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Pricing Stuffby Ellen Million
As the prices drop for setting up your own printer (the printer, if not the ink!) and new gadgets come out that allow artists to make their own great stuff, more and more of us are faced with the question of: what do you charge for things you make out of pieces of artwork you've already created?
Pricing commissions is a topic I've tackled before, but that topic is directly involved with creating new artwork to someone's specific requirements - essentially being hired to put the paint (or pixels) on the page. Pricing merchandise is a totally different bowl of fish, because the time spent on the artwork itself is pretty much irrelevant. That labor gets spread out over a potentially enormous range of products. What's more, you may have been paid for that initial work, if the piece was commissioned, or if it is a traditional piece, you may sell the original to recoup some of that labor. (You may even sell a single edition print through Portrait Adoption!)
So, what do we consider?
The simplest place to start is at the actual materials that will go into the product being sold.
This is fairly straightforward math, but there are a few steps, so grab your calculator and a scrap piece of paper. For each product, list the ingredients - every consumable that is going into the thing. For example, if you are doing laminated bookmarks, you need to count the paper, the ink, the lamination and the tassel. You can even count the electricity needed to run the lamination machine, because that is something you use up with every product, but in general that ends up being pretty negligible, so you can skip it if you aren't interested in that level of detail. (It's also pretty hard to quantify.) Don't include start-up costs here! Those we'll discuss further on.
Now, figure out how much each page of bookmarks costs you!
I order my lamination from one place, tassels from another, my paper from another, and my ink from a fourth location, so I have to pull out a few receipts.
Lamination and tassels are the easiest of these, as I order them each from a company all by themselves. So I take the total cost of the order, with shipping, and divide it by the number of lamination sheets or tassels I get in the end. My lamination comes out to about $0.45 per sheet, and my tassels come to approximately $0.50 each.*
Paper is harder, because I order a lot of different packages at the same time, so I end up having to divide shipping up and figure out about how much of that shipping went towards the letter sized paper, and how much went to other sizes. I tend to simply divide the shipping cost by the number of packages of paper I ordered (the larger size papers come with less in each box, so it's about right), and then use that as the shipping cost for one box. Add that to the list cost of the box, and divide by the number of sheets in it. Viola! The cost of the sheet of paper. For bookmarks, I use a mid-grade, heavy-weight coated paper that ends up being about $0.30 a page.
Ink is harder yet! It is very difficult to monitor how much of your ink is going to the product, how much of it is getting used up in cleaning cycles and start ups, and how much of it is going to wasted prints (we'll talk about that further below!). I have a high end Epson that consumes ink like a lush consumes booze, and I generally estimate about $1.00 per page for ink. Bookmarks have a little space between them, so they may not use as much ink on that side as a print would, but I also print my web URL across the back of the page, so it evens out.
Add all that together (except the tassels! Note that they are per-bookmark, not per page!) and we end up with $1.75 per sheet. I get 6 bookmarks to a page, so we're looking at $0.30 per bookmark. With the tassel, we're looking at $0.80.
Let's pull up a spreadsheet and start tracking this... having our numbers in each category down on a page will simplify things and allow us to do each product with more ease! I use Open Office (which is freeware), but Excel is also a very common spreadsheet. program.
Related, but not entirely the same, is your packaging cost.
Some items may not have any packaging at all - my bookmarks can easily be hung on most displays, and they're durable and can be washed off, so I don't use anything to protect or display them. They already have advertising on the back in the form of my web URL.
Stickers, however, require a little more attention. For retail display, I have to make them look good, give people a way to see them, and protect them. They're small, and just putting them out on a table is problematic and eats up very valuable table real estate without making a good impression. What's more, I will inevitably get a dozen people in a day asking "what is this?" because they look just like tiny prints. This will happen regardless of how many signs I have next to them stating what they are and what they cost, or how large said signs are. The next question asked will always be "what does it cost?"
So, I use clear bags with hang tabs, and put a little extra advertising insert in behind the sticker stating what it is, and the price, and highlight my web address so they can come back and find me (and buy more!). It's a very good idea to plug yourself right on the product, and worth the hassle. Return customers are a large portion of business, and you've already found an audience who likes your stuff enough to shell out money. Better yet, sometimes they give your product as a gift to someone else who will like it even more; make sure they can find you later! Good packaging is some of the cheapest and most rewarding advertising you can do.
I print my advertising insert on cheap-ish paper on my laser printer, so even with the cost of the bag, it's just about $0.11. That's still $0.11 we need to record, and as you get into larger products, that cost will go up!
