Episode 012 - Pricing 101
Megan and Friend respond to a listener’s question, reflect on the difference between pricing strategy and pricing math, and try not to make artists shriek.
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Show Notes
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Book A Room of One’s Own by Virginia Woolf
Tate Modern Museum in London
National Gallery in London
The Prelude by Kehinde Wiley
Artist Bella McGoldrick
Artist Tara Andris
Homework:
Categorize your costs, overheads and profit.
Support a friend who is trying to perfect their pricing.
We would love to hear from you! Email us your questions and ideas at podcast at artbymegan dot com
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Megan: Um, ready. Go. That's my official entry to this topic. One two three. Welcome to The Arts, a brand new podcast about art and money. I've spent my career managing at some of the world's largest financial institutions. So I can't tell you my name, but trust me, talking about money is my jam.
And I'm Megan, I'm an artist and a teacher. And now co-host of this amazing podcast. We're having this conversation because we came to a realization. We have no idea how the other person spends her workday.
Friend: Or her money. So let's chat about it.
Megan: On today's show. We were talking all about pricing. I know. I know you want to cry already, right?
Friend: Me? No, I like, no, it was
Megan: that was like the worst joke ever, because I know you like this.
Friend: I love pricing. This was my crazy idea.
Megan: Oh, all right. Well pricing. and this is a tough topic and we're going to just tackle it. But first The Scene.
Friend: The Scene.
Megan: So friend, what's trending in the arts this week?
Friend: Um, I always like it when you go first. Cause you have like some crazy things happening. You had a show. I don't know. Like what do you want to tell me about?
Megan: Okay. I don't even, I can't digest the show yet cause I'm still like, I'm too tired from it. And so I have no thoughts, period. No, it was wonderful,
but
Friend: I can strip that out.
Megan: my brain is tired. All right. But I
read a new book. That's come out.
Friend: Wait, do extroverts get tired?
Megan: Oh my God. I couldn't. No. Keep this in. Let's tell all the introverts everything.
I couldn't function. I cried not in public, but in my home, like I curled into a ball and cried
Friend: from the,
Megan: exhaustion of talking the opening night. I had so many conversations in a row that I felt like I was wasted drunk. I couldn't, I couldn't think straight. got home and I was beyond tired. I was like, zooming around my home, like a puppy.
Friend: oh, I didn't. I thought that you would come out of something like that re-invigorated and, you know, with 18,000 new painting ideas and like, gardening at the same time.
Megan: I wanted to cry and lay on the floor. So even extroverts can't go in public is what I'm telling you. Also there is this like pandemic looming still. So that just kept coming up in conversation. And I was like, geez, I just want to be in public.
Friend: Right. And it's probably a muscle that you have an exercise too much is the super social butterfly with fans.
Megan: But I was like, wow. I hit a wall one day. I just like ate a salad in a closet that was like, no one talk to me.
Friend: that's what introverts do. They're always looking for the closets.
Megan: I think I have a shocking confession. I think I might be like a little bit of an introvert. I'm a joyful introvert.
Friend: Okay.
Megan: I don't really like people. Well, anyways, so anyways, I read a book.
Friend: Tell me,
Megan: It's not new. It's from 1929.
Friend: okay, Megan, I'm going to put you on notice for the next episode. How do you have time to read all these books?
I read a book. I think you need another podcast called I read a book.
Okay.
Megan: This one's called Virginia Woolf's A Room of One's Own.
Friend: Okay.
Megan: It's only every high school reading list slash every like intro to feminism class. I read it because I'm pretty sure I've already read it or that I'm supposed to read it in high school.
Friend: You're just checking up on yourself to make sure you did your homework
Megan: Yeah.
Friend: retroactively.
Megan: check, you know, like you're like, what's happening.
Yeah. Like did I read it? I don't know. So I read it and it's very funny to read as an older wiser person. she's, first of all, roasting men, just the whole book is a roast of her contemporaries. She was like, how about you pay women?
And then we'll be able to make a living, you know, just full on feminist hatred. I'm so into it. She also, the way she writes is like very like Bridgerton adjacent. So that was fun. I liked it. It was a very dense. You know, we like her ideas though. The whole premise of the book is that she basically like fakes that she's been invited to lecture on this topic of women in fiction.
And so she's like in order to be successful, women must have a room of their own. And I'm like, yeah, preach Virginia.
I really liked it. Okay. My favorite quote from the book is this, " intellectual freedom depends upon material things. Poetry depends upon intellectual freedom. And women have always been poor, not for 200 years nearly, but from the beginning of time."
And you're like, ouch. But her whole point was like, if you want me to raise these children fine, but I'd also like to write poetry and I can't do that. If you guys don't pay us
Friend: So, still relevant. a hundred years later.
Megan: Yeah.
It was kind of a bummer, but really good.
Friend: How long did it take you?
Megan: It's still like a small thing. I read it like during carpool pickups.
Friend: Okay.
Megan: This is how I read. I have a lot of stagnant time.
Friend: I don't understand how carpool pickups
w
Megan: driving and reading. No. I mean, I'm like waiting for children to get into the car.
Friend: Why do you have to wait for them?
Megan: Oh my God. Any parents out there? The COVID school pickup protocols are just elaborate.
Friend: they're your own children who
cares?
Megan: out of the building at a time.
Friend: What,
Megan: Yeah.
Friend: Why do they need protocol for the kids to go back with your
Megan: don't want them like crowding each other.
Friend: Oh, come on. they're sitting in a classroom all day.
Megan: They're getting snuggle their way out to the car to like, let's go.
Friend: Do they have to check them all out and do a nasal swab on the way out the door?
Megan: Might as well.
Friend: Wow.
Megan: Yeah. It's wild.
Friend: I thought it would be the kids waiting for the parents, not the parents waiting for the kids.
Megan: The tides have shifted.
Friend: I had to walk in my day.
