Oscar Wilde once said, ‘When bankers get together for dinner, they discuss art. When artists get together for dinner, they discuss money.’ Valuing your work is one of the most difficult challenges in artistic life or creative activity (also because generally no artists or people working in the creative sector are taught that). Besides, it is very difficult to determine the value of something as personal as your own art, especially if you are emotionally connected with your work. It becomes even more complicated when you think about winning clients and international audiences: you do not know the customary rates in other countries, and besides, something (product, service) recognised in your country as very expensive and exclusive can be estimated in another country as too cheap and not worth attention. And no matter if you run your own creative business, work as a freelancer or sell handicraft, proper valuation of your work is crucial. From a commercial point of view, you should value your work in such a way that its value corresponds to the level presented, the artistic output, but also the costs you have incurred during the work.
In the beginning, it is good try to answer a few questions:
- What are my financial expectations?
- What factors do I have to take into account during the valuation?
- How to determine the risk of this project/activity?
- How to present the cost estimate to the client so that the price is best received?
- How to best clear the accounts with the client?
- How to maximise my profit with the client’s limited budget?
In addition, an important question that needs to be answered is the question of whether you sell your works through galleries, dedicated sites or rather directly, taking part in fairs, presentations and events. Working with international clients means that the majority of work is done remotely, so it will rather be a direct valuation without intermediaries and the costs/overheads of online platforms selling works.
Since the cultural and creative sector includes a multitude of segments that are very different from one another, below we present three most universal valuation methods as an inspiration to develop your own method (with the reservation that the art market has its own specific laws, but it does not apply to it).
Method 1. competition based
Method 2. cost based
Method 3. value based
This approach relies on an analysis of the prices of similar services or products. It is necessary to investigate current rates (it is not difficult in the era of the Internet, available reports or analyses; it is also worth having liaisons in the sector to be up to date in the event of rate changes) and finally offer your client a similar rate.
However, this method has its drawbacks: first of all, it diverts your attention from the client’s needs and the uniqueness of your offer. It also does not allow a full insight into the components in which the valuation of the competition was the result (costs). In addition, every offer is slightly different in the creative sector; every artist or creator has different experiences, capabilities and techniques. Therefore, when you analyse competitors’ prices, you should take a broader look at what the service or product included: you should treat their prices as additional information rather than the main determinant of your decisions.
And you should remember that although the market context is important, it is not always the price that determines the final choice of your offering.
This approach is based on estimating the time it will take to complete the project and calculating the cost of the materials and resources needed to complete it, plus something extra for you as a creator. This method is based on the common hourly rate: it is a common, simple and fast method; in addition, it works well as a simple business plan (it gives you the knowledge of how much you need to earn to cover all expenses); it also gives you the knowledge of what the lowest rate in the project is below which you will simply have to pay out of your own pocket instead of earning on it.
However, similarly to the competition-based method, it also has drawbacks. First of all, by focusing on rather mechanical calculation of your costs, you can often forget about the broader perspective: how much is the client willing to pay for your unique work? That is why it is so important to consider this extra component in this method, but still looking at it from the perspective of the clients and their benefits.