Doing The Sums - Methods Of Pricing Your Pottery

Written by Peter Smith
Thursday, 28 February 2019
How to calculate the right selling price
How to calculate the right selling price

Pricing your pottery is always a vexed issue, that never seems to get more comfortable. Markets and tastes are ever-changing, so is the price people are willing to pay for hand-crafted ceramic ware.

Many ceramic artists sell through galleries and retailers of one sort or another, and there are various ways of entering into commercial arrangements with them.

The cleanest method is for the retailer to pay you a wholesale price agreed between you. How much they mark it up becomes their business.

Wholesale pricing is neat because you know what you are getting up-front and more importantly when you are likely to be paid.

You know your production costs - materials and labour - and if you can sell your work for a commercial profit above these costs, then you have some degree of control and certainty. However, most galleries and many retailers want to sell on consignment only.

Here you supply the goods at no up-front cost to them, and the retailer agrees to pay you a percentage of the selling price if and when they sell. The retailer covers its costs with a commission percentage from the selling price.

This is a riskier proposition from your perspective, but often it is the only game in town. On the upside, it is also a way of potentially increasing your returns as it is in everyone’s interest to maximise the sale price.

PRICING

Commissions are generally 25% - 60% of the sale price. That seems a lot, but galleries and retailers need this sort of margin to pay their rent, pay their staff and to promote and market your work.

Retailers will sometimes seek your guidance on the final selling price for your work.

Let’s say your costs for a piece are $15 for materials, $25 for labour, utilities and packaging and your accountant recommends adding a further 50% to cover other studio costs. That makes a minimum return to you of $60. We’ll ignore GST to keep things simple.

MARKUPS AND COMMISSIONS

Markups are easy to calculate. In the above example, your costs are $60. To sell at a local market, you might need to markup your costs by 50% to cover your selling expenses, the total is 60 + 30 or $90. If the markup you need is100%, then the sum works out to be 60 + 60 or $120.

Commissions and Markups
Commissions and Markups

With markups, it’s a simple calculation.

With commission sales, it is different.

Say the selling price is $100. With a gallery commission of 50%, they get $50, and you get $50. If the commission is 35%, they get $35, and you get $65.

If you know the selling price, it’s simple to work out what you will be paid. But if you need to figure out what that selling price should be, then things are more complicated.

Let’s take our pot from our previous example, where we want $60 paid to us from the gallery.  

If the gallery commission is 50%, we can’t just add 50% to our $60, because that would make the selling price just $90 (60 + 30). When the gallery takes 50% from that final selling price, we only get $45, not the $60 we want.

So we have to multiply our $60 by more than 50% to get that $60 payment after commission.

The table below shows you how much to markup your price to give the gallery the commission percentage the gallery wants, and you get the return you need.

Therefore, if you want $60 and the gallery wants 60% commission, then the markup on your price is 150% or $90, making the final selling price $150.

Ergo, you get $60, the gallery receives $90, and everyone has what they need to stay in business.