Now, let's total the product cost.
These are all of the actual things you bought to put into your product.
This is not the labor that goes into creating your artwork! This is the labor that goes into making the actual product. Don't include time you may spend laying out the file (that comes in with setup, next month!), but do include the time you spend opening a file and sending it to the printer, as well as any time flipping pages to print double-sided, feeding lamination or magnet paper into a machine, cutting things out, or stuffing them into their packaging.
There is a certain amount of scale of economy in this - if you're making 100 at once, it will take you less time per item than if you're making 1 at a time. Guess how many you'll be making of the items at once, sit down and time yourself making that many and then divide that time you spent by the number of products you end up with. I generally try to make 12-24 of any given product at a time, and if I don't have orders for that many at once, I will pick and choose some of my more popular designs to make extras of so I don't have to go crazy when it comes time to do shows that I'll need stock for.
Once you have an idea of how long it takes you to make each product, put that in your spreadsheet. In the case of my standard bookmarks, I cut them out by hand and then use a hand corner-trimmer . . . very time consuming! In the case of my squat bookmarks, I use a punch and it's much, much faster.
But that's not a cost . . . yet! We have to take that time and multiply it by a wage to get a cost.
And so, we get to wages. Charge a wage that you feel good about, and, in some happy eventuality, you think you can probably get away with paying someone else if you ever get to the point where you can. Minimum wage is generally a good place to start. I like to use $10 an hour because it makes the math so easy.** Whatever you decide, put that in your spreadsheet. Whether you're "paying" this to yourself or to someone else, it's still a tangible cost!
Then we'll add those together to get a good look at the materials and labor together.
If we were all perfect, and every bookmark came out wonderfully and every sticker was punched exactly right and printers never jammed or needed cleaning, we wouldn't need this category. Life being what it is . . . we do.
A certain amount of that product and packaging cost that you calculated above is going to go to waste. The printer will eat not only the piece of paper, but also spit ink all over the rollers and clog and require cleaning and make you want to throw it out of the window. Some of the lamination pages are going to get bubbles or cat hairs in them. You will spend time on a bookmark just to accidentally snip off a corner. So, we have to pad the cost estimate to cover such events. I generally recommend rounding up by at least 10% to cover waste and errors. I use a percentage, because the amount of waste is directly related to the cost of the materials and labor, and I make sure that packaging is included, because that gets wasted, too!
Does this seem high? Use a number that's comfortable to you, and keep track of your success rate to figure out if it's accurate. You can adjust this later if you wish, especially as you climb the learning curve for making things and learn all the little habits and tricks that will prevent waste. I'm doubtful you'll decide to adjust this down any, though! I'm very good at what I do and have years of experience, and I still find 10% pretty conservative. Especially with fragile things like transfer paper, and with printer ink. Big companies with lots of automation may do better, and when you're just learning and you mess a lot of things up, you may do worse.
We can plug this into our spreadsheet - and at any time later, we can come back and adjust it depending on how much we actually tend to mess up.
Now, we finally have a cost of the product that includes the labor to make it and (hopefully) all of our regular screwups! But is this all? It must be cheap to make this stuff! What a racket! Oh, but not by a long shot. But, because I'm wordy and long-winded, you'll have to wait until next month for details on figuring your setup, overhead, wholesale selling, taxes and the adjustment of market value, plus tips on being a conscientious consumer. Oh boy!
*Of course, while I was writing this, I got an e-mail about the order of lamination I just placed asking if it was "okay" that shipping was an extra $78. Of course it's not okay! You guys advertised free shipping over $200! That's why I ordered $200 worth of lamination! If you meant "free shipping over $200 except for Alaska," SAY that, don't wait nearly a week and then ask if an extra 40% charge on an order is "okay!!" Ahem. Moral of the story, use your actual, final shipping charge to calculate your costs. Especially if you live in Alaska.
**This is not the wage I recommend or personally charge for doing artwork - remember that the more skill and practice a task takes, the higher the wage will be for it. You will pay less per hour for a highschool dropout to cut out a few bookmarks than you will for a highly skilled professional to create you a one-of-a-kind piece of artwork, of course!
***Waste is frequently grouped together in overhead, but I like to keep everything separated at this stage so that later if I decide I've over- or under-estimated this part, I can adjust it in my spreadsheet without having to redo ALL the overhead. We'll explore a simpler method in following articles.
Ellen Million has always had a passion for projects. Visit her site for prints and embarrassing archives.
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