Pricing your work can be a difficult thing to do, some rely on their instincts of what they believe is a fair price while others make assumptions based upon what others are charging, what the markets will stand or what they believe their customers can afford.
These are all valid points. However they are not accurate financial indicators to your individual business circumstances, meaning that we all have different costs, profit margins and overheads and therefore all will have different pricing policies. You need to know whether your business will be in profit when quoting a figure or if you are making a loss. More importantly you need to know what your “break-even” point is.
This pricing guideline will enable you to break down each element of your business expenditure, (material and overhead costs etc) including the biggest expense YOU. You must consider how you value yourself and your time not only as a creative person but as a consultant and business person and how much you have invested so far in reaching this professional level. The guideline will also help you to consider what may go wrong or to take account of unforeseen costs and make sure that your business has some money left in its account at the end of a project.
You might want to try out different variables when using this format, but remember, once you have decided the figures and percentages you are going to use, stick with them and don’t change them, otherwise this will cause confusion. You are better using one consistent format for every market place or customer.
What materials are you going to require to undertake a task, co mmission or project? These may include experimental,
mock-up or proto-type costs as well as materials needed to fulfil your order.
This is entirely up to you what you set your rate at but you must consider yourself as a
professional, not an amateur. You must also bear in-mind that you won’t be working full time on
the business all the time, you don’t get sick pay or holiday pay and most importantly it is you that
takes the risks: the buck stops with you!
Look at what other creative people are charging.
Avoid charging yourself at the same rate as a low paid employee.
There are many different ways in which people cost their time, some by the hour, others by a half
day or a full day rate, a lot of this is dependant on what you do, i.e. if you are a sculptor producing
an artwork this would most likely be charged at an hourly rate, if you are delivering a 2 hour
workshop session you would probably charge a half day rate (given travel and prep work).
You are most likely spending additional time on the business that you haven’t accounted for (bits
of travel, sketching ideas, nipping out to the shops to buy materials etc) and also spending small
amounts of money on the business that you aren’t considering (emails, internet, small items):
you do need to account for these.
Also you need to add a percentage into your budgets for anything that could go wrong
(installation problems, extra material costs, extra delivery/ transport costs, breakages etc).
This percentage is called contingency and it covers you for all of your unseen cost. What you set
your contingency percentage is up to you, but you need to consider your risks, i.e. a painter may
have a lower risk and therefore charge 7% and a public artist will have a higher risk and may
have a contingency of 30%.
At the end of the day you need to remember that you have a business and that business needs to
have some money left at the end of a project or end of the year. If you can get into the mind-set it
is useful to consider yourself as an employee of your business, i.e. the business is one entity and
you work for it - separate it out. Profit can be used to buy new equipment, update your website,
get new brochures, or give yourself a bonus …. The average national profit margin is 24% and
again it is up to you to set your margin.
The main thing to remember in all of this is that when you set your formula stick to it and don't
keep changing it to suit an audience or what you think your product/service that you have just
created or delivered is worth.