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I've been asked a couple times already about how I price my commissions. Often, I think it's because I tend to price my work higher than a lot of other artists, yet people are still willing to buy. I think this journal will sum things up quite nicely (from my personal viewpoints.)
- A Brief Econ Class
- So how do I price, then?
- Frequent Concerns
My philosophy for pricing art is actually best illustrated by the opening page of this chapter of AKB49 (a manga based off of popular idol group AKB48).
So what does this mean? "Because... it really is delicious" represents the idea that something can be sold for a higher price because demand is high. Time for a quick economics class!
Basic Econ for Artists
Disclaimer: I'M NOT GOOD AT ECONOMICS! I barely know what I'm talking about mathetmatically, but theoretically, I'm fairly confident about what I'm saying. Please bear with me. If you're not a fan of graphs, math and stuff... just skip this part and go on to the next. ; v; I'll explain things again in non-mathy terms if I can.
Here are some basics we to know before we start the next part:
- If all people acted the same way (if all people are robots,) the higher the price of a good, the less people will demand that good (law of demand.)
- If all other factors remain equal (if all people act the same way,) the greater the price of an item, the more the seller will supply (law of supply)
We can't plot everyone easily on a graph, especially with no solid data, so we go with these generalized rules. I'll talk about the general trends first. And then I'll address problems such as "my art is priced really low, but it won't sell" and such.
This is a basic supply-and-demand relationship graph. As you can see, the higher the price of an object, the less demand there is for it. The cheaper the price of an object, the greater demand there is or it. Most people only price their art based on the demand line, and that is, in my personal opinion, a horrible thing to do. I'll explain why (in really cheap, easy numbers... but don't actually price your art this low, okay?)
Supply line: How many pieces an artist is willing to draw at a certain price-per-piece.
Demand line: How many pieces people are willing to buy at a certain price-per-piece.
In the graph above, Timmy has priced his art at $2. Pricing his art at $2 means demand for his art has gone up. Let's say 8 people have ordered one piece of art each from Timmy. However, Timmy only has the time, effort and funds to supply 3 pieces of art. That's a total of $6 that Timmy earns. But Timmy needs more money than that.
So what does Timmy do? Well... a lot of artists try to do this:
NOPE NOPE NOPE NOPE NOPE NOPE NOPE NOPE NOPE NOPE NOPE NOPE
A lot of artists try to up their supply to meet demand.
That works for mass-production sometimes. Manufacturing companies can do that if they continue to make a profit, with which they can use to make more products and sell more to match demand in order to make an increased profit due to increased demands. THAT'S BECAUSE THEY HAVE FACTORIES AND OTHER THINGS! GRAAAAAAH!!!!
Artists are not machines. We can only supply so much because we're human, we do all this by hand. We put our heart and soul into it. There's only so much we can supply. Trying to go beyond our means reduces the quality of life for the artist as well as, sometimes, the quality of the work the artist can supply.
So what DOES Timmy do? Well, instead of increasing supply... Timmy can decrease demand.
Timmy has raised his prices to $3.50. At this price, six people order one piece of art each. Timmy is willing to supply 6 pieces at $3.50. That's $21 compared to a mere $6 from before, just by increasing his price to the point that he is willing to draw a little more.
Where the supply and demand line intersect is called equilibrium. Equilibrium is the point at which supply perfectly meets demand. It's a hypothetical paradise that almost never gets met, but it is a point which you can guess at to maximize profits.
Timmy finds himself satisfied with his $21 and wants to try again, but school started for Timmy and he is really busy. He no longer has much time to draw, so his ability to supply something is really low.
Timmy decreases his supply. Instead of keeping his price at the same low $3.5, however, he raises the price to $5. Only 3 people order pieces and Timmy is able to supply those 3 pieces at equilibrium, earning him $15.
But why doesn't Timmy just keep his prices at $3.5? That's because art is different from the manufacturing process. For a manufacturing process a company people at an hourly wage or yearly salary to handle machinery, then lets the paid-for machines take care of the rest. However, art is a case-by-case matter. What customers are paying for is not only the art. It's for a portion of the artist's time.
Timmy has decided that school is very important, so important that he has to cut back on drawing. In this sense, every drawing he does takes away time from his schoolwork, which is important to Timmy. Timmy values the time art takes away from his schoolwork at $5/piece. The loss of potential gain from other things you can do because you chose one activity is called opportunity cost. What Timmy is charging for is the opportunity cost of the time that it takes to do his school work.
If you're busy, raise the price on your art based on how many you can do. Sure, your art might only be worth a certain amount, in your opinion, but the time you spend doing art could be spent on doing something that you deem is more important, and thus it is legitimate for you to charge a higher price for the opportunity cost. Less people will want them, but the few that order will allow you to earn a profit that better reflects the worth of your time. This reinforces that you are human and that you should be treated with respect due to your time.
In the graph above:
- A - Underpriced: you are only willing to draw a small amount of pieces at such a cheap price and demand is too high for you to meet.
