How to Price Artwork: Your Billable Rate
When you are self-employed, you set the value of your time. You determine how much you make and how much time you spend working. This is one of the best part of self employment—it it can also be the hardest part to get right. Setting your billable rate will make it vastly easier to know how to price artwork.
So how much should you charge for your time as an artist? Start with the big picture (annual goal), and break it into small sections until you get to your hourly rate. Then you have what you need to set a billable rate for your work.
Determining Your Billable Rate
What’s your lifestyle goal?
Identify what monthly/yearly personal expenses you want to support. (Note: these are not business expenses like studio space, materials, computer for work.) Then set an annual salary goal that would achieve this (don’t forget about taxes). At the beginning, start with what you need to survive. Consider basic financial self-dependence a major success to be proud of. Establish a stable income and sustainable operation and it will be easier to grow.
How much do you want to work?
Your lifestyle covers your personal expenses, but work-life balance needs to be considered as well. Set an hours-per-week target that includes all work: inspiration, practice, production, marketing, sales and administration.
Determine your hourly rate for pricing.
First, take your annual salary goal, and divide it by 52 weeks in the year. As an example, let’s say your salary goal is $52,000. This means your weekly revenue target is $1000 dollars a week. But there’s a catch…
Not all time is billable. Your customer doesn’t want to pay you directly for your administrative, marketing and sales hours. But they will pay for your production. Therefore, your billable production rate needs to account for non-billable time.Using the example above, let’s say your goal is to make $1000 in a 40 hour work week. Your hourly rate (what the business pays you) is $25/hour. But you estimate 50% of your time (20 hours) is spent on hard to bill or non-billable tasks. So to make $1000 a week in 20 hours you need to charge $50/hour—this is your billable rate.
The full equation described above looks like this:
[Annual Salary Goal/(Weekly Work Hours Goal * 52)]/Proportion of Billable Time = Your Billable Rate
Using numbers from the example it looks like this: [$52000/(40 hour x 52 weeks)]/.5 = $50/hour.
To review:
- An hourly rate is what the business pays you.
- A billable rate is what the business needs to make to cover expenses (like your salary in this example.)
For a freelancer or a self-employed person getting started, these simple calculations are a good place to start. This billable rate sets the foundation for how to price artwork. This is the number you need to take home. As the business grows, your pricing needs to cover additional costs and expenses as well.
Higher billable rates require more sales energy.
The audience and customer needs to know why your time is so valuable. The higher your prices, the more convincing required.
Communicate your process. Even though we’ve calculated a billable rate using strict measures, the value artists provide transcends any one hour doing your work. Each hour of your work is the culmination of a lifetime of honing your craft. The real cost of art is immeasurable.
Communicate your uniqueness. Help them feel something special that money can’t buy otherwise. Remind your audience they are involved in an exchange that transcends money.
Ultimately, as the business grows, billable rates evolve and account for more expenses than the owner’s salary. A sustainable business needs to cover costs of production and expenses besides your salary. Furthermore, to make a “profit” your price needs to exceed your time, costs and expenses.
To dig deeper, read more about how to price artwork and recover direct and indirect costs. If you’re ready to grow your artistic practice, coaching will help you determine your billable rate, and start building a sustainable creative business.
Banner art credits: Mantel Clock by Ulrich Fischer and Lorenz Rothkranz is watercolor and graphite on cardboard from the Index of American Design. The art in the Index of America Design, including Fischer and Rothkranz, catalogs clean well lit renderings of familiar objects without shadow or context. In a graphical style, they lend themselves to digital re-interpolation. Used in this way, the clarity of depiction gives the object the air of a symbol.