Megan: I was the child who wanted to walk so badly, but there was like a busy street between me and school. So I couldn't, I remember having a full meltdown about it. And my mom was like, please stop.
What did you do recently? Creatively.
Friend: So I was in London for work and that cramped my style a little bit because work hours. But I did manage to find a couple of the museums were open a little bit into the evening. And so I went to two of them. I managed to squeeze in two museum visits. What I love about the museums in London is that they're free. And I feel like that makes them more appropriate for a quick drop in because you don't feel like you have to get your ticket money worth.
Megan: For sure.
Friend: So went to the Tate Modern, which is one of my favorites, in the city because of the building, but also it's, you know, it's modern and contemporary art. I will say that I think the staff there. need to take more vitamin D they were or get some sunshine or just loosen up a little bit. Know that the staff were slightly contakerous but the art was stunning.
Megan: Word of the day, contakerous.
Friend: Thank you. No, I mean, it's, it's apt. There's no other way to describe these folks. I got yelled at on my way into the building, but all that aside, they had an exhibit on color and the use of color, which I thought was really fantastic. And if it is available online, I will link to it.
That's my favorite from like a building and type of art perspective. But, The National Gallery in Trafalgar Square is... it's so vast and you really can not take it all in. It's like the Louvre in a way, you know, you can't, uh, you can't digest it all.
It's too exhausting. So I made it my mission to just see one thing, which I was super excited to tell you about. Kehinde Wiley has, uh, has an exhibit on there now he's doing, it's called The Prelude and he has his own, what do we call it? Would we call it a gallery?
Megan: Yeah. A wing of exposition hall?
Friend: Um, it was two rooms, so I would call it, uh, it was a small wing. He has his own exhibit there. And, It was nice to see he started getting into film or maybe he always was, but there was a film that he had directed and created. So it was like live, imagery. And then there were some of his portraits where he's taken some of these classic, portraits of white people and he's, you know, done his thing on them and,
Megan: He's so good.
Friend: He's so good.
I, Megan, I was like, because these were these ones I could get closer to than the, uh, one of Obama. I don't understand what he is doing with his paint. it's, usually oil on linen. It looks like it's printed. It is so fine and perfect.
Megan: It doesn't make sense. You feel like you're looking at a human, not even a photograph.
Friend: That's right. The way that the skin, you know, the coloration on the skin and the way that the fabric is is depicted. I just like, I don't even have the right words for it. And so then I just stood there, like stuck.
Megan: You just gasp. It's not even a photo realistic because that almost feels too fake. These look like breathing humans.
Friend: Yes,
yes. And so I was so impressed and I don't do this, you know, that we have a very minimalist approach to life and I don't buy stuff. I bought the book for my coffee table. I don't even have a coffee table.
Megan: The book is the coffee table.
Friend: The book is the, I mean, how I have this book and I, because I wanted more time, like I wanted to read about his process and what was he thinking and how, why this one? And so on. It was really amazing.
Megan: I need to go to London, number one. Number two, I have that problem. There's a medical diagnosis for this, where you want to touch the paintings. And when I look at Kehinde Wiley's work specifically, when I go insane as an old woman, I will be in a museum, gently caressing the faces. I just feel it like I cannot hold my hands in my pockets.
Friend: Yes. I want to climb inside and like,
sit sit on the,
Megan: The horse.
Friend: Yes, sit on the horse. The one of them was, they're standing sort of on a cliff overlooking the ocean. And I wanted to, I felt like I could stand there with them. It was incredible. That's what's what. So Megan, have I just committed a faux pas in saying that I like these London museums, because they're free and I don't want to pay for them? And we're about to talk about pricing art.
Megan: I mean, you never could commit a faux pas if you tried.. She's faux pas-less, ladies and gents.
Um, if I spoke a little more French and by that, I mean more than 10 words I would talk about faux pas more, but that's all I've got. So, let's talk about pricing art.
Friend: Yeah, I think we should. The Main Exhibit.
Megan: So the museums free and the art well paid for.
Friend: That's right. The art very expensive. Yeah. It's an interesting one. I've been so interested to hear throughout our interviews so far on this season that, uh, pricing comes up a lot and not just because we forced it, but, you know, with a few of our guests we've heard and had those conversations. And so I thought, well, why don't we take that and, you know, talk about it a little more specifically. And We also had a question come in from a listener and" I'm just going to read it. " I love your podcast." I should have not read that part, but she said, she said it, so, so "my sister and I are just like you and Friend, I'm an artist and my sister is a CFO. Can you talk on your podcast about free or discounted work for friends and family? My sister ends up helping about 12 friends and family with their taxes every year. And I always feel funny about charging, full price for painting commissions, for friends and family. I would love to know how you and Friend handle this situation."
Isn't that good? First of all, thanks for reaching out.
Uh, we love hearing. Yeah, I know. We love hearing from people. We're happy to answer questions and make episodes of built around the topics.
That's super cool. so that was kind of the, I was like, well, let's talk about pricing in general and then pricing for friends and family and discounts. We're definitely going to get to that over the course of this episode. For me in my mind, there's two approaches to pricing. One is math, like what's the math about what goes into your price. And then one is strategy. So, what is, you know, what is your approach to it? Not from a mathematical perspective, but maybe more sort of philosophical or strategic, what does it say?
Megan: Yeah.
Friend: so I thought that there would probably be some things that I can pull from like corporate financial world to apply to the creative industry. And then I'm sure that you have lots of thoughts about this as well.
how does that sound?
Megan: Tell me your perspective. Like, what are your general thoughts on pricing for creative small business?
Friend: Oh, Yeah.
I mean, the more I get into it, the more I think that is like a nearly impossible task. I don't think there is any right answer. I think it is a giant experiment and you just have to keep tinkering, you know, pull this lever, pull this lever and see what happens. I think that you and I I'll just say right. up front in this conversation are not going to really be giving advice about how to. Every creative business is different. Every, You know, segment and depending on where you live in the world, the medium, you know, it's just, there's just too much variation and well, you may hear our voice. We don't hear yours. We don't know who's really listening. And so it's hard for us to really give advice, but, my general thoughts are that, oh my what a difficult challenge.
