How should I price my work as an artist or designer?

Price a piece by adding up what it costs you to make: materials, your time at an hourly rate that actually pays you, and a fair share of what the studio costs to run. Add a margin of profit on top. Then set your retail price high enough that half of it, the usual wholesale price, still covers all of that. Finally, check the result against what similar work sells for where you want to sell it.

That's the whole method. The rest of this post walks through each step with a worked example, then covers commissions and when to raise your prices.

Start with what one piece costs you

Every price starts from three costs. Leave one out and you pay for it yourself.

• Materials. Everything that ends up in the piece, plus what gets wasted along the way: offcuts, failed firings, test pieces, packaging and shipping supplies.
• Time. Every hour the piece takes, including design, setup, finishing, photography and packing. Time it for a few pieces; most people guess low.
• Overhead. What the studio costs whether or not you make anything this week: rent, tools, software, insurance, fair fees, your website. You'll spread this across your hours in the next step.

Set an hourly rate that pays you

Your hourly rate has to cover three things: what you want to take home, the studio's yearly costs, and the hours nobody pays for directly, like email, applications, bookkeeping, marketing and trips to the supplier.

A simple way to work it out:

1. Decide what you want to earn in a year, before tax.
2. Add up the studio's yearly overhead.
3. Estimate the hours a year you actually spend making or designing paid work. Leave out admin, time off and slow weeks.
4. Divide the first two added together by the third.

For example, say you want to earn $45,000 and the studio costs $9,000 a year. If about 1,000 hours a year go into paid work, your rate is $54,000 ÷ 1,000 = $54 an hour. These numbers are an example only; put in your own.

Studio income is taxed differently from a paycheck. In the US, self-employed people pay self-employment tax of 15.3% for Social Security and Medicare on top of income tax. If you expect to owe $1,000 or more for the year, you generally pay it in four estimated tax payments through the year. Set your target income high enough to cover that. This is general information: the linked IRS pages are the official source, and an accountant can tell you what applies to you.

Add profit

Materials plus time plus overhead is your cost. Selling at cost means the studio never has money of its own: nothing for a new kiln, a slow month or a fair that doesn't sell. So add a margin on top. The percentage is your call; the example below uses 20%.

Cost plus profit is the least you should accept for a piece. It's usually your wholesale price.

Retail, wholesale and consignment

Retail is what a buyer pays. Wholesale is what a shop pays you to buy the piece outright and resell it. The common convention, called keystone pricing, puts wholesale at half of retail, so the shop doubles your price.

That's why you work forward from cost: cost plus profit becomes your wholesale price, and retail is twice that. Then keep your retail price the same everywhere you sell, including your own website and open studios. A stockist won't stay with you long if you undercut them online.

Consignment is different: the shop or gallery shows the piece, and you're paid your share only when it sells. Your share is the retail price minus their commission, and commissions vary by venue, so agree on the split in writing before the work leaves the studio. Keep a list of what's where, with the date each piece went out.

A worked example

Take a stoneware planter, using the $54 rate from above. All the numbers are made up to show the method.

• Materials, with breakage and packaging: $14
• Time, made in a batch of ten: 50 minutes each, so about $45
• Cost: $59 (overhead is already inside the hourly rate)
• Profit at 20%: about $12, so wholesale is $71
• Retail: $142, rounded to $145

If $145 is well above what similar planters sell for, don't lower your hourly rate. Look at the time instead: bigger batches, fewer steps, a simpler glaze. If the piece still can't earn its keep at a price people will pay, it may be better as a one-off or a commission than as a product line.

Pricing commissions

A commission is priced the same way, with two additions. First, design time counts: sketches, samples, meetings and revisions are hours like any other, so estimate them and put them in the quote. Second, a one-off piece carries more risk than a product you've made fifty times, so estimate the time generously.

Write the quote down with what it includes, how many rounds of changes are covered, when it expires, and what happens to the price if the scope changes. Take a deposit before you buy materials, and bill the balance on delivery.

Check against the market

Your costs tell you the lowest price you can live with. The market tells you the ceiling. Look at work like yours, at a similar stage of career, in the shops, galleries and fairs where you want to sell. If your number lands in that range, you're set. If it's well below, you're likely underpricing. If it's well above, revisit time per piece or where you're selling.

When to raise your prices

• Work sells out quickly, or you have a waitlist.
• Your materials or studio costs went up.
• You've been in a few strong shows, won a prize or got press.
• You're turning down work because you're too busy.

Raise prices on new work and new orders, and give your stockists and galleries notice before the new prices take effect. Small, regular increases are easier for everyone than one big jump.

Keep the numbers where you work

Pricing gets easier when your real numbers are easy to find. In Plya, each project can carry its own hourly rate, and you can track the time a piece really takes. For commissions, that tracked time can become invoice lines at the project's rate. Potters can see how Plya fits a ceramics studio.