Unless you’re intent on living on the streets, working side jobs, or are fortunate to have the support of wealthy parents and benefactors, most of us at one point or another have to ask ourselves – “what prices should I charge?” Pricing out and valuing your work is a great mystery. If you look around the Internet and even ask others for advice, the amount of money – especially for artists, ranges a very wide gamut. The price point is very difficult to gauge with so many people out there. Of course to some degree, what you can charge is indicative of your skill level, but for the sake of this article I’m just going to discuss what an average businessman, freelancer, artist, and even photographer should be charging at the very minimum.
For the sake of this article, I’m going to use my experience as a freelancer for close to the past 10 years and running my company, LunarStudio. The same experience should apply to most people in a variety of different situations.
The Internet – The Global Price Mediator
At one point before the Internet grew in size and popularity, if you wanted a television, you would drive around town to various electronics store. The price would have probably remained relatively fixed. If you drove to a competitor in the same neighborhood, you might have found several hundreds of dollars in savings. If you drove even further – perhaps to another state – the price may have gone down or up several hundred instead. There really was no baseline comparison from place to place. Prices were more or less regulated to the availability and general income of where you lived.
Enter the shopping world of the Internet. No longer were people confined to the neighborhood electronics store. If you saw a television you liked at a physical location/store, you could come back home and do a search for that same TV online. In the Internet’s infancy, you could discover huge savings on the same exact product, perhaps even including free shipping and no taxes. Suddenly, you were aware that there were great deals to be had online. You saw what one company was charging at one location, and what another was charging in a completely different part of the country. This is comparison shopping on a larger, more instantaneous and convenient level.
The Internet had the effect of exposing exorbitantly high prices in one area, and showing “rock bottom” prices in another. Over time, the highs and the lows across the country evened out to a degree. Your local store started to honor TV deals that you could find out on the Internet. The boundaries originally set by a lack of information and geography started to evaporate. The Internet became the great price mediator.
Now you may be asking yourself, how exactly does this apply to your business? The same analogy applies to many of your services. As prices of goods around the country start to level off, the highs and lows of what you can charge has also been affected. Everything including average income and salary starts to average out. In some parts of the country, there are still higher costs of living and major differences in salary, but these differences are going to eventually follow suit.
Let’s take for example two digital artists that work remotely off of the Internet. One is out in farm country – somewhere out in Oklahoma. We’ll call him “Artist A.” Artist A has a very low cost of living. He pay $500/month in rent. Most of his bills tends to be relatively inexpensive for him.
Now let’s take “Artist B.” Artist B lives in the heart of New York City. His rent is $2,000/month. The costs of living are generally much higher for him.
Let’s suppose that both of these artists produce a similar quality of work. Guess who has to charge more in order to keep up their living expenses? Artist B.
Unfortunately, Artist A can easily undercut the more expensive Artist B. On the other hand, is Artist A really doing himself any favors by drastically undercutting the more expensive Artist B? In the short-term, yes. It costs a lot less for Artist A to stay alive. But guess what – the prices of the TVs they were looking at earlier still remains the same now. Artist A in effect has to work harder to afford that television because he’s charging much less. Artist B also has to get more jobs in the door (because he’s charging higher prices) in order to compete with Artist A in order to buy that television. Both artists have made more work for themselves simply because more competition has entered the field via the Internet.
So what is the solution to this problem then? You can choose to wait out the “great Internet mediation” – as to how long that will take is anyone’s guess. We all have to wait irregardless. You could also try producing substantially better work and charge more, but there will always be people who don’t recognize better quality and simply go for the lowest prices. You could also perform lower quality work, and at that point it becomes a numbers game as to how many clients you can shove through any given door before they realize they’re getting substandard work. In essence, you’re still making the same amount of work. If you want quality – then you have to pay for it.
What the average person has to do (assuming that your skills are average in nature) is to find the middle ground – a happy medium. A price point which isn’t “too high” and not “too low.” As your skills progress, you should be able to charge more over time as your services come into greater demand.
The point is that you’re not doing anyone any favors by undercutting your fellow artist (or businessman) in the age of the Internet. In fact, you may be doing more harm than good. Ultimately, you need to provide a quality product with a quality service, and hope that makes all the difference. In a perfect world, we would all be charging similar prices, and only those that charge higher are producing better quality.
