How your work is valued, and the costing and pricing strategies used, will depend on the art form you operate within as well as its location(s) and audience(s). This guide introduces tools to help you consider the value of your work in your particular context. The guide covers Considering value
Income streams Costing work Costing your time and calculating a daily rate This guide is accompanied by further information on our website linking to specific rates of pay information and pricing strategies. 1/29
Introduction In pricing work, you are aiming to balance what your clients / audiences are prepared to pay, (the market value of your work), with
the costs of creating the work, (your outlay including materials and time). The price should reflect the work’s value which you arrive at through market research.
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Adding up the costs will help to establish whether you will break even, be in profit or require subsidy and investment. Ideally, the
market value will be greater than the costs, giving you a margin to invest in you and your work.
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Considering value The value of your work is influenced by a number of factors: •
distinctiveness; how similar or unique the work is
•
market price; if it fits a low or premium going rate
•
adoption; how established the relationship with the audience is and how quickly the work will be bought
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These factors represent the context in which you present your
work, which helps your clients, customers and audience judge value. For instance, in an established venue with a knowledgeable audience, the work may be highly valued, considered worth a
premium price and sold quickly but elsewhere the same piece may be under-valued and unable to command a low price. Considering these factors can also help you explore the range of income streams available to you.
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Income streams Depending on the range of your skills and activities, you may be able to identify a number of potential, earned income streams for your work. You could be selling a number of different ‘services’ or ‘products’. For instance you may produce editions of work, have a regular gig slot, do copywriting, reviewing, and deliver workshops which provide a reliable, frequent income at a relatively low market income whilst creating one-off, more expensive works. These premium pieces may take time to sell and fetch their true value but can help to raise your profile and establish your reputation and
relationship with clients and audiences.
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You can consider the range and value of different income streams
by plotting the different aspects of your work against the first two value factors; distinctiveness and market price. Income streams are placed along the distinctiveness axis according to availability, exclusivity, competition and the frequency or quantity of production or delivery. Income streams are placed along the market price axis according to the customer’s perception of value, budget, affordability and comparison to current market rates. 9/29
Examples are given for: •
Visual arts, crafts and design
•
Music
•
Screen & digital media
•
Literature
•
Performance
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corporate design fee
one off / bespoke commission domestic design fee gallery shop retail
workshops & classes production pieces licensing royalties
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Visual art, craft & design income streams
new writing commission headline tour corporate gig
session work support slot workshops & classes royalties
downloads
merchandise regular gig slot
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Music income streams
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Screen & digital media income streams
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Literature income streams
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Performance income streams
Try plotting your own (potential) work and then overlaying the venues,
agents and / or spaces which you want to distribute and sell through. •
Is your work in the proximity of the work they usually present?
•
Which matches your work’s profile best?
•
Which could present your work now and in the future?
•
Which work will you prioritise?
•
How does your decision impact on your cash flow and the investment required in your business?
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Exploring the third factor, adoption, might help you answer those questions. Consider how new or established your work’s profile is with clients and audiences you are trying to attract. Try split ting clients and audiences into groups of people who seek out new work (innovators and early adopters) and those who gravitate to more established work (late majority and laggards).
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Adoption lifecycle
List the types of venues, distributors and publishers who work with and attract these types of audiences and highlight ones that fit with your work
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Costing work How much your work costs to make may vary from the amount at
which it is valued. Doing a costing exercise will establish any variation and whether you break even. If creating the work means you are making a loss, you need to consider: •
Presenting it in a different context so your work can increase its value. This may mean working with a different audience or market, or adding value to your presentation and reputation.
•
How to make savings in the time or resources used to produce the work.
•
Subsidising the work through other profitable activity and outside
investment.
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The key elements which make up the cost are:. •
direct costs; costs specific to the piece (e.g. materials, hires, delivery and time)
•
overheads; costs general to the business (e.g. rent, power, phone, insurance)
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Direct costs should be easy to allocate to specific work and are often itemised in an invoice or detailed in a project budget.
Overheads are usually allocated as a proportion of your annual running costs equivalent to the time spent on work. They are often presented within a daily rate.
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Costing your time and calculating a daily rate One of your key costs is your time. By adding your overheads, (the costs of running your business), to your personal salary, (the cost of running you), and dividing those by the days available to work, you can calculate your daily rate.
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Out of the days available to work, make an allowance for the time you spend doing administration (e.g. invoicing, planning, marketing) so that this
becomes part of your rate. You should aim to spend 25 - 40% of your time on administration: any less and no one will know about your work and you won’t be in control
of your paperwork; any more and it may not be financially viable (unless you have very low overheads). If you don’t allocate any time to admin you will be doing all the chores in your own time for no pay.
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Overheads plus Salary
Days per year
Holidays
Contin -gency
Admin
Total days available
Weekends
no admin time
£27,000
365
104
30
5
0
226
£119
£15
admin at 25%
£27,000
365
104
30
5
56
170
£159
£20
admin at 40%
£27,000
365
104
30
5
90
136
£199
£25
Daily Hourly Rate Rate
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Pricing Once you have worked out all the costs associated with a piece of work and its value to your clients and customers, you will be able to
established a price. Pricing structures for each creative industry vary; and links to further information are given on our website.
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Income The price and the number of sales or fees associated with that work will form your income. It is common practice to present predicted sales figures and funding
along with costs in the form of a budget so the balance of income and expenditure can be viewed easily. These figures can also be entered in a cash flow to see the impact of outlay and income over time and establish a timescale for breaking even. 28/29
Next steps For further information on this subject, please refer to the following resources: Budgets Guide Cash Flow Guide Costing Your Time and Daily Rate Calculator Making Live Music Pay Planning to Sell at Trade Events 29/29
Disclaimer: Cultural Enterprise Office is not responsible for any advice or information provided by any external organisation referenced in this document.