Art vs. Production: Pricing Work

[David Perata]

I have spent a lot of hours designing a new piece of Art Deco furniture for a line that I plan to introduce. As I've designed it, I've built jigs to make future set-up work go quickly. The problem is, I have no idea how to price this piece. Even with the jig time removed, there are a lot of hours that go into it. I don't know how many. It is difficult to keep track when you are designing and building as you go, and it has been four years.

I have contacted artists who do this type of thing for a living but the answers are always somewhat evasive. First off, how much an hour? I guess that is my first question. I charge $45 an hour when I do contracting type work. How much is the design worth? The "art"?

Galleries and such would be my main target as well as on-line, although I hear that some galleries get upset when the artist competes with them that way. Then there is that gallery mark-up.

If I sell a piece from an artistic perspective ala Sam Maloof, then it theoretically would be worth more. However, with no "name" at the beginning, a person is selling off the sheer attracting power of the piece itself.

How is the market these days, anyway?

What I plan to do is to make several pieces at one time, hence the jigs. It's difficult to determine how much time you have in each piece when you make them that way, at least at this stage when I cannot actually make five at a time.

Then there is the question of how many do I make? Like Sam's chairs, you offer them on a continual basis, I guess. I can customize this piece with different veneers and colors.

Be interested to see how some of you may have solved this problem. Thanks.

[Frank Drew]

David,

It's tough to get compensated for your R&D time, at least until you become established. That's why one-offs are, in principle, so expensive -- you're making the prototype. Making some jigs, though, is a great idea; for chairmakers they're essential.

Whether a craftsman can finally get paid what he or she deserves is the question, and from what I've seen the answer more often than not is no if they choose to remain small operations. There are precious few celebrity furniture makers who get to charge whatever they want, and many of them have a shop full of assistants who have to be paid, too.

As for the market for non-essential luxury goods these days? Not what it once was, no matter how big the recent profits on Wall Street.

Best of luck on your enterprise, and let everyone here know if you find the magic formula to fame and riches.

[Jamie Buxton]

One way to approach this is to focus on how much you can get for it. For the moment, don't think at all about what it costs to build or what the development costs were. Just focus on how much you can sell it for, through whatever sales channel you're going to use. That's really all that's important. How much can I get for it?

Of course, determining what people will pay for the furniture is tricky, but that's ultimately what you have to do. You can compare your product to others like it in the market. You can factor in name recognition. You can factor in ways in which your product is different from others in the market. You can crank in "limited production", or "art". These are all thoughts which will be running through your customers' heads, so you should be thinking about them too.

(After you set a sales price, you can think about your costs. If your costs are higher than the sales income, you don't have a business. )

[Steve Rozmiarek]

Jamie, not trying to contradict you, but the usual approach is the oposite of what you said, figure your cost, then set the price to ensure the bills get paid and a profit is made. Kind of hard to really know what you need out of a product if you don't know what expenses you need it to cover. I see what you're saying though, that really is the litmus test for a products marketability.

[johnny means]

I went through a similar process over the past four years. My approach was to sell my first pieces cheap ($2000- $3000). This was far from profitable, but allowed me to establish a market presence and helped to fund my portfolio (paid for materials and shop cost). After my initial sales I began to creep my price up until I reached equilibrium between demand and my ability to supply (my price range for the same work is now $8000-$12,000). I could probably get half that and do pretty good, but why get twice the work without additional profit.

This is pretty much standard for any entrepreneur. Regardless off your millwork experience you should think of your venture into studio furniture as a new business and most new businesses are not profitable for the first few years(if they were, no one would be an employee).

I can tell you my first two years were excruciating. I can honestly say I made less than $5 an hour. If you count the marketing hours required it probably goes down around $2.50 for me and my wife. Some jobs ended up being colossal losses.

In my mind I chalked those first few years up as part of my initial investment along with the tools and machines I had to buy. If I had tried to price my first piece at my perceived value, it would still be in my garage.

[Jamie Buxton]

Jamie, not trying to contradict you, but the usual approach is the oposite of what you said...

Yes, I know. But that's the wrong approach in my opinion. Think about it. If you can build a product for a buck, should you sell it for a buck fifty or ten bucks? If customers will pay ten bucks for it, that's what you should sell it for, regardless of your costs. The key issue is what customers will pay. That should always be the focus.

