Don't underestimate the importance of pricing.

Meet Norman. Norman creates art and doesn’t know how to price it.
Firstly, he has a house that has 10 rooms. His combined utility bills are £200 per month. Divided between each room that’s £20 per room per month. Norman works just in one room, and he works 40 hours a week. There are 168 hours in a week, times that by four and you roughly have 672 hours a month. £20 divided by 672 = approximately 3p per hour, granted, it’s not a high sum, but if he doesn’t add it to the cost of his work he will be paying it out of his own pocket. The HMRC gave Norman this way of working out his costs for working at home; the HMRC usually allow around £4 per week for your homeworking expenditure (utility wise), & it soon adds up. Unless you live in a tree you are using resources to work at home, that should be added to the cost of your work.

Norman works with paper. His paper costs £2.50 for a pack of 10 sheets and he needs 2 sheets for each piece of work he creates, so at a minimum he uses 50p per output.

He also uses blades. The blades cost roughly £10 for 100, (10p per blade) and he uses 10 blades per unit, so he spends £1 each time he creates.

He roughly factors in his other costs such as glue and estimates it to be around 5p per picture.

Norman sometimes uses templates. The templates usually cost him around £10 and he estimates that he will probably use each template around 10 times, so when using the template he adds £1 to the cost.

When creating his own template Norman spends around 2 hours on the design process, he needs to pay himself minimum wage for that, which is £6.70. That’s £13.40 in total. Again he will probably use the template around 10 times, so he will add £1.34 to the final cost when he does.

The actual time spent creating the finished piece is around 3 hours (not including the design time). Norman’s pretty new to the game so he is only charging minimum wage. He needs to add £20.10 to the cost of his piece.

Finally he has to factor in the cost of his frame, which was £5.

Using someone else’s template =

Utilities – 3 hours = £0.09
Paper – £0.50
Blades – £1
Glue etc – £0.05
Template – £1
Wage – 3 hours – £20.10
Frame – £5

Total = £26.60 with no profit added.

Using his own template:

Utilities – 5 hours (design & creation) = £0.15
Paper – £0.50
Blades – £1
Glue etc – £0.05
Design time – £1.34
Wage – 3 hours – £20.10
Frame – £5

Total = £28.14 with no profit added.

Remember, Norman hasn’t allowed for a profit margin here, he has paid himself a wage. Anything that he now adds to the total cost is profit. Where necessary he will need to charge P&P as well.

All of this might seem like mathematical bollocks, but when you see a cut charged out at a fiver the basic costs of creating are unlikely to have been factored in, it undercuts the market as a whole because those of us that charge according to our costs know that if those costs haven’t been accounted for then we are partially gifting the work to the customer, and you simply cannot run a successful business by doing so. ‘I only really do it as a hobby though’, well, if that’s true then you shouldn’t be charging at all. The minute you charge you need to register with the HMRC, and as soon as you do that you are a registered business. It really is that simple.

Finally, when you say that your customers simply wouldn’t pay that much, what you are actually saying is that you don’t believe your work is worth that much, that YOU wouldn’t pay that much. If a customer values what you do they WILL pay, just as you might pay an extra £0.20p for Heinz beans rather than an off brand, because you believe it is worth the cost.

This is about as basic as it gets, if you are not following basic pricing guidelines and just hazarding a guess at what you think somebody might pay for your work you really are doing yourself an injustice, and compromising the field as a whole. I hope it helps.

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