Calculating the overhead method of pricing art involves determining your total overhead costs and incorporating them into the pricing of your artwork. Here are simple steps to follow:
Identify Overhead Costs:
Make a list of all your overhead costs. These are expenses that are not directly tied to the production of a specific artwork but are necessary for running your art business. Overhead costs may include rent, utilities, insurance, studio supplies, marketing, packaging materials, and any other business-related expenses.
Calculate Annual Overhead Costs:
Add up the total annual costs for each overhead category. This should give you the total amount you need to cover your business expenses for a year.
Determine the Number of Artworks You Expect to Sell:
Estimate the number of artworks you anticipate selling or how many hours you spend working on art in a year.
Allocate Overhead Costs Per Artwork:
Divide your total annual overhead costs by the number of artworks or yearly hours you spend working on art. This will give you the overhead cost per artwork or (Recommended) hourly rate.
Incorporate Overhead Costs into Pricing:
Add the overhead cost to the keystone method of pricing.
By following these steps and using the formula, you can ensure that your artwork’s selling price covers your overhead expenses and allows you to make a profit that sustains your art business. Remember that it’s essential to regularly review and adjust your pricing based on changes in overhead costs and your business goals.