Many artists are confused about pricing their work, and what customers will pay. Are you comfortable with the prices you are charging? Is your business profitable?
Pricing art and craft work is a big headache for many artists, and often results in more questions than answers. Artists sometimes feel hesitant to charge healthy prices for their work out of fear of being undercut by others. Meanwhile, those other artists who are charging less for comparable items are often not profitable themselves. Lowering prices to beat out your competition can result in a downward spiral which is detrimental to everyone.
Are you currently retailing your work, but want to expand your business by selling wholesale? You might find that cutting your retail price in half doesn’t work – this is a common complaint. Take a close look at your costs of doing business, however, and you might find that your current retail price is too low.
Are you pricing using this formula?
Overhead + Materials +Labor+Profit = Wholesale Price
Wholesale Price x Markup = Retail Price
When you sell your work wholesale, retailers will mark it up at least two times, but the average is between 2.3 – 2.5 times. This allows the retailer to make enough money to make a profit on the sale. Notice that a profit for the artist is written into the formula too.
Pricing your work at wholesale realistically means that you make a profit – not that you break even. Profit is an important part of the formula because it helps you to grow your business. Your profit is above what you are paying yourself for your labor. It is above what you are paying for overhead. Profit may allow you to take time to experiment on new techniques and designs. Profit may allow you to buy new equipment to increase your productivity. Profit gives you room to breathe, and to grow.
Often, when artists decide to start wholesaling, they build a new line of work from the ground up. Your line must be profitable at wholesale, and have a perceived value that will allow a healthy markup for your retailers.
Perceived value can be increased by a number of factors. Your presentation is important here – what does your product say about the owner? Is it chic, luxurious, or rare? If you create jewelry, clothing or accessories, what does your work convey about the wearer?
Your authority as the creator also increases the perceived value. Are you an expert in your field, the only one who can make what you make? Is your work really excellent, and different? Is your signature style recognizable as being yours, and is it well known?
Functionality also increases perceived value. Adding versatility and more function adds value. Can your products be used several ways, or are the functions innovative?
Packaging can add perceived value. Is your work bundled to create a ready-to-give gift that is perfect for your target market? Does the packaging help make it easy for customers to say “yes” to a purchase?
When you design your wholesale line from the ground up, have an idea in mind of how your work will be presented when it is retailed. Understand going in how you want to communicate the perceived value of your work to your audience. And build in that all-important factor – profit.
Need assistance in pricing or launching your own wholesale line? Check into The Art Business Institute’s business consulting services. Find out more here.