And so just like anything, just like what we did with the risk conversation, when I'm faced with something that's like big and nearly impossible and scary is I just break it down into little questions that I can answer. And so I think that's maybe what we do.
Megan: Perfect. We spoke to the Eve of the economist and I liked that. She told us to not think of the big picture all the time. Right. So what you're saying is that essentially as well, it's like break it up into small choices. And I think sometimes that's the daunting task. When you run the business by yourself. I mean, everyone in the, on your side of the world says to do this, to take it small chunks.
Friend: Yeah.
Megan: On the creative end of the spectrum, people think they have to solve the problem in one decision. That's just not, that's not how it is, but I like this. It's good for me.
Friend: So let's, uh, let's have like a strategic conversation about pricing and then we can get to some math, in a gentle way. It's very, very simple math,
Megan: Gentle math.
Friend: Gentle math. So when I think about pricing strategy, what do I mean? I mean, like, what goes into it? How do you think about it? Why are you doing this? what is your, you know, what, message are you trying to say? What have you tried? And hasn't worked. That's what I mean about it. Can I just sort of hit you with some,
Megan: Yeah. Hit me.
Friend: And we'll just kind of tease it out and use you as the live case. All right. so right now, today, when you think about pricing, how do you go about what are the things that go into your pricing decision and why are they included or excluded, if you leave something out?
Megan: Yeah. I mean, well, let's start with this. We started to touch this topic a lot with Amanda, the artist in episode eight. And if you remember her reaction to this question, It's a really tough topic for artists specifically. I mean, artists. So I'm speaking from just the artist perspective. as an artist, I feel like I have to wrestle with the idea of selling the work, which is my idea, which is actually like my diary.
I mean, it sounds so dramatic, but it is very personal. So it's something you're creating that is like your heart and soul. And so selling that inevitably you just feel like a sellout. So that's what Amanda sort of touched on when we were talking about it with her. I have had to separate my own feelings about the work I produce from the fact that I need to make dollars.
Right. So I've had to separate my emotion from the fact that I have to run a business, not have to, but have chosen to. So I don't have an answer that will work for everyone, but I personally have a formula, which I know you'll be shocked to hear, so ideally I want to make X amount of dollars.
Right? Each year I try and double my take home, which I know like is a loose number. And when I say I want to double each year it's because when you first start as an artist, you make $12. So doubling that simple. No, I'm joking. But my point is, it's not like I'm doubling six figures. I'm S I'm still doubling small amounts and I don't work full-time yet full disclosure.
So in my small amount of studio time, I try and at least make more each year in order to do that, I have to raise my prices each year. I also have to outsource certain things each year, so that my time, which is my most valuable asset is accounted for. Right. for me personally, I have to sort of say, I want to make X amount of money, and now I can look at years and years of data on this and work backwards. I recommend everyone make a formula for themselves.
Friend: So your formula, you know, when you do formulas, you are solving for X, right?
So you, you know, there is an unknown in there somewhere. It sounds like for you, the unknown is not as much, or you're saying I want it to equal this. And so therefore the exit you're solving for is it volume?
Megan: It's output for sales. You might say. One thing I've been pleasantly surprised with though, as I do this little formula, my output has surpassed what I thought it could be given the hours I have.
So what I'm telling you is I underestimate myself mathematically and generally, but if I want to make X amount each year, it's not the number of paintings that I'm selling. It's more about like, I have changed the size of the paintings I'm selling, selling big paintings is a better use of my time, but I like it more also. So that works right. That's one example.
Friend: yeah,
Megan: it's also how much risk do you take in a year financially? How much overhead do you have
Friend: Okay, Right? Yeah, We're definitely going to talk about that. Okay. So, in terms of strategy and an approach to pricing, it sounds like you're very outcome driven and, you know, this is what I need to walk away with. And so I'll, I'll do what I need to do the, the work product to get to that. Okay. Interesting. All right.
Megan: it works for right now.
Friend: Yeah.
Megan: my family conditions were different or if I was a single person or if I lived in a different city, all of these, factors will be different.
Friend: Okay. All right. I know you touched on the, emotional attachment, or the sort of selling your diary. Amanda mentioned that she's basically pricing them at what she's willing to let it go for, which is different from, you know, some products we assume that price relates to quality. Whereas here, I feel like what I'm hearing is price relates to emotional value. So let's use jewelry as an example, or a, custom made dress. The quality of the fabrics and of the metals and so on is likely to determine the price. Right. Are you selling a high-end or a low-end product? Is it at the top of the market or is it, is it like entry-level you can think about this for handbags shoes, right. Everything. But I don't know if a painting has that same, like, is there, is there some quality scale on a painting?
Megan: The longer I'm in this, the answer is, yes. This is why I'm trying not to price emotionally, because I do know that if I charge more, I will spend more time working on a painting to make it perfect, including many steps, even involving in like shipping or packaging, you know, like all the, the I's will be dotted and all the T's will be crossed. Right. If it's a quick, fast turnout of work, you're not, you're not able to do that. So I do think there's a bit of quality involved. I also think just to give you an idea, there's a baseline, a square inch price for art. So yeah, this is like a real, it's an industry standard. If you will. So beginning artists or emerging artists or whatever you want to call them it's recommended in like art school that you price your work, per square inch. Okay. So if you look at artists, this is for emerging a dollar square.
Friend: That doesn't make sense.
Megan: So. like a 24 by 24 equals what? was a bad example because I can't do it.
Friend: Well, that's why I'm just like, wait. So if it's a small, if it's an eight by 10
Megan: You're charging $80
for that work. It's not enough.
Friend: It's not enough
Megan: It's also not taking into consideration what it's made of.
So
Friend: Who made up that, that sounds like, just made up out of the sky.
