money on time?

What if I ruin my credit?

90% of the things we worry about actually won’t happen.

I forget who said it, but I can relate to that in my experience. I am a big fan of Napoleon Hill’s 1930s classic THINK AND GROW RICH. To achieve success, we need to control negative self-talks and redirect all that energy to solve our current situation.

Current situation: Need capital to start my art business.

Opportunity: Credit card is available.

Condition: Don’t miss a credit card payment.

Next target: How can I pay for what I need to start my art business using a credit card without missing a due date?

Once you hit the target, find your next problem and repeat the same process.

Cash flow management will always get in your way if you don’t pay attention to it. Cash flow management is not fun for most artists. Unfortunately, if you don’t become good at it, it will push you to compromise either your income or the quality of your artwork. Cash flow problems will always be there throughout your creative career, pay attention, and learn to be good at managing it. Most importantly, don’t ignore it.

I will drill deeper on this topic later on. Today I just bring cash flow management to your attention.

Thought? Leave a comment.