[Leigh Betsch]

A wise man once told me "There are two ways to go broke, one working to cheap, two not working. Given the choice number two is preferable." The point he was making was don't work cheap, it's a loosing game. I agree with Jamie, the market will dictate how much you can charge. And I agree with Johnny, you may have to sell low to get established -for a while, but long term if the market dictates you must work cheap, move on there are easier ways to go broke. Of course you've got to know where your expense are so you can know if you are making a reasonable profit.
So the big question is how to know what the market will bear. The way I see it there are three ways, price low and inch up until nothing sells, start high and inch down until things start to sell, or build on commission and don't quite your day job until you have a back log of orders. But then just do this as a hobby, so listen to those that have actully done it.

[David Perata]

Johnny -

It appears that you are the perfect test case of what I am looking for. I guess my next question is where and how do you market them?

I've had a couple of books published - one I did myself - and they were profitable first for the publisher and then for me with my own book. I did all of my own PR, book tours, media, etc. So I know the media game, at least for books.

But what I need to know is the gallery scene vs. internet. Where do your sales come from?

I do have a regional magazine willing to do an article on me and my work. It has been delayed due to my production delays. I plan to build off of that initial piece.

One idea was to take my work to a local gallery to have them give me some idea of where it would fit into the marketplace with regard to price.

So do you have to share your profits with a gallery? I assume it would be worth it if they sold your stuff on a fairly regular basis.

I'd love to hear your experience. Maybe you could write a book!!

Thanks.

David

[Steve Rozmiarek]

Yes, I know. But that's the wrong approach in my opinion. Think about it. If you can build a product for a buck, should you sell it for a buck fifty or ten bucks? If customers will pay ten bucks for it, that's what you should sell it for, regardless of your costs. The key issue is what customers will pay. That should always be the focus.


Very true, and that is where this particular product departs from merchandise into art I suppose. If I was making the average widget, and one of my competitors could do the same thing for a few cents less and capture market share, then I would loose by pricing too high. Art furniture is different because there is no direct competition, so who is to know if you have it priced too high, as there is no comparable product on the market for your customers to shop around with.

I agree that this is one of those rare cases where you charge as much as the market will bear. The vulnerability to your niche would be someone else coming on market with an equal product for less. By pricing too high, you may give some other craftsman the opportunity to do the same thing for less, and still make a tidy profit. That may not matter though, if the market does not get saturated by both of you producing the same thing.

I have no idea, but can you protect a design with a patent, or copyright?

[David Keller NC]

David - I can't comment about the market for your work - Art Deco is a niche that has relatively few woodworkers in it.

However, I can comment on the charge per hour. Generally speaking, there is a dividing line in custom woodwork between retired folks that just want to recover their material costs and make a little bit on the side, and professional cabinetmakers that rely on it for their living.

The retired folks almost uniformly price their work way too cheaply - that's their choice, of course, but it's generally not a model one can survive on.

In this area, which is relatively affluent, professional cabinetmakers and furniture makers charge around $75 an hour for shop time. One particular individual I know charges $100 an hour for shop time, and he stays busy. However, he does the consultation and at least some of the design work that leads up to a quote without charging for it, so his true rate may be a bit closer to $75 an hour.

As others have noted, one of the biggest mistakes any small entrepreneur can make is to put his/her own value system into the equation for pricing their work. For woodworkers, this often means charging far less than they should, because they wouldn't even consider paying for something that's priced about the way the overall market is. The opposite can also occur, but it's a lot rarer because most artists live pretty low to the ground.

One other note is that there is a counter-intuitive aspect to pricing in the art world. To a point, a higher price actually makes a given object more desirable, because it lends an air of exclusivity.

[Mitchell Andrus]

Jamie, not trying to contradict you, but the usual approach is the oposite of what you said, figure your cost, then set the price to ensure the bills get paid and a profit is made. Kind of hard to really know what you need out of a product if you don't know what expenses you need it to cover. I see what you're saying though, that really is the litmus test for a products marketability.


Agreed. Build a business model and design goods that will fit into that model. Will you be making one of each design or 20 of each of 10 designs all at the same time, or over the course of a year?

Selling 10 pieces for $10,000.00 each and selling 200 pieces for $500.00 each are two entirely different things and require very different approaches to marketing and manufacturing.
.

[David Perata]

First, to answer Steve's question, yes you can copyright a design. I'm not sure how much protection that affords you, however. I used to copyright songs all the time. With a song you can easily hear infringement, like George Harrison's "My Sweet Lord" and the Chiffon's "He's So Fine." I still cannot believe he let that out like that.

With a design I would imagine the parameters are a bit more hazy. Maybe Johnny could provide a more definate anwser to this.

David you brought up some great points.