Megan: It's truly like made up, this is why this is hard yeah, this is why this industry is hard. Also. I, it's not the same across mediums. So if you're doing like a color pencil drawing, that's one thing and you're doing an oil painting that takes years to complete.
It shouldn't cost $80. Right? So that's one factor in a variety of factors. An emerged artist, a middle like an intermediate artist or an established artist, which I now fall into that category should be charging, probably double that. And I'm close to double that in my pricing. Also, I use acrylic paints, which are cheaper than oil paints.
Friend: cheaper,
Megan: Cheaper to purchase
Friend: purchase.
Megan: and quicker drying. So I'm spending perhaps less time than an oil painter would on one given piece. So like mathematically, you can try and, put that together. And then the opposite end of that spectrum is I really admire a woman artists named Ashley Longshore. She's like a sensation she's super famous. She's hilarious. Irreverent is the word that comes to mind for her in a good way. Like aspirationally. I want to be like that. And she prices her work however, she pleases and I really admire that because people purchase it because they want piece of her art.
Friend: right. And that relates to what Evie was saying You have to understand what your audience wants and you have to have a following. And once you have that, then you, can get the price for it. But until there's that demand, like there's a little bit here about supply and demand. Right. So if nobody wants it they don't want it at any price.
Megan: right. And then how do you start a job when you are basically making up a whole career? And you're like, please buy this thing. You
know, that's really, it's impossible. It's quite impossible at the beginning.
Friend: Yeah. Have you ever gone back and looked at any of Ashley's pieces with a known price that, that, you know, It's sold for and looked at the size of it and worked out what her dollar per inches
Megan: It's high. It's like shockingly high. I will link to her work in the show notes. We'll we'll link to her.
Friend: we can, yeah, Okay, so the question is, do you think in paintings, we can have a look at the quality is based on what is it, the quality of your artistry of your artistic talent? Or is it the quality of the materials or is it quality of the Like what, you're saying as you've been in this longer, you think? Yes. But what's determining whether it's high or low quality?
Megan: I'm not sure. I think there's an equal emphasis on quality because it's like the person has a studio, a studio assistant, a shipping department, you know what I mean? Like the there's a higher quality when it's multiple people helping. The outcome, which is you getting the art in your home. They might even have an installer come to hang the art for you. You know what I mean? You're getting a full service.
Friend: That's different service. The service is different from quality. If you think about let's go back to my $250 t-shirts. Right. So if you think about a t-shirt that came from Amazon, which was maybe $8 And they made it in, Vietnam or Bangladesh, or you think about, Pima, cotton from maybe Everlane, Everlane is not at the super high end, but you know, they, they have very nice quality cotton.
it could be the same crew, neck, short sleeve, uh, wine colored. T-shirt. The price will be an indicator to you of the difference of how that fabric feels in your hands.
Megan: Oh yeah.
Friend: Is there something like that, that tangible the way it feels or looks not the service? Cause that's a different, that's a different component.
Megan: You're right. I don't know how to say this without sounding like a jerk, but there is a way to tell when you look at emerging artists work, I think the factor is time. I look at my initial work and it was not good. I'm going to use myself as an example. So I don't hurt anyone's feelings.
My art year one wasn't good because I wasn't, I had not practiced enough with the materials make the paint what it's supposed to do.
Friend: right? Okay.
Megan: you look at a painting by an unexperienced painter, and you can tell that they haven't yet mastered how to control X, Y, or Z, whatever the medium is.
Friend: Okay, perfect.
So that it is hard to say, but I'm also more than willing because, you know, I showed you that painting. I did, um, the first painting I've ever done and like, it's, I know you didn't get to feel it, but I can look at it and be like, it's kind of cool. cause I finished it. But like, there's something weird about it. There's something, you know, and I was trying with a knife and trying, you know, learning about the different brushes and whatever. Like it's very disorderly. It's rough. Whereas what we were just talking about with Kehinde
Megan: Not rough.
Friend: see the brush, like, you don't even believe it's painted with a brush, right?
Megan: okay. So I used to get offended because people would call my paintings watercolors. And I was like, I don't paint with watercolor paint, but I think what they mean is that it doesn't look like acrylic paint, which is in fact. No truly because acrylic paints are rough. And so if you ever dabble in like for fun acrylic painting, it always looks like garbage because it's chunky. It's, plastic-y it dries, shiny and lumpy. So if you can master that over time, it's the same as mastering anything. There's a woman. I follow her paintings are worth hundreds and thousands of dollars. She uses colored pencil. That's it? Bella McGoldrick. It's mindblowing. She's using colored pencils.
Friend: what you use in school?
Megan: Yes.
Friend: Like pencil crayons. Did we call them that?
Megan: She paints with pencils, I would say. And it is photo realism, but more and with a colored pencil. So my point is I think the mastery of the material is what makes it non-Amazon t-shirt and more luxury cotton.
Friend: Okay, exactly. And that exactly we got there in the end, but I think the journey was important because for other artists, I think what the takeaway here is be honest with yourself that there is a scale of the quality of your work and where you are. You, you have, maybe this is where whatever he was saying, like get an honest friend or get a partner, you know, somebody to be like a human embodiment of truth in your life. you have to make that assessment. Unless you want people to think you're crazy and you're selling a, you know, a garbage cotton for $250 a t-shirt right?
in my mind, that should be part of your, your pricing strategy is where am I on the quality scale? And if I'm at the high end, which I would say, I mean, I have sat in front of your paintings and gotten lost in the beautiful brushstrokes and how the paint sits on the, like I would say it's high quality.
Megan: Well, that's very generous.
Friend: and so, but so for you, then that's part of the confidence that goes into the confidence of saying, this is why it's priced this way, because it's quality work. Right.
Megan: I just shared a booth at the art fair that I just recently did with a guard, a good friend of mine, who we met on Pinterest.
Friend: What,
Megan: Like, how does it happen?
Friend: think it was that interactive.
