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Tools to help you consider the value and expense of your work, which may depend on the sector that you operate within as well as its location(s) and audience(s).
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How your work is valued, and the costing and pricing strategies used,
will depend on the art form you operate within as well as its location(s)
and audience(s). This guide introduces tools to help you consider the
value of your work in your particular context. The guide covers
Considering value
Income streams
Costing work
Costing your time and calculating a daily rate
This guide is accompanied by further information on our website
linking to specific rates of pay information and pricing strategies.
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In pricing work, you are aiming to balance what your clients /
audiences are prepared to pay, (the market value of your work), with
the costs of creating the work, (your outlay including materials and
time). The price should reflect the work’s value which you arrive at
through market research.
Introduction
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Adding up the costs will help to establish whether you will break
even, be in profit or require subsidy and investment. Ideally, the
market value will be greater than the costs, giving you a margin to
invest in you and your work.
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The value of your work is influenced by a number of factors:
• distinctiveness; how similar or unique the work is
• market price; if it fits a low or premium going rate
• adoption; how established the relationship with the audience is
and how quickly the work will be bought
Considering value
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These factors represent the context in which you present your
work, which helps your clients, customers and audience judge
value. For instance, in an established venue with a knowledgeable
audience, the work may be highly valued, considered worth a
premium price and sold quickly but elsewhere the same piece may
be under-valued and unable to command a low price.
Considering these factors can also help you explore the range of
income streams available to you.
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Depending on the range of your skills and activities, you may be able
to identify a number of potential, earned income streams for your work.
You could be selling a number of different ‘services’ or ‘products’.
For instance you may produce editions of work, have a regular gig slot,
do copywriting, reviewing, and deliver workshops which provide a
reliable, frequent income at a relatively low market income whilst
creating one-off, more expensive works.
These premium pieces may take time to sell and fetch their true value
but can help to raise your profile and establish your reputation and
relationship with clients and audiences.
Income streams
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You can consider the range and value of different income streams
by plotting the different aspects of your work against the first two
value factors; distinctiveness and market price.
Income streams are placed along the distinctiveness axis
according to availability, exclusivity, competition and the frequency
or quantity of production or delivery.
Income streams are placed along the market price axis according
to the customer’s perception of value, budget, affordability and
comparison to current market rates.
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Examples are given for:
• Visual arts, crafts and design
• Music
• Screen & digital media
• Literature
• Performance
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Visual art, craft & design income streams
corporate design fee
one off / bespoke commission
domestic design fee
gallery shop retail
workshops & classes
production pieces
licensing royalties
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Music income streams
new writing commission
headline tour
merchandise
regular gig slot
royalties
corporate gig
workshops & classes
downloads
session work
support slot
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Screen & digital media income streams
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Literature income streams
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Performance income streams
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Try plotting your own (potential) work and then overlaying the venues,
agents and / or spaces which you want to distribute and sell through.
• Is your work in the proximity of the work they usually present?
• Which matches your work’s profile best?
• Which could present your work now and in the future?
• Which work will you prioritise?
• How does your decision impact on your cash flow and the investment
required in your business?
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Exploring the third factor, adoption, might help you answer those
questions. Consider how new or established your work’s profile is with
clients and audiences you are trying to attract. Try split ting clients and
audiences into groups of people who seek out new work (innovators and
early adopters) and those who gravitate to more established work (late
majority and laggards).
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Adoption lifecycle
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List the types of venues, distributors and publishers who work with and
attract these types of audiences and highlight ones that fit with your work
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How much your work costs to make may vary from the amount at
which it is valued. Doing a costing exercise will establish any variation
and whether you break even. If creating the work means you are
making a loss, you need to consider:
Costing work
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• Presenting it in a different context so your work can increase its
value. This may mean working with a different audience or market,
or adding value to your presentation and reputation.
• How to make savings in the time or resources used to produce the
work.
• Subsidising the work through other profitable activity and outside
investment.
The key elements which make up the cost are:.
• direct costs; costs specific to the piece (e.g. materials, hires,
delivery and time)
• overheads; costs general to the business (e.g. rent, power, phone,
insurance)
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Direct costs should be easy to allocate to specific work and are often
itemised in an invoice or detailed in a project budget.
Overheads are usually allocated as a proportion of your annual
running costs equivalent to the time spent on work. They are often
presented within a daily rate.
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One of your key costs is your time. By adding your overheads, (the
costs of running your business), to your personal salary, (the cost of
running you), and dividing those by the days available to work, you
can calculate your daily rate.
Costing your time and calculating a daily rate
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Out of the days available to work, make an allowance for the time you
spend doing administration (e.g. invoicing, planning, marketing) so that this
becomes part of your rate. You should aim to spend 25 - 40% of your time
on administration:
any less and no one will know about your work and you won’t be in control
of your paperwork;
any more and it may not be financially viable (unless you have very low
overheads).
If you don’t allocate any time to admin you will be doing all the chores in
your own time for no pay.
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Overheads
plus
Salary
Days per
year Weekends Holidays
Contin
-gency Admin
Total
days
available
Daily Hourly
Rate Rate
no admin
time £27,000 365 104 30 5 0 226 £119 £15
admin at
25% £27,000 365 104 30 5 56 170 £159 £20
admin at
40% £27,000 365 104 30 5 90 136 £199 £25
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Once you have worked out all the costs associated with a piece of work
and its value to your clients and customers, you will be able to
established a price. Pricing structures for each creative industry vary;
and links to further information are given on our website.
Pricing
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The price and the number of sales or fees associated with that work will
form your income.
It is common practice to present predicted sales figures and funding
along with costs in the form of a budget so the balance of income and
expenditure can be viewed easily.
These figures can also be entered in a cash flow to see the impact of
outlay and income over time and establish a timescale for breaking
even.
Income
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Next steps
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For further information on this subject, please refer to the
following resources:
Budgets Guide
Cash Flow Guide
Costing Your Time and Daily Rate Calculator
Making Live Music Pay
Planning to Sell at Trade Events
Disclaimer: Cultural Enterprise Office is not responsible for any advice or information provided by any external
organisation referenced in this document.