Pricing Art with Confidence! Develop a pricing strategy appropriate to your product concept or market. Whether you are selling crafts, marketing art or are involved in product development for a large corporation.
Valuation of a product is one of the most difficult tasks, for not only new enterprises, but existing businesses as well. This applies to SOHO and Fortune 500 companies, artists and writers, as well as the largest industrial manufacturers. The simple fact is, that regardless of how or what products you are marketing, a company must come up with the perfect pricing strategy in order to generate a profit and remain in business.
In addition, the volatility of certain labor-intensive markets create even more of a challenge when pricing art. This is commonly seen in smaller enterprises, home-based businesses, and service industries who rely on either handwork or a substantial investment of time to produce their product or service.
Please don't misunderstand .... Pricing for Profit is a never-ending process for ALL businesses of ALL sizes in order to be successful and to Improve Your Profit. Each price must be reviewed on a regular basis to meet the economic conditions. It must also be competitive within your industry in order to obtain market share and continue to produce enough capital for you to continue to operate in a competitive environment. So whether you are in Product Development for a Fortune 500 company or operate as an Independent Artist, you have found this site because you are looking for new ideas about pricing methods.
In view of the fact that the primary focus of this site is to encourage the success of artists and craft persons, I will use their products as an example ... please do not be deterred by my focus as there is IMPORTANT INFORMATION that applies to pricing ANY product in the link below.
Due to the artistic nature of your business, many of you would prefer to invest your time in creating your art or craft rather than in performing the research required to monitor the best price for your work or products. It is, however, quite costly to hire a professional consultant to do the job for you.
So, what is your pricing method?
If the material costs of the product are consistent and the time it takes to produce is predictable, you could total up your direct expenses and develop a formula for building in a percentage to cover the costs of indirect expenses, labor and expected profit margin. In this case, a portion of your income would be derived from buying materials at wholesale and reselling them at retail plus the markup.
But will this work for low-material, time-sensitive,Not likely -- since the materials would no longer be a source of income, it is possible to develop a pricing strategy whereby you determine an hourly rate based on all direct and indirect expenses, expected profit plus your 'estimate' of time involved to complete a given project. In this case you have determined a 'project cost'.
So, what if the project takes longer than expected?Then you most likely either lost money on the project, or at best, did not generate the expected profit. You could solve this problem by placing a flat value on your time. This pricing method is also based on all direct and indirect costs, expected profit plus an hourly rate that you are comfortable with.
But what if the time-element drives the cost of theAh yes, as in a painting, you would not really know how long it will take to produce a finished piece. If you charge for all of your time, will you still have a buyer? Art is often created for the sake of creation. That's what makes it art. The value the artist places on his work may be higher than that of the viewer and in some cases visa versa. At any rate, the piece may be rendered worthless for the time being and yet the time has already been invested.
Must an artist be starving? I don't think so!Often, people in creative fields price their products by making a quick attempt to identify the current value by using comparable works and then reducing it by a small margin to remain competitive.
How do you know that the comparative's price is correct in the first place?And as a last resort ... the artist or crafter simply guesses at a price!
How long do you think you can survive as an artistRegardless of the method you are using, do you always have that question as to whether or not you could have priced your product differently?
For those who are not aware --- the market price of any product or service is driven by Supply and Demand. Supply is the amount of a specific type of product available for sale during a specific time frame. Demand is the need for that same product or service during the same time frame. This means that if there are twice as many of a specific item than their are buyers for that product, then the price of each will be lower in order to induce buyers to either buy more or more buyers to buy. If, however the number of buyers outnumber the availability of the product, they will be sold at a premium price possibly because materials may be scarce or simply because the market will bear it.
In the artistic world, it's important to remember that value is generally based on the "perception" of the potential buyer and is not a commodity of necessity, but one of desire. This means that the artistic market is often directly affected by the general economic state of the globe. Also note that the higher the status of the artist, the higher the demand for their art and therefore the higher the price that is offered. This is not necessarily a direct reflection of the quality of the art produced by the less known artist, but a matter of supply and demand.
I have recently been introduced to a unique method referred to as Dynamic Pricing. It's based on the premise of Supply and Demand and allows buyers to view the current market value of a particular product in real time. Buyers will have the ability to immediately purchase a product at the current market value or to bid on it and wait until the supply and demand effects the price. For anyone currently marketing their products on their own website, this appears to be an opportunity to sell items at their true value allowing artists and crafters to actually sell their wares at the maximum price that the market will bear based on the demand for their particular product at any given time.
If you wish to read more information about Dynamic Pricing you may click on the bar below.