Megan: I know we don't know how it happened, but she's a lovely person. And it turns out where neighbors like truly very close. She, paints with gold leaf, which inherently makes her paintings more expensive. Right? Like it's gold. So her name is Tara Andres. We'll link to her, but she. Hey, Megan, raise your prices. Hey, Megan, raise your prices because she is like, she gets it. So
Friend: yeah,
Megan: she's very good at separating the emotion from the technicality.
Friend: Yeah. exactly.
Yeah. And I actually think it's quite helpful to have, something to focus on other than the emotional. I think that if you look at the technicals of it, if that's what we call it, and I'm going to get to that when we get to the math, is that the inputs, the costs, Right. It helps you to be less emotional about it and more, more just business. Like this is business. this is your superior cotton. So take it or leave it it's the same with leather, right. and sorry to our vegan friends, but, you know, people are still buying leather handbags, in some places and some of us love our leather handbags for better, for worse.
Megan: Right.
Friend: and we can tell that when we walk into a target and pick up a bag,
it's not the same as when you're in, you know, in Barcelona or, or somewhere in Italy, where the leather is like the most beautiful top of the line. Like you can feel it
it's the same here and price accordingly.
Megan: Word.
Friend: Word. All right. So that's one aspect of, pricing strategy. Another question for you is looking around, you know, what's happening in the market. What's happening? I don't know if I would necessarily say competition, but what are, similar producers What does that journey look like for you?
Megan: When I started, I definitely researched people who painted similar, medium, similar style, maybe similar subject matter, even similar age group. When you're emerging is applicable. And then once you're emerged like a butterfly, once you're established, yes, it's not no longer relevant, but when you're emerging, it is, I think a person fresh out of art school can talk to peers and they can price their work accordingly.
Right. I wasn't that young when I started professionally, but I was pretty young. And so I felt like at least a group of peers was kind of obvious, like on the internet. So I use their work as sort of a rough guideline, some much higher than mine, some lower. And I sort of sat in the middle to start just to give me an idea of where to begin. And then I realized like I could figure out my own formula. So Yes.
Friend: Yes.
Megan: can look what the competition is doing. You can look at your peers, but you have to do your research because their factors are different. Right. Where you
Friend: Yeah.
Megan: Do you have children to pay for, stretch your own canvas or do you buy it pre-made like, there's so many factors involved. So I think, you know, it's just like a starting point.
Friend: Yeah, it's one of the inputs. And I like that you called them factors because what you just mentioned, there were, things like, you know, the environment in which you're selling you touched on a quality item again, you know, so that's where I'm saying, like, just, like we did with the risk topic. I want us to start thinking about things in buckets. So what is the factor here relating to quality? What is the factor here for what I want to say with my pricing and what is, what is it when it comes to the cost of items and what is it when it comes to, discounting and so on. So it's like, answer all the questions individually.
Megan: Yes.
Friend: And then look at what you have and say, does this make sense for, you know,. To consider all of these factors. A final one that I would ask you about when we're thinking about approach to pricing from a strategic perspective is it's kind of a big one and it's, it can be controversial. I know people sit on both sides of this, but I think that artists should be asking themselves, I discount? And even service providers, right? Like this is my time I'm, I'm investing. as a service provider, will I ever discount? And if I will in what scenarios and with whom will I discount?
Megan: This question is awful.
I will not answer. What I don't like is that I really am at the point now where I can say confidently, no, I'm not going to discount much more often because here's why I don't make a single cent if I discount my work. Truly I've worked out the equation, right? Like I know if I bump it down to one third, the price I'm making $0 or worse yet I'm taking a hit.
That's not good. You wouldn't want to do that to a friend. Right. And I understand that it's not in everyone's budget to own original art. It's just not, I barely own any myself. So it's not like I'm coming from this from my ivory tower. I just have to be ruthless because I need to have dollars to pay for my business.
So I often try and tell myself, I just can't do it anymore. Unless it's a painting that's been sitting around forever or it's like slightly damaged then. Yes, of course I can discount something that's scratched or dented or whatever, but overall, I'm not asking for a discount on like my car repair, my plumbing services, my gardening guy. Like, I don't definitely don't want to hire a discount babysitter. Like I actually pay extra because I want them to do a good job.
Friend: Yeah, exactly.
Megan: So I kind of have to think of it that way.
Friend: Yeah, I think that's so good. love hearing that. You're thinking about it that way. I think we have to think about why would we, why would we like ask the other side of a question? Why would you discount? What are you trying to accomplish by discounting? And if you think about retailers with inventory, like clothing and so on, why do they discount? They're discounting because they want to move merchandise that they can't sell. And so, for artists, listen to the message that, that sending to both yourself and your customers, if you're discounting like literal translation of discount is like to devalue or to like, not count it. like you are taking away from the value of something.
Megan: it's a bummer.
Friend: like, if something is not selling it's because people don't want it. it's
Megan: So true
Friend: so basic. Like if you have to drop the price to sell it, maybe it inappropriately priced, but it's because the demand isn't there.
Megan: or you're selling it at the wrong place, your audience isn't the right audience. And that's 100% the case for me, I will discount works on paper on occasion just to do like a quick Instagram sale, because I have like a following of people who have bought literally 20 paintings. Like there are people who just keep buying things. And so they're sort of like a VIP segment of this,
Friend: sure.
Megan: but That's sort of different works on paper. There's basically no overhead for me.
Friend: Right. And that's, we'll get to the discount, the effect of discounting on the math, but the effective discounting from a strategic perspective is the message that it sends. And so I think it goes again, back to the truth telling I think that if people don't want it it may not be about the price. And so you need to pivot and you need to figure out what it is like, how do you create something that people want not, how do you price it to get rid of it?
Megan: Or stop selling to your peers, sell to people who want it.
Friend: Yes.
Megan: That's the trick. That's the golden ticket right there.
Friend: Exactly. So when it comes to, you know, know this, this listener has said, like, she feels funny charging, full price. I guess my question would be like, what's funny about covering a, your costs and B your need to live. why does anyone deserve to not pay you for your work? I don't.
