How to Price Art – The Not-So-Magic Formula

When I started exhibiting, I attended classes, talks, read books, and spoke to countless artists & galleries owners about pricing.  I tried all kinds of ways to price my work. Mostly I just guessed.  It was stressful.  I had no confidence in my pricing.  I was changing pricing too frequently.  I second guessed myself at every turn.  It was horrible.  Sound familiar?

This is actually my second post on the subject.  After 8 years, I had an epiphany in the form of Marcus Lemonis.  I realized I needed to reconsider how to price art – my art – which I thought I was good at!  It completely changed my outlook on my career.

The good part is that my formula is useful no matter where you are in your career or what kind of artist you are (gallery or self-produced).

How to Price Art

Let’s start with what you need…..

Step 1:  Determine Your Costs
  • Determine what it cost you to make the piece (you do this for every single piece, no exception)
  • Determine what the maximum gallery commission you’re willing to pay is (for me that’s 30%)
Step 2:  Profit
  • Determine a minimum amount of profit you want to make on a piece (for me that’s 45%).  This can & will change so don’t sweat it too much.
Step 3:  Final Price
  • The first step to determining a final price is to guess at one.  No seriously.  Just stick with me……..  You need to work backwards from the final price deducting out the previous steps, then adjust until you’re happy.  This step is just to prepare you.  One you have the your costs & profit amount, then I can explain the formula.

The Basic Gist:

Let’s say I just created a new piece of art.  It cost me $10 to make.  It’s 8″ x 10″ so I’m thinking I should sell it for $50.  It’s a decent price. Sounds good right?  Not so fast!

We have to work backwards from the $50 price.  If I sold the piece in a gallery they would take 30% of price, or $15.  From there I have to to deduct what it actually cost me to create the piece which was $10.

$50 – $15 – $10 = $25

$25 is the total amount of profit I make off the piece if I sold it for $50.  That makes my profit percentage 50%, which is above my target of a a 45% minimum. That doesn’t just sound good, it is good!  Keep in mind I picked a good price.  I wasn’t always good at picking ones that were good after I did the actual math.

How to Price Art

The Not-So-Magic Formula

I have an Excel workbook containing numerous spreadsheets that make this a lot easier than it sounds.  If you don’t have Excel, any spreadsheet tool will work fine (i.e. Open Office, Numbers, etc).

In my spreadsheet called PRICING, I have 6 basic columns:  Title, Price, Cost, Commission, Profit, Profit Percentage

Column A is Title.  All my currently available art lives on this spreadsheet so the title has to be first.  No formulas on this column.

Column B is Price.  When I start the process, I guess at this first & then adjust it until the profit percentage is right. There are no formulas on this column.

Column C is Cost.  This number is calculated on a different sheet & manually entered into this column.  Again, no formula.

Column D is Commission.  The formula is B1*0.3 (price column multiplied by 30%)

Column E is Profit.  The formula is B1-(C1+D1) which is the Price minus the combination of the Cost & the gallery Commission.  This tells me how much profit, in dollars, I will make on the piece.

Column F is Profit Percentage.  The formula is E1/B1 (Profit divided by Price).

Note: the ‘1′ after each letter represents the row number.  You can copy/paste formulas from one row to the next & your spreadsheet will automagically correct the row numbers.


How to Price Art

The Breakdown

Cost

The first spreadsheet in my full workbook is called “Cost”.  There’s nothing fancy to this.  I simply put the title of my new piece followed by each part of that piece: canvas, type of paint, frame, hanging hardware, adhesive, protective coating, printing – literally anything I used to create the piece.  In the column next to that list is how much each of those things cost.  In the case of paint & other such consumables, I guesstimate (based on what a whole tube cost vs. how much of it I actually used).  I use the “autosum” feature to add that up.  That tells me what it cost me to make it.

How to Price Art

You have other costs, like the rent you pay on your studio, photography costs, business cards, website, etc.  I don’t account for those on individual pieces which is why the profit percentage is important.  The profit is technically my profit per piece.  From that amount I deduct all the larger expenses like studio rent, advertising, promotional costs, etc.  If your profit percentage is too low, you’ll find yourself operating at a loss year after year.

