You may think pricing is really easy in the local craft show scene. However, when your work is sold through many different “channels,” pricing becomes much more complicated.
Take into account that when you sell art or craft work at both retail and wholesale, your pricing structure should accommodate market factors. There are just a few ways to price your work:
- From the bottom up – adding together labor, materials, cost of sale and profit.
- From the top down – analyzing stores, galleries and websites in the marketplace and then modifying your product to meet the final price.
Here are just a few examples of embarrassing moments in pricing…
Ken decided to leave Maine where his best galleries are, and fly to Florida for sun, fun and a few retail fairs. Being out of his “market,” he figured that he could deeply discount his retail prices. But… one of his gallery’s top collectors discovered him in Florida and bragged to the gallery about the great prices they got directly from the artist. The gallery lost one of its best customers because the collector believed that the gallery was unfairly marking up the artists’ works.
Jennifer started her own website, using the same brand name she uses for wholesaling. Her website prices were marked at 2.0 (twice wholesale price) with free shipping – making her prices as much as 30% less than her galleries! She quickly lost the support of her galleries, who watch the web for these “mistakes,” and the word spreads quickly.
It’s less about what you make, and more about where you sell!
The problem becomes that it’s less about how you make your work, and more about how and where you sell your artwork. A shop in Beverly Hills can, and often does, command a higher price for a piece of art than your local gallery on Main Street. This can be understood by considering that the Beverly Hills store has an unbelievable overhead of $300 per square foot, and their customer is a tough cookie -demanding a personal discount that must be considered in the cost of sale.
Most artists begin by establishing a local price, before they find out how well-established galleries in their field price work. But when you begin to sell nationally, it’s important to find ways to keep those local customers while you expand the market for your work.
How Galleries Price Your Work
Many artists believe that a keystone (two times the wholesale price) is the standard mark-up that galleries use. However, with the increased costs of resort and high traffic rents, and the fact that art sells slower than imports, the reality is that your work requires a higher mark-up than a simple keystone.
Other factors driving markups higher are increasing insurance premiums, loss of inventory through breakage, and advertising costs to the retailer.
Do Galleries Want Half Price?
Well, yes and no. What they want is a fair deal, so that everyone involved can make a profit. There are dozens of creative ways that artists can employ to provide galleries with a fair deal. Begin with establishing the true gallery value of your work:
- If Your Work is: $100 True Wholesale Price + Shipping and Handling
- Then Calculate this: $240 True Gallery Price (2.4x Wholesale =Gallery Retail)
- And Allow for this Online: $250 Web Price (2.5x + Shipping and Handling)
- While Selling Discontinued and Seconds for: $150 Local art fair price
Split Your Line or Collections
Sometimes the best way to create a safe and fair marketplace for your galleries is to join the “multiple personality movement.” Many couture designers do it. Artists and makers are learning that a split of person or collection can provide the cushion that keeps everyone happy.
Dale Chihuly has successfully separated his museum quality installation works from the small museum gift shop pieces. The result is that everyone can have a Chihuly something, from a small piece of glass to a book, note cards or an umbrella. Does this reduce the value of his one of a kind works? No. What it does accomplish is to nurture a new generation of young collectors, who will someday purchase their own Chihuly studio piece.
1) Establish two bodies of work – one for wholesale, one for retail. This creates non-competing lines which each serve their own purpose. Choose carefully what price points and types of work sell better in those two different environments, and then create to your heart’s content!
2) Use seconds and discontinued items for local retail fairs and open studio events. Do you have slow sellers that have been discontinued, samples that didn’t make the cut, or work you made while experimenting which is not in your current line? You can make this your stock for retail fairs, along with any “seconds” if you are willing to sell them. (Use a permanent marker on the bottom of objects to mark them as “seconds” justifying a lower price.)
3) Use a separate studio name for retail, and another brand name for wholesaling. Develop a whole collection, or “brand” that represents your work at wholesale, and is distinguished from your retail line. This avoids comparisons and conflicts when selling.
What other ways have you developed to work through the pitfalls of pricing your work?