Megan: there's some deeply rooted there.
Friend: yeah,
Megan: can tell you it's rooted in being a woman pursuing a career. That seems fictional being told by professors. Like this'll never work for you. I mean, there's a lot ugly, ugly, baggage
Friend: yeah, I that. And I say, let's find a different solution to the baggage, then reducing the price. I just, I don't know that it accomplishes what we're trying to accomplish.
Megan: No.
Friend: So that's the strategic part of it. Those are some questions that when you're thinking about pricing in order to detach a little bit from the emotional, can you look at what your peers are doing, the quality of the work and whether you will, or won't what message you want to send with the place that you price it and
Megan: Yeah.
So good.
Friend: do you have any other sort of questions that don't involve math that when it comes to pricing that you think we should talk about?
Megan: I think you should just me with the math.
Friend: Okay. All right. Let's get into it. Pricing math dent into,
Megan: Scary. I feel tricked and duped.
Friend: I was always a good, we're always going to go here. So, all right. Here's the thing, right. it's it's really very simple. And I love what Amy said. Um, when we were talking to Amy, the accountant about like, she doesn't do any more complex math and then addition and subtraction, right. It's the same thing here. And it's just, I think Amy would, appreciate our take on this. Like just put the right things in the right bucket. You just picture like you have a basket and in one of the baskets is costs.
Megan: Yeah.
Friend: So what did you spend? And then in another bucket, you, what did you spend for that particular item in another bucket?
You have overhead, which you've mentioned a couple of times, we'll talk about that. And then in a third bucket, you have profit, you know, you have margin like that is the little extra that is not tangible, like the other two things. Okay. When you put those three things together, what you should have is your price.
And so the unknown or the X factor for a lot of us is the profit. So like any good formula you're solving for X, you work on the other ones first, Right. You make sure that, you know, what's happening with the other pieces. So costs, let's start with the cost bucket. Um, so I I think it's helpful to think about costs as direct expense for a specific item. So in your world, what would that look like? so let's say you get commissioned to do a painting.
Megan: Right. So I have to purchase the canvas or make it myself. So there's time or supplies, the colors of paint, some of which are more expensive than others. Many of which are really expensive. I have an example here for you too bad this isn't a vlog.
This is a tube of paint. It's two fluid ounces. It's about six inches tall.
It costs anywhere from 15 to $25.
Friend: For two ounces. it's like an expensive face cream.
Megan: Right. But I'm like, oh gosh. I mean,
Friend: How much of that? Can you
Megan: you know, like, do I, do I, do I like squirrel it away and only use like a little bit? No, sometimes the client wants that color and then you just, you go with it. You also then account for the frame. Are they getting it framed? Am I taking it to the framer for them?
Are they going with the luxury option or going with basic option the hour spent painting, emailing the client, having a client call, having multiple calls, making the invoice, sending the invoice, resetting the invoice. You know, the admin?
Friend: Do you have, an hourly rate for yourself that you use for all of these things? You don't okay.
Megan: because I not yet, I guess is my answer. Talk to me in September.
Friend: okay.
Megan: my hours are horrible Right. now because I'm a mother of small children,
Friend: Right, but it's not, uh, it's not the number of hours. It's the what? Like what do you pay a babysitter per hour?
Megan: 20. bucks.
Friend: So what do you, what do you think your physician makes an hour? I don't know, maybe 150 or 200 or something like that. What do you do? You know what I mean? Like every profession has as an effective, hourly rate that you can kind of get to by estimate. When we talk about the hour spent painting the hours, spent emailing the client that, you know, driving to have it shipped. You may not have the same hourly rate on all of those items. Cause it might be that you're More valuable as a painter than you are as an email or a and when you got to the, you know, the artists that has the person working with them. And right? though, those people in that studio would be paid at different hourly rates. But the point is that for that one painting, there were hours that went into it and those hours should have a rate. So that's, that's, those are great, by the way, you just, you just like nailed. I give you an, a plus on that. So in your accounting and pricing exam costs, your costs, basket is full for this painting. you know, you've identified all the things that you put in the basket. So for others listening and thinking about their own pricing, it's going to be different in the basket. Right. Chi-Chi talked about hers, her time on shoot and her, editing time.
Megan: yeah.
Friend: So everybody's basket is going to be different, but the container is the same.
Okay. So fill that container first. Cause it's the easiest one to fill it's the most tangible.
Megan: Yes.
Friend: Okay. The next most tangible container is overhead overhead expenses. So we, what size was the painting? We just cost it out.
Megan: Four feet by six. feet. So we're at 48 by 72. So like $3,200.
Friend: okay? All right. Okay. So that's our starting point. So already you have undercharged me. If, if you, if you tell me that? painting is $3,200, you've undercharged me.
Megan: I know. That's the problem.
Friend: I know. I know it's a problem, but let's keep going. Let's keep going. Let's keep going. So then we're moving into the next basket. The next basket is overhead.
That's indirect expenses. that if you didn't paint that four by six, for me, you had the many ways you're going to have them throughout the year. So some of those things might be, if you rent a studio, Uh, you pay an accountant?
Megan: Yeah,
Friend: Okay. that that's not, you're not paying that accountant because of my four by six painting
Megan: right,
Friend: Right. So that's what I mean by indirect, they're not tied to one piece of art they're spread across. but they need to be still covered because you can never make up that if all of your paintings are only priced with your first basket of costs, you can never cover the costs of your second basket. Let alone give yourself anything extra.
Megan: Uh, yes. I would just like to pause there and let you know that the artists are all shrieking, like everyone's shrieking, because I want you to understand that emerging and established artists, most of the time are living I don't want to say paycheck to paycheck, but painting to painting. I just want to tell you that's the reality of it. Many people are not, I don't want to like swath it over the whole group, but it's um, feast or famine baby.