How to Price Art

Average Gallery Commission

I don’t show my work at a lot of galleries, by choice.  I refuse to show at any gallery that charges more than 30% commission.  Now I could write a whole post on that, but my reasons aren’t important here.  What’s important is that you set a ceiling on this.  Maybe you’re willing, or have to, pay 40% or 50%.  Setting a ceiling is important for a lot of reasons but most importantly is the math in your pricing calculations.

You may live in an area where there are few galleries which means you don’t get the luxury of declaring “I won’t pay a gallery more than 30%” like I do.  If you aren’t actively exhibiting yet, do some research on what the average commission is.  Don’t just guess!

NOTE:  I rarely show in galleries but I still factor this in.  I sell on Etsy from time to time.  Shipping is always a pain in the ass.  You either overcharge or undercharge.  Keeping this 30% in place means I don’t have to worry because the undercharge would be covered by this fee.  I sell most of my work at Artomatic which takes ZERO commission.  That means when I move a piece from my PRICES spreadsheet to my SOLD spreadsheet, I put a bit fat zero in place of the formula for the commission.  This isn’t a bad thing.  Making more on pieces I sell at Artomatic or Etsy means, at the end of the year, I’m still OK financially.  It also means my pricing is consistent. If they see a piece for $175 at Artomatic, it’s $175 at Etsy, and it’s $175 at Gallery ABC.  

How to Price Art

Profit

….is not a dirty word; profit pays the bills.  The more the better…..within limits.  Having a target profit is important for understanding how much you’ll make selling art vs. how much your art business is costing you.  Too many artists wing it.  They sell a few pieces & think they’re doing good.  Selling art isn’t doing good.  Selling art & making enough money to continue to create art, that’s doing good.

How to Price Art

Profit Percentage

This is a powerful number.  It gives you a metric for determining if you’ll be in a good place at the end of the year.  Being an artist costs money above & beyond art supplies: entry fees, web hosting, business cards, etc.  If you’re only making 20% per piece, you’re probably not covering all those other expenses.  Having a quick, visual indicator of your profit tells you whether or not the end of the year will be a good one or a bad one.

I set a minimum of 45%.  That doesn’t mean I never go below that.  That also doesn’t mean I never go above that, because I do try to go above that.  Where you start depends on where you are in your career.  In the early years, you may not be able to get 45%.  As you advance, you may be able to increase this.  Sometimes I have to go lower because I decided to buy a more expensive frame or because I just need the space in my studio & need to clear inventory.  There are legitimate reasons.  Just make sure there are legitimate reasons, not excuses.

How to Price Art

Notes on Your Final Price

I’m not a gallery artist. his is exactly how I price my art.  If you are a gallery artist, the formula is a starting point.  If you’re trying to work your way into better & better galleries (which is the actual goal of a gallery artist), you may not get a lot of input into pricing.  The gallery will tell you what they think they can sell your work at.  If you follow their advice, do so with caution.  If you move to a different area, you may not be able to sell art at the same price.  The Art World frowns upon lowering your prices, regardless of circumstance, so keep that in mind.

Regardless of what kind of artist you are, too many artists adjust their prices per show and that’s stupid.  Yes, prices sometimes have to be adjusted, don’t do that until after a piece has been exhibited a few times.  Otherwise your potential buyers will constantly wait for a better price which may or may not come.

I recently exhibited work with a photographer who priced his pieces in that show at $250.  The previous show they were $425.  He said the next show he was going to try $800.  ????  All of these shows were in the same town!  No wonder he had problems selling, everyone was waiting to see what the next price level would be!!  No one wants to overpay.  Set a price & keep it there until you’re sure you messed up (and one single show is not proof).  

Size Matters

A piece that measures 5″ x 7″ should not cost the same as a piece that is 16″ x 20″.  Bigger generally equals more expensive.  Be consistent in this.  I now price all of my framed 16″ x 20″ pieces at $175.   Sometimes that means I get 80% profit & other times I get 40%.  It depends on the frame cost.  However, in the eyes of my clients the prices make sense.  No one is standing in front of 3 piece of the exact same size & medium wondering why one is $20 more than the others.  Almost no one will ask you that question though, keep that in mind.  They just don’t buy.