- B - Equilibrium: you are drawing as many pieces as people have willingly ordered from you at the price that you've set. This is ideal.
- C - Either overpriced or you're pricing for your time: At that price, you are willing to supply a lot more art but you might not have the ability to do so. Luckily for you, because the price is higher, the demand becomes lower and you don't have to stress over having to draw so much, which can burn you out anyway. If you're overpricing, while people will complain at you a bit for it, ultimately, it's up to you.
In summary, overpricing is alright. If people don't think it's worth it, they don't have to pay for it. That's their choice. But underpricing is selling yourself short, disrespecting your own time, and really should only be done when it makes you need to price yourself low to feel comfortable/achieve a goal that can only be met by using a low cost.
How to Price Things
When pricing, these are the things you ought to keep in mind:
- Art is skilled labor. Generally, skilled labor is paid higher than unskilled labor, but due to the present situation of the economy, they are priced at roughly the same at the entry level.
- Art takes time. Your time is valuable and only you can put the estimate of a price on it. No one else should be forcing you to lower prices or raise them.
- Art is an economy. How you price your art will affect how other people price their art and how much people are willing to pay for art in general. Sell yourself short and many other artists may suffer for it.
- Sometimes, respect carries a price. People will become returning customers if you give good quality work and are nice.
- Your price rises with time, depending on your previous successes. Your past commissioners share their art with people, who see your art and watch you and may order from you in the future. With a greater audience, there is also greater demand for your work, which means you can raise your prices to control the demand to a level you can handle.
Disclaimer: All of the guidelines below are of my personal opinion. I do support it with my rationale but no one will stop you from disagreeing with them.
Guideline 1 - Don't sell anything unique (as in made from scratch, not from a base) for less than $4/400pt
$4 is less than half of hourly minimum wage in some cases, meaning that it's probably only worth selling if you can finish something in about half an hour. Less than $4 means you'll have to finish your piece in about 20-ish minutes. The question is... can you do quality work in 20 minutes? If you can, good for you. Sell away! But generally, people who can produce quality work in under 20 minutes are skilled enough that they can charge higher than $4 for a piece. Caricaturists at fairs and amusement parks charge anywhere between $10 and $40 from what I've seen, for work that they do in as little as 15 min. Most people on DA can't do that, though.
Guideline 2 - Compare your time to an hourly wage.
Minimum wage is different in every state. If the minimum wage of your state is $8/hr, then seriously, don't charge much less than $32 for something that'd take you four hours to make unless if you're in it for the learning experience rather than the money. Keep opportunity cost in mind as well. If you have other obligations you need to spend time on, raise your prices a little to lower the demand and reflect the importance of your time to you.
Guideline 3 - Follow the pattern of supply and demand.
If 10 people asked you for art last time you opened shop and you could only accept 5 pieces, raise your prices this time around to control demand. You can only finish 5 of them anyway. Sell 5 of them at a slightly higher price, then. If you keep a good rapport with your customers and create a reputation of customer satisfaction, you might see an increase in demand. Same with if you suddenly have an influx of watchers.
Guideline 4 - Be reasonable to show your respect.
This is sort of a hard one... "reasonable" is very subjective. There is indeed nothing wrong with overpricing because art is a luxury good, not a necessity, thus raising the price does not truly hurt someone's quality of life in an irreparable way. However, people may take an exorbitant price in the wrong way and see it as a statement about yourself. In a way, it is! It shows how much respect you have for your skill and your time. However, like with any self-respect, too much turns into arrogance. A $400 chibi at average skill level could be seen as a form of arrogance that repels buyers.
Guideline 5 - Try not to raise your prices more than a little at a time.
If you raise it too high, too fast, you don't get a good feel for the "inbetween range" for demand and supply and you don't get to know how many people are willing to pay for something 10% more expensive. You might miss the equilibrium point of supply and demand and end up with less customers than you are satisfied with. Having less customers often feels bad because the first thing artists tend to blame is "I'm not good enough" when sometimes, it's just too fast of a price increase and the customers aren't ready for it yet.
Guideline 6 - Try to use use just one currency.
Conversion rates with paypal are automatic. Points are spoken for. Trying to standardize a price with more than one currency can result in people trying to pay you in the currency with lower economical value, not to mention you have to be the one who bothers with the conversion and the cost of the conversion. Your art store is your domain and you pick your terms for what currency is allowed. As for the clients, well... when in Rome...
"But I have to price it low, or it won't sell," and other concerns
"I keep lowering my prices, even making things free, but no one is buying."
There are a couple of possible reasons for this.
1 - Plainly and frankly, you might just not be drawing at a level where people are willing to pay for your art, or even get your art for free. I don't mean to be rude, but if you don't want something, even if it's free, you probably won't take it simply because you don't want it.
2 - When you price your art very low, you give off the appearance that your time is cheap and that your work is cheap. This often discourages buyers who are looking for a quality product.
What to do: Price yourself reasonably for your time. Treat each customer the way you want to be treated. If you are still not selling, stop trying to sell and start working on your skill level. There's nothing bad about taking the time to get better at something. That's why people spend time and money, go to college, and then come out into the job market.