Friend: I know. Which is why I go back to, and this is why I'm glad we're having this episode now in the chain. And we've talked to all of these other wise women, which is why Evie was saying, if you're going to do what you love and create beauty and be in this kind of business, you might just need a partner and you might just need somebody who's honest.
And you might, you know what I mean? Like you might end, like you talked about the scaffolding of your business. You might not be able to just sell one painting and then famine. Right. So there, there has to be this reality check around. Okay, that's fine. you can't price exactly what you need to on each painting from the beginning. And maybe you're not selling enough of them, but what else is paying the bills? Right. And we talked to Amanda and she was doing the graphic design and we know you're doing the teaching and So it's that's right. That's right. Exactly. So, but nevertheless, we have to still cover the overhead.
Somehow it might not be in the price of the painting. Ideally I'm, I'm walking us down a path to the price of the painting covers everything else. But in reality, not everyone is there. I hear you.
Okay. So it's things like bank fees, you know, you need internet, you have to pay for zoom.
those are basically shared. So you have to do some, some estimates or some division of sharing that cost. So maybe you look at it on a monthly basis. Here's my overhead. And then I I'm going to sell five paintings. So I divide the overhead by five. right. But you have that, that sort of bucket.
Okay. Then we get to what I thought was going to be the scariest one, but it sounds like maybe it's overhead, the last basket is profit.
Megan: No, really? I love the profit.
Friend: This is where it gets fun. and this is where I really encourage women, especially to like, Leave themselves some margin and pay themselves, you know, like you give yourself some something to work off of here, something to retire off of. So with your profit, you're able to reinvest in your business if you want to. And you're able to save and put a little away for a rainy day and you can pay yourself. you know, some people do it quarterly. Some people like you can give yourself a salary or, share of profits depending on how the business is structured, which means that now we have three components. If you stop at the first one, you can't cover the second one and you'll never make any money.
So when you're pricing a painting, you go you said 3,200, let's say your overhead works out to another. 300 just for simplicity. So now we're at 3,500 for that painting. And let's say on every painting, you'd like to be able to save $200 for retirement or whatever, or a hundred dollars for supplies for the next painting. So then you, you know, you need to charge between 3,500 and say 4,000, so that's kind of the, the mindset of a little margin, a little extra on top of, it's not greedy.
Megan: No.
Friend: It's, hopefully not impossible if people want your paintings. right. They need to they're trying to support you to live, not just to paint, not just to grind, but to like, be able to go out for a date night and buy yourself a nice pair of shoes. Right.
Megan: right.
Friend: I mean, that's my ideal is a date night and a nice pair of shoes.
Megan: and shoes. Truly. It's all I want.
Friend: So thoughts on that? Is that like,
Megan: it's achievable. I mean, th the formula is kind of like made me take a deep sigh. It's just that it's not often taught. I don't know if that is, it's taught now, but when I went to, you know, state school and the art department, it wasn't like a thing we were crunching numbers about around it should be.
Friend: Yeah. hard when it's a theoretical like that when you don't have
customers and you don't have actual products, but you get into it, you know, over the years. And I, I know from our chats that you've, you've been able to shift this a little bit and maybe at the beginning, you're just barely. covering your costs.
Megan: barely. I mean, true. I can tell you years. One through three, I just was happy if my art paid for the art, right, like I would go to the art store with the profit and go on my little spending spree and buy the supplies and then make the next painting. And that felt like this is sustainable because I wasn't dipping into anything.
Friend: Right. And that's a pricing strategy, right?
That's an entry to market strategy, but that isn't where you live your whole career.
Megan: no, you can't quit your day job on that.
Friend: exactly, So you have to keep reevaluating and saying, am I out of that phase yet?
Megan: And it's nice when you exit that phase for me, step two was paying myself, which people debate about some artists don't pay themselves. That's fine. Whatever your needs are, is whatever you do. But I like to pay myself every two weeks, I cut myself a check to like the family fund.
Friend: Oh, to have some regular
Megan: And I like to brag about it endlessly to my husband.
Friend: Is
Megan: I'm not kidding.
Friend: where he's like, yeah, Okay. Megan,
Megan: It's like, yeah, everyone gets a paycheck every two weeks in the real world. I'm like, did you see.
Friend: Is it the same every week? Or is
Megan: No, sadly not
Friend: It's variable, right.
Megan: it's variable, but within sort of maybe a comfortable range now where I can kind of predict, but that was not the case years. Three to seven. I'm telling you now it's like more the case than ever, but I, I, love to tell him that I paid us. It's a pride thing. Right? So I've, spoken to, um, an artist coach who recommended doing that for me, because she knew that my value as an artist was attached to the money I was bringing in and she could tell when we talked.
So she was like, how about you just make a power move and pay yourself every two weeks and then you'll feel better about it. And I was like, you know what? That's brilliant. Simple, but brilliant.
Friend: And there are some people out there who are like, I don't like, they're just not even minded that way. it's just not in their desire list, which is cool. But, some of us are not minded that way and are very motivated by like, I earned that. That's my dollars.
Megan: right. Or, like you're paying the bills a different way and that's totally fine. Yeah. There's not like a right way to do these things.
Friend: but so I, I guess I would say that as you evolve in your pricing, whether it's in photography, in event planning, in painting, as you evolve, keep an eye on, you get to the point where the price that you're charging not discounting, in the end has an element of all three of those things. of your true costs specifically to the event or the product, your overhead on a monthly or regular basis. And then some, for you, some margin, for, you know, life.
Megan: Our two friends Justina and Kristin, who both were interviewed on this podcast would 100% agree with that. And I'd say that there are probably two of the most kind and genuine people we know, but are ruthless business owners, they're paying themselves well, and they're
Friend: They're not negotiating.
Megan: No.
Friend: they're saying, this is my price, there. They were both also you know, 10 or 15 years into it, around, so let's say average 10 years.
Megan: But they're also successful and it's because they're not discounting themselves. So this is all, it's all interwoven.