So you have looked around the Internet and checked to see what other competitors and colleagues are charging. You have one relatively unknown person in the middle of nowhere trying to charge $25 for a photograph. On the other hand, you see another person with a little bit of better work charging $250. Which price should you charge? Perhaps like most people, you consider yourself an “unknown” too and are just starting out or trying to make ends meet. The first inclination may be to charge on the lower end of the spectrum – $25. But are you selling yourself short? Perhaps if you charge closer to $250, others will see your work as “more professional” or “more valuable.” It’s a tricky question with a seemingly tricky answer.
In order to answer this question, we can look at other various industries for a baseline number.
Take for example a plumber or an electrician. They can easily charge $100-$150/hour. If your electricity goes out or your toilet stops working – you have no real alternative aside from trying to fix it yourself. You’re more or less forced to pay those prices. However, there’s a reason why you pay them these rates. Even at those prices, I don’t see many plumbers and electricians living in mansions. The standard of living factoring in risk and reward (for running your own business) all averages out.
How about professional photographers? They’ll bill out $1,500-$2,500 a day. What is not apparent to the average person/onlooker is that they’ll spend a few days prior negotiating with potential clients, a few days in post process after a shoot, and a few days cleaning up all of their previous negotiations.
As for architects, how much do you suppose their companies bill out on a hourly basis? The average is around $125/hour. The principals? They can push $200/hour.
Now let’s take a look at my architectural illustration work. Running my company (artwork creation, 3D knowledge, self-education, marketing, invoicing, sales, etc.) is more complicated than any other job I’ve personally ever seen and requires multiple skill sets. What do you think I should be charging if I spend an hour’s worth of work on something?
You may say to yourself, “well, art isn’t a necessity.” However in my field, I argue that it is. My illustration work helps sell multimillion dollar buildings based on ideas and blueprints. If someone is planning to put up a $50 million dollar building and it all hinges on a pretty picture, do you think it’s worth spending $10,000 or more? It sure is. My work gets ordinances passed by town boards. It communicates to designers what something will look like even before it goes to manufacturing. And it helps fill spaces quickly. That’s a very useful service to people and companies.
So I’ll ask the question again – what do you think I should be charging? My work is more complicated than average and it is very useful. I know from personal experience that I’ve spent almost 10 years, working and studying 16 hour days, almost 7 days a week with no vacation doing this. Shouldn’t I gain some level of reward on top of all the energy and extra efforts I’ve put into my craft?
I’ll make the same point as I did in the previous section. You’re not doing yourself any favors by charging low. That only works for the short-term. The same applies for charging high unless you’re determined to produce a better quality and provide a better service. You need to find that middle ground.
Cost of Living Breakdown
Now that I’ve more or less made my argument that geographical location is becoming increasingly irrelevant in today’s digital age, let’s assume that you’re an average professional artist living in a city all by your lonesome in an apartment. You’re single with no children. All you do is freelance for work. This “should” be the most common situation. Let’s tally up your expenses:
- Rent: $1,500/month or $18,000/year.
- Electricity: $250/month or $3,000/year.
- Heating (assuming it’s efficient): $250/month or $3,000/year.
- High-Speed Internet/Digital Voice/Television (hey, it’s bundled): $200/month or $2,400/year.
- Cell Phone with data access (most people have them): $80/month or $960/year.
- Car loan or finance: $300/month or $3,600/year.
- Groceries (we all have to eat): $200/month or $2,400/year.
This means that you have to make at least $33,360/year in order to just pay your bills. I’m not even factoring in credit cards, health insurance, and miscellaneous equipment expenses – that could easily add another $8,500 to that total. So let’s add in those items:
- Health Insurance (average Massachusetts plan): $300/month or $3,600 year.
- Credit card (you ran into trouble and have to pay it off monthly): $150/month or $1,800/year.
- Misc. equipment expenses (ie. a high end computer for graphics, software, repairs, .etc): $2,500/year
- Previous total: $33,360/year.
REVISED TOTAL #1: $41,260/year.
So we’re up to a little over$40,000/year. That’s not including 1/3 business taxes, 10%/annually in retirement savings, savings for your potential kid’s college education, and savings for a nice down-payment on a home. I like round numbers and I’m going to jump a few more steps to include these items.
REVISED TOTAL #2: $60,000/year.
That’s right. You need to make $60,000/year just to survive in a city by yourself. How do most people do it? They manage, but they often struggle to just keep their heads above water. It also general requires a dual income either through having roommates or through marriage. Add to this economic uncertainty such as the global depression in 2009, and you’re sitting on the edge. Here are some statistics as to the average income and salary within the United States.
