If you are following this series of articles on the basics of Art Marketing you already know that a traditional way to describe marketing is called the Four P’s. The Four P’s are: Product, Price, Place (Distribution) and Promotion. In the first article on pricing Art Marketing – The Pricing Part of the 4P’s – The Basics we took a look at the basics of pricing your art to give you some food for thought to answer the question – “What should I charge for my art?” In this article on Price we will explore various pricing strategies and how you might use them in your art business.
Your pricing strategy is not monolithic. You may have different pricing strategies for the various products you produce. These pricing strategies may vary by market served, product attributes such as size and quality or where you are in your product (art) lifecycle.
The 4 P’s Pricing is an important part in well known marketing model known as the “4 P’s”. The 4 P’s along with Pricing are:
- Product – the art you sell along with it various attributes such as style, size, quality…
- Promotion – the ways you make people aware of your art such as advertising, public relations, social media, brand…
- Placement – the way you distribute your art such as galleries, stores, agents, internet…
Here are few of the many strategies that you can use to price your work. Study them closely; some may work better than others for you.
Cost Plus Pricing
This concept is pretty simple – you price your products by adding up all of your costs labor (think about how much you want to make per hour), materials, overhead (be sure to include your rent, website expenses, phone etc.) and then add an amount for your profit. In order to make this work you need to keep records and have a good idea of the costs associated with a particular piece of work.
There are times where you may want to sell your art for less than it cost you to produce (including the cost of your time and a reasonable profit) but you should have a good reason to do so. The main reason for selling below full cost is to get a foothold in a new market or gain market awareness. Remember that you can vary your profit level, but not covering your costs is not a sustainable business model.
Depending on the type of art you produce your competition may have a large effect on what you can charge. For example if you make jewelry, you may be limited by what others are charging. If you have a strong brand your buyer may be less concerned with what others are charging and more concerned with the value that you provide.
Premium or Luxury Item Pricing
With this strategy you keep the price high and try to instill a perception that your work is of the highest quality, the best investment value, is only for a select few and worth the premium pricing. In order to make this strategy work you need a exclusive brand and you have to deliver a premium product.
Dollar Store Pricing
This strategy may work if you produce art that is of low value/quality and thus deserves a low price point. If you can mass produce your work and sell it at a low price you can make a lot of money – no judgments here on your work, only business success.
Great Deal Pricing
A good way to build your market is offer a great deal. Consumers are getting a good product at a great price and the word is sure to spread. As with all strategies make sure you are covering your full costs. If you are successful with the Great Deal Strategy then you may want to consider moving some or all of your products up to the Premium or Luxury Item Pricing strategy as you build your brand and customer base.
Shady Business Pricing
In this strategy you sell low value / quality products at a high price. I wouldn’t recommend that you employ this strategy but it is done every day. You need to convince your buyer that they are getting something which they are not. While this strategy may be initially profitable it is not very sustainable unless you want to continually reinvent yourself and possibly have to move frequently.
Some final thoughts on pricing your work:
- You need to be competitive but try not to leave any money on the table.
- Your pricing strategy may change depending on the product or services offered.
- Your pricing strategy may change depending on where the product is in its lifecycle – new product/market, established product/market or declining product/market.
- As your brand and reputation grow you should be able to raise your prices.
- Cover all of your costs and don’t deviate unless you have a real good reason to do so.
Experiment with your pricing strategy, try different prices with different markets and distribution channels. But don’t forget you need to cover all of your costs in order to have a sustainable business!
Neil McKenzie is the author of The Artist’s Business and Marketing ToolBox – How to Start, Run and Market a Successful Arts or Creative Business available in softcover from Barnes & Noble and Amazon and as an eBook from iTunes, Amazon and Barnes & Noble. He has developed and teaches the course “Artrepreneurship” at the Center for Innovation at Metropolitan State University of Denver, and is also a visiting professor at University College at the University of Denver.
Neil has over 30 years’ experience as a management consultant and marketing executive, working with some of the world’s top brands. Neil is a frequent lecturer to artists and arts organizations, a guest columnist for Colorado Biz Magazine, where he covers the creative sector of the economy, and the author of several articles for Americans for the Arts, a national arts organization. Follow Neil on Twitter: @neilmckenzphoto