I was told by a NY fella who made lacquer for pianos and high priced work, that some folks actually won't consider pieces that are under a certain amount. Snob appeal? Maybe. But I do believe that an artist is entitled to receive whatever he can get for his work.

Locally - to make a living - I have fallen into the trap of pricing my work too low. And you're right, using my own personal value system has derailed me numerous times. I couldn't afford hire me now. Most around this area of Iowa probably can't either, or won't. It all boils down to the consumer and their knowledge of quality or perceived quality. With house painting and construction, there is the bottom line of doing the job right and safely. With furniture there is no such consideration beyond maybe liability of some kid swallowing a knob or something.

[Steve Mellott]

David:

Before, you can determine how much to charge for your furniture, you need to decide who your target market will be. Your marketing plan (of which price is one factor) will evolve from that. On Saturday, I toured a furniture studio in which a woodworker showed us the furniture which he currently markets. He charges $4800 for a chair and $800 for the matching footstool (and he seems to have a continual supply of orders). There was no discussion as to how many hours it took or how much the material cost. He charges the amount that he does because his customers are willing to pay that much. His target market is very wealthy people primarily in the Atlanta area, but he also sells worldwide. Assuming you also want to target very wealthy people, find out what "high end furniture" is selling for and charge a comparable amount - this is what people are willing to pay. If you are not targeting wealthy individuals or if your furniture is not truly a unique design (art), then you will have to adjust your price accordingly. Good luck with your venture!

Steve

[Earl Kelly]

David,

First thing to do is research the Studio Furniture Market. There's literally thousand's of custom furniture makers and unless you're producing work that is very unique or the "Finest of the Finest" (Think - Frank Pollaro) it's not that easy to get noticed. It takes a while.

There's no copyright protection for furniture, but there is for Art. Furniture can have Design Patents covering certain aspects of the Design. But it's not cheap and you have to defend against them, meaning spending money on Lawyers.

Galleries usual percentage is in the neighborhood of 50% of the sales price. Some are less, others are even higher. The only way to get in, is to get a resume and great pics together and send them out to the Galleries that take Artist Submissions. You can also apply to some of the High End shows like the Smithsonian to get your work in front of the right audience.

As to your pricing, look at what is similar to your work and the market it's selling in. If you get a Gallery to take your work, pay close attention to their thoughts on what they feel they can sell your pieces for. My philosophy is this "I'd rather make $5 an hr than $0 an hr" meaning you can price yourself out of the market and have no income coming in. Pricing comes from experience. Even then you can still make mistakes.

There's a few of my thoughts. Unique designs and high quality, especially in the finish is what I would concentrate on.

Earl

[Perry Holbrook]

David, welcome to the world of handmade marketing/selling. The learning curve will be interesting and challenging. Fine art/craft is generally priced "what the market will bear" in most cases. Visit as many fine craft galleries that carry furniture as possible. If you would like a nice vacation trip, come here to Asheville NC and spend time at Grovewood Gallery and New Morning Gallery. They may be the best in the country. After making several of these visits you'll begin to get an idea for the "price point" that your designs will sell.

After you have that number, build your business plan that includes ALL COST of completing a sale. If this plan can generate the cash flow that you need to live and grow the business, then you may have the start of something good.

Finding ALL COST can be very tricky, and will be greatly influenced by how you will go to market.

Working with galleries is an art in itself and will not be conquered in just a few months. Most high end furniture is not purchased out-right by galleries but is taken on consignment. Their cut of the sell is usually 40 to 45%. Lesser galleries will take less, but will sell far less. If they do purchase, they will multiply their cost from you by anywhere from 2 to 2.4 times.

It is important that to decide pretty early whether you will ever want to go the gallery route. I have a friend that is a perfect example. He has been making high end rockers for several years now and sells as many as he can make at around $3200 -3500. Lately he has shown interest in going the wholesale route thru galleries. We have had several discussions about this, since he knows all my sales are thru galleries. He just can't get past the fact that the gallery will buy at half his regular price and feels they will be making more than he is and doing nothing for it. (This is simply not the case, and he only fells this way because he has never completely understood his true cost of selling retail. (That's another topic entirely.)

Anyway, he feels that if he was around $4000 per chair maybe the wholesale number of $2000 would be OK. But in today's market a $500 increase is probably not a good idea.

Most people make the pricing mistake by only considering retail and fail to consider the effect it has on wholesale if they ever go that way.

Anyway, good luck on your adventure. If you would like to discuss this more, feel free to PM me and we'll set up a phone call.

Perry