"But why should I try so hard to not underprice my art? I'm okay with underpricing my art."
Art is an economy. That means that your prices and your business affects other artists. If your art is underpriced, then someone buys from you and is satisfied with your work, that customer will tend to expect a similar cost for all other art of similar quality. Thus other artists who compete with you have a harder time selling at a price that better reflects their time.
While this is a great tactic for direct competition, when it comes to art, it's rude to your fellow artists. Commissioners do go back to the same artists for work quite often, but commissioners also like to collect various pieces of art from many different artists. If that commissioner is satisfied with your work, he may never come back for another piece because he may be going for variety. You do not gain from underpricing yourself in this situation, nor do you help your relationship with other artists.
When other artists are met with comments like "but so-and-so has around the same quality art as you and charges $20 less," it's very discouraging to them. Not to mention, when they lower their prices to accommodate the demand for cheaper artwork, they continue the effect you start. That forces the equilibrium price of a certain quality of art down into the dirt. What happens then?
The cycle repeats! Because the new equilibrium is now established, people will underprice themselves below the new equilibrium, which causes another ripple effect, then lowers the equilibrium price once again. This continues until artists are no longer charging for the worth of their time but simply to beat out competition.
This is detrimental because it often takes the quality out of the art. In order to make enough money, more art has to be created in less time. The artists aren't getting paid well enough. Clients aren't getting as good art as they can get. No one is happy. That's why underpricing can be dangerous to the art economy.
What to do: price according to the worth of your time. Don't undersell yourself. This helps establish a pure and pristine equilibrium. I understand that some people have to sell their art for a living and are desperate to charge lower to gain more profits. That's even more reason to gain a higher equilibrium then, because at equilibrium, you have optimized supply and demand in a manner that gains you the most amount of money for your time.
"How do I know when I'm underpriced?"
Sometimes, people will just tell you. One good way to tell is if you get more orders than you can handle. That's almost a surefire sign that your supply is much lower than your demand.
But other times, no matter how low you set the price, no one will buy. In that case, go back to the first box in this section and consider working on your skills and gaining more watchers who might be potential clients in the future.
"I have lots of watchers, but no one wants to buy my art."
How old are your watchers? If you have a premium, you can put out a poll with age ranges for: under 15, 16-18, 19-22, 23-28, 29-36, and 40+. See what your primary audience is from that poll.
The below are just some general trends that I've personally noticed within the audience groups. It doesn't speak at all for everyone. People are more likely to speak up if they are different from a trend than if they are the same from a trend, so looking at comments will generally give you a biased representation of the audience groups. The best thing to do is to do your own surveys, explorations and observations on this matter.
Under 15 - often no money and no paypal to use, since not old enough to work hourly yet without work permit.
16-18 - might be working part-time now. Sometimes have a bit of extra money to spend but not always.
19-22 - college age. Might be experiencing free use of money for the first time. Might also have no money to spend due to college fees. Might be working part-time or full-time, with or without extraneous money.
23-28 - often contains college graduates with not high-paying jobs but a reasonable income. Often without children, thus with extra money to spend on luxury goods.
29-36 - often a bit more money due to time spent in the work force, but also sometimes have children.
"My art isn't selling very quickly. It's been a week and only one person bought something."
Sometimes it just takes time for things to sell. Sometimes, people will comment and say "I better start saving up." It could take them a month but they often keep their promises on the matter. Give people a few days of warning before you close if that helps them get funds together.
"In my country, the minimum hourly wage is only 3USD. I'm not comfortable with asking for more than that."
And that's alright! In the end, pricing exists to protect the artist's wellbeing as well as the customer's art quality. While it does hurt other artists if many artists underprice, if artists and commissioners are educated about the art economy, you underpricing for your own comfort becomes less of an issue.
I do suggest to look up the minimum wage of the country who uses the currency you want to use for your pieces. USD is the most popular, as far as I can see, and currently, $8 is around the minimum wage for many states. If you're not comfortable with that yet, slowly raise the prices on your commissions when you can so you can gradually ease yourself into a comfort zone.
What to do: Just remember that minimum wage does not denote how much people should be paying for your art and your time. It is only a marker for entry-level artists to check the MINIMUM worth of their art and time. If you are skilled and if you are in demand, there's no reason for you to feel guilty that you are earning above the minimum wage, though it's perfectly okay if you feel that way. Think about the fact that what you do is skilled labor, and what you create make people happy, that for happiness people are willing to pay you a monetary representation of their appreciation. Eventually, you may be able to allow your clients to show their appreciation to the fullest.
Balance taking care of yourself and taking care of others. And if it doesn't work out, no big deal. As more people become educated about art economy, less artists will become influenced by the chain reaction of underpricing.
If you have any questions or comments, post below, please. I'll do my best to answer, but please keep in mind that I only speak off of my personal opinions and views! If you have other concerns that are worth featuring, I will stick them up here.