A Question of Time

Some artists charge for their time. If you do, you can add a line item under the pieces cost (not on the main spreadsheet, but the one just for cost calculating).  If your art is labor intensive, then consider charging for your time.  Keep in mind that you don’t get to charge $100/hour right off the bat.  I mean, you could, but you’ll never sell anything.

 


How to Price ArtHow I Price My Art


How to Price Art

Is This Really a Big Deal??

Yes!  As a former small business owner, yes, this is important.   I understood pricing my old business & used that as a basis for pricing my art.  I knew from talking to other artists that I had a much better handle on pricing than any artist I had met (and I’ve met hundreds due to Artomatic).  There was still something wrong.  I still felt I was missing something important….

Then I started watching The Profit & realized I had no idea what my profit percentage was.  I added the formula to my spreadsheet, sat back, & spent some time being depressed.  I had underpriced a lot of my pieces, even for me.  The amount of money I made on any given piece seemed good enough.  Except it wasn’t good enough.  Not by a long shot.  I realized I was making only 20-30% on a lot of pieces (not all but way too many).  I can’t rent a real studio when I only make 20% per piece!

This even caused me to retire several themes & mediums. I realized I had thousands of dollars of ‘stuff’ in my studio, some of it was there for years unused (nature of the beast as they say).  I had invested so much into themes I could barely sell for more than 20% profit.  Madness!  I sold off my inventory (at a loss) and refocused my efforts.  I’m now more creative, productive, and profitable!

The profit percentage line cannot be overlooked!!

Artists Are Small Business Owners

The moment you put a price tag on a piece of your art, you’re a small business owner.  When you act like a small business owner, and not “just an artist,” you get a much clearer sense of what you should and should not be doing:

  • Maybe you could quit your day job if you just tweaked your pricing a bit.
  • Perhaps you need to shop around for your frames a bit more now that you see just how much they’re costing you.
  • Maybe you could afford that new easel or class or whatever if you just charged a bit more.
  • Maybe you work in multiple mediums & themes like I did…..and maybe, like me, you shouldn’t be.
  • Perhaps you need to think a bit more about paying yet another round of entry fees to that gallery that has never accepted your work.

Maybe you feel like you’re making OK money on your art.  But guess what?  Feelings are liars.  Know your numbers and know you’re making OK money on your art!

A Pricing Formula Protects Agains Scams 

Having set pricing formulas can also save you from getting screwed by the art world.  Too often artists go along with whatever the gallery wants.  I’ve heard that some galleries tell artists that they may have to discount the work to sell it.  But if they do, that discount is deducted, entirely, from the artist’s commission.  If they give the client a 20% discount, the artist only gets 30% commission instead of 50% (assuming a 50/50 split without a discount).  First, I’d walk the moment a gallery suggested I bear the brunt of their “discount” entirely.  But the formula makes sure I do because my profit percentage would likely fall below my target.  I’m not a charity any more than the gallery is.  If they can’t sell my work without a discount, they’re bad at their jobs.  Time to find a new gallery!

The forumla also protects you against “donating” your art.  Exposure is a myth.  Any charity should give at least some of the proceeds to the artist.  It cost you something to make it.  When you see pieces show up with negative profits (meaning you lost money because you gave it away), you’ll think twice before mindlessly agreeing to another charity request.

How to Price Art

No You Didn’t Learn This In Art School

I didn’t either.  In fact, most of my professors scoffed at the idea of selling art.  Those that didn’t insisted the Art World handles that.  That’s dangerous.  That’s why they have day jobs.  The Art World doesn’t have an artist’s best interest at heart.  It uses artists to the benefit of wealthy collectors.

You can either pretend that’s not true & hope the Magic Art Fairy comes & makes you successful.  Or.  You can embrace your new status as a business owner & learn how businesses function.  You don’t need to go to college, just a bit of reading every now & then. Having a formula is business 101.  See?  You just read an article on how to price art so you’re already on your way. Congrats!


How to Price Art