Making a Profit with Your Art
by Carolyn Edlund
There can be a world of difference between making a sale and making a profit. Do you know if your small business is profitable?
I recently talked to a friend who was having images of her paintings reproduced in miniature to create a line of jewelry. She was ecstatic. Another way to sell her work! But once we took apart her costs and how she planned to sell wholesale to stores, it became apparent that she actually wouldn't make any money at all with her current plan. She needed to rethink everything.
Wholesaling is a model that can work for artists who are able to put their work into production and create multiples. The formula for pricing at wholesale is:
Materials + Overhead + Labor + Cost of Sale + Profit = Wholesale Price
Profit is an essential part of this formula, and normally should be about 20% - 30% of the wholesale price. But what is profit anyway?
Profit allows you to grow your business. It lets you buy new equipment, or to expand and grow your business by investing in ways to produce, market or sell. Profit is not what you pay yourself. It is money that gets reinvested in your business.
If you are a 2D artist pricing by the inch or foot, do you understand your costs? Do you understand what the gallery will take and does the remainder you have left cover overhead, materials, labor, and profit too?
How do you get to the profitable point? If you are not profitable now, you must lower your costs and/or raise your prices to build the profit in. It means that you find sources for materials at wholesale prices, rather than buying at retail, perhaps ordering in volume. You may need to lower your labor costs by creating a system to "work in production" in your studio, making things more efficiently. It may mean that you "scale" your business by having reproductions of your work made and selling them, rather than only selling originals.
The more complex or finished the materials that you buy, the more expensive they will be. If you use found materials, you have a distinct advantage (although figure your costs in sourcing them.) If you are purchasing silver and gold as materials, you well know how volatile prices can wreak havoc with your pricing, and proceed carefully.
Do you spend umpteen hours on one piece, and cannot possibly get the price you would need from it? This labor of love results in art that would not be practical to sell profitably. Understand why you are choosing this approach, and that it would not fit as part of a business plan for a profitable business.
If it's important to you to become a full-time artist, you must take a hard look at the potential ways you can sell and what you need and want in your business. If you cannot reach the point where you pay your costs, yourself, and create profit as well, you may not really have a business – just an expensive hobby.
This article is courtesy of Carolyn Edlund
Carolyn Edlund, founder of Artsy Shark, is a business writer, speaker and consultant for artists. She is the Executive Director of the Arts Business Institute, presenting at art business workshops throughout the United States. Carolyn works with artists every day in strategy sessions designed to help them structure their businesses, set and reach their goals. Find out more about scheduling your own business consultation with Carolyn here: https://www.artsyshark.com/build-your-art-business/