Friend: Exactly. So I think that, to kind of circle back to the question that we got from the listener, do you think that we've treated that one fairly and appropriately?
I mean, we can't tell them what to do, but, you know, the question put to us was how would you handle this situation? you know, I think we've given some ideas without getting into giving advice.
Megan: One more thought I have on this matter is I personally have seven benchmark for how many pro bono activities I'll do a year.
Friend: Yeah.
Megan: So I'll donate one painting to a school gala.
Friend: Oh, cool.
Megan: one moment of my time to something cute and adorable that I can't resist and I'll do one or two discounted things for family and friends. Boom.
And that's part of the formula,
Friend: exactly. And that's part of you, you're a given persona, right? Like it's part of, we talked about this with Evie, like just have a, have a look at what you're going to give in a year. If you have that ability
Megan: Right.
Friend: be intentional about it. And then when, when asked for the 12th time, you can say,
Megan: sorry.
Friend: know, I'm sorry. but I've already done that three times this year. And that's the, that's the limit, you know, and pick your people that you're things for free for that you're giving things away to. And then you're not being not generous. You're being, you know, you're having boundaries and that sounds healthy.
Megan: Yes,
Friend: I didn't know you did that. That's really cool.
Megan: some topics that are irresistible.
Friend: Wait. So Like, if I wanted you to paint me a bunny, would you have
Megan: no,
Friend: out of the goodness of your heart? What I mean, no, don't give it away because then you'll get all these requests. no, no. no.
Megan: the Pandora's box is opening. If it's like cute children who want to learn about art, I'm like, I'm there.
Friend: Oh, that's cute.
Megan: if you can pay or not.
Friend: That's cute. Yeah. Well
Megan: I'm just a sucker.
Friend: ah,
Megan: But as a result, I have to be a little, I have to say no, thank you sometimes.
Friend: yeah,
Megan: All right. We're verbose.
Friend: we are. mean, I feel like I might've preached too much.
Megan: No, I like it.
Friend: I also would like to acknowledge that it's very easy for me to sit, in a corporate space and get a regular income and then be like, you should all charge more and don't discount. Like I understand, but I, I also would like to encourage, to just think about like, why we're doing things and what's the message being sent.
Megan: I also think you've dabbled enough in the creative world that you have a perspective that's worth listening to. I mean, many people have done both corporate and small business. Right. And so there are a lot of people out there that can talk from both sides of the aisle.
Friend: Yeah. you know, I've been in a position where I had a bunch of products that I thought were fabulous and that people were telling me we were fabulous, but they weren't buying. And, you know, tried, a little discounting and ended up deciding that this is not the right business at the right time, at the right place, with the right products and closing down and giving away.
Like, I didn't even discount. I had all my girlfriends over, we had a party and I gave away and I wrote off the items, like from an accounting perspective because, because it was, you know, I had already spent the money and real customers weren't buying them. So if real, customers who aren't like being charitable to me are not buying them, why should I ask the people who are trying to help me and being willing to pay a little bit? Why do I ask them for just pay a little less? Why don't I just give it to them? Cause they're like their heart's in the right place and I've already spent the money. so I have actually been in the, chair of this isn't working, people are not buying, do I tinker with discounting or do I say, you know what?
I actually need to go and get a job because it's not working. And, you know, and by the way, I've also been requested to discount myself, on a salary basis. like, I've had job offers for I'm like, you do not, you are not going to, I can't work for you. I can work for you halftime if you want, or like one day a week. Like you know, so it, it does come across a little bit, sometimes in corporate where, or, you know, people ask you to work on things that aren't your job or extra hour, you know, weekends and so on. And so it, it comes in, in a, in a sort of different format, I think it's all down to like boundaries and deciding where you're willing to, to give and not.
Megan: I agree. Okay. I think we have to end there because there's like 17,000 more topics, but we're going to have to split this.
Friend: Okay.
Megan: What do you say?
Friend: That sounds good.
Okay, so that's what we had for pricing. this is sort of pricing 1 0 1, it's our thoughts and ideas. thank you, Megan, for allowing us to use you and your business again, as an example, a live case.
Megan: I'm a real Guinea pig, but I really liked this conversation and I like breaking down the elements of pricing because I think it's so daunting. And I think it's not necessarily approached the right way by people in the creative world. And I think we need to take a chill pill collectively and remove the emotion if we can, from the conversation.
I know it's hard, it's impossible for a room full of artists to, to not feel emotionally about their art. I'm not asking people to do that, but I want people to be successful. Right? So the whole whole goal is to just feel confident about what you charge and eventually become successful over time.
Friend: Yeah, so from a homework perspective, I guess I would say very similar to what we did with the risk episode is see if you can, for your own business, categorize your costs for your goods or service. And, get a good handle on your overhead.
And then think a little bit about what would it mean to put in some margin in your pricing. And those are your three elements. And then, you know, do a little, a plus B plus C equals D and see like, are you comfortable with D and if not, which of the levers can you pull, you know, to adjust it.
Megan: I love that homework. I think it can be done like on a post-it note or
Friend: Yeah, totally.
Megan: or scary, so it's a good assignment. And I think it's kind of a relief to think about.
Friend: Yeah. And so that's for the artists in the room for the women in finance. I think that, if we all could just be, coming along in support, like talk to one of your artists, friends about it and be like, Hey, did you know if you ever need somebody to bounce an idea off of, from a pricing perspective? Like just be sort of available to
Megan: shoulder to cry on, but truly, I mean, having someone who's confident explain something that seems frightening is a huge gift. So sorry. You're doing pro bono work after we told you not to. Thank you.
Yeah. Got to help out.
Friend: As always, for listening to The Arts.
Megan: This is Megan of Art by Megan.
Friend: And her friend, your patron of the arts.
Megan: Wishing you more art.
Friend: And maybe, a better understanding of your money.
Megan: Thank you.
Yes.
Friend: Nice to see you.
Yeah.