I’m not trying to scare anyone here, but rather I’m pointing out that you should at the very minimum be targeting $60,000 year in 2010 just to earn a living.
How Much to Charge
Let’s say that we agree on $60,000/year as a target figure. How much does that mean we need to make per week at a minimum? Let’s say that you work 50 weeks out of the whole year. That breaks down to $1,200/week or roughly $4,800. Again, I like round numbers so you need to earn $5,000/month.
Let’s say that you’re an artist and you’re lucky to get two jobs per month that take a week per job. Each job would need to cost $2,500 in order to meet your target goal of $60,000/year.
Assuming (and this is a big assumption) that all of your marketing duckies are lined-up in a row and that you can manage to pull four jobs per month, then maybe you can charge $1,250/per job at the very minimum. At that minimum price point, you are really risking your own livelihood and future. Truthfully, you can’t just risk staying at the baseline, but should instead be focusing on getting ahead.
So. how much should a person charge? Realistically, you may only get two jobs per month – if that. Most artists don’t. Either you’ll need to seriously improve your marketing strategies and obtain more jobs, or fit the average quantity of jobs you receive per year into that $5,000 month target.
Guess how much most professional rendering artists at the top of their game charge per image? $4,000 on up. I’ve heard of figures on the order of $12,000 per image for the very best. They may spend half a month working on a single image, but that may be the only image they get. If they receive two or more, then they’re often happy. The next month they may have none. You’re doing yourself and others no favors by low-balling one another. All it does to serve in the long-run is lower the overall quality of work involved.
I’ve also heard of some well-known 3D studios charging around $10,000 per image. Is it highway robbery? Absolutely not. They’re simply trying to meet their overhead in a rapidly changing economy.
You may be saying to yourself, “haha, I don’t live in a city so I don’t need to charge nearly that freelancing amount” or “I’m married so that doesn’t apply.” I have news for you – pull your head out of your ass. We are living in a digital age now. Those boundaries and rules do not apply. It’s also a matter of time before the playing field is more or less leveled. There’s no reason why any of us should become complacent to simply struggle and “get by” on keeping that car of your running on fumes. If you value your work and hard-earned efforts, than that value has a minimum price tag you should try to meet. You need to change your mind-set. $2,500 per image at the very least is a good target goal when starting out on your own. It’s not always realistically possible, but you should keep that target figure in mind. In fact, I’d go so far as to say that you should be targeting over $4,000 per image in your mind. The more you value your work to be that figure, the more it will actually become to be worth that amount. Don’t sell yourself short.
Taking Your Practice One Step Further – Getting Ahead
So now that I’ve hopefully convinced you that you may be charging too little, I’d like to point out another angle. Pretend for a moment that you are an actual business with an employee. Not only are you taking your original figure of $60,000 that you had to make, but you also have to insure their salary over the course of the year. That figure alone could easily run $50,000 (or more) in a very technical field. You also wouldn’t simply want a helping hand – you deserve to make a profit for the additional risk and responsibilities you’re putting upon yourself. So you’ve basically more than doubled the amount of work you must do and charge in order to keep your head floating above water.
The artist needs to stop thinking of “me, me, and me.” Unless you have an extraordinary gimmick, luck, or style – that “fame” you might be seeking will often prove elusive. You need to take your ego out of the mindset of being the lone artist. Pretend for a second that you are a full-fledged company. Whatever charges you proposed in the previous section starts to quickly look small. Not only are you targeting that $4,000 mark, but you have to set your sights even higher than that.
I have many reasons why I wrote this article. In particular, I’ve seen many artists ask themselves over the years, “how much should I charge?” I’ve seen many crazy answers. I also speak from personal experience. When a little more than half of all small businesses fail within the first five years, I consider LunarStudio to be a success in that department. By helping fellow artists and businesses alike through healthy discussion about this topic, in turn I hope to raise my own standards and rates. If we all work together (and stick together) to help determine the lowest common single denominator any single one of us can charge, then we can prevent drastically undercutting one another which often leads to more harm than good. Artists and freelancers alike need to start valuing their work, time, and efforts and stop selling themselves short. As much as I don’t like thinking of our artwork “as a business” from a philosophical perspective, being a “professional artist” entails that we carry ourselves in a professional and respective manner.cleo