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MenuHow do I decide on pricing and share profits with artists?
I want to start an art subscription business for commercial spaces - hotels, offices, residences.
I'd like to know how to decide on pricing structure - inclusive of installation.
What kind of commission structure is fair to the artists? What about right of ownership?
Answers
Being a part time artist, I can say the pricing structure depends on the category of artwork and the artist's background. Not to forget if you are dealing with similar structure as subscription boxes it is imperative to know what is your central product concept.
Installation and procurement costs need to be addressed separately. The business model can address different commercial aspect to develop long term relationships.
As far as artists are concerned, there are specific measurement of the art piece and standard pricing for first sale. Now with NFT there are avenues of resell percentage that lands to the artists. The current trends need to be addressed. Ownership can be addressed with the type of contract that is being modeled.
Hi, I am the Managing Director of a $100m Technology Company and I consider there to be 2 approaches to pricing:
1. From the bottom up. This is where you calculate the cost of production / the service including all overheads and your time and then add the profit margin you wish to make on top.
2. Top down: What is the market willing to pay for your product and charge that price. For this approach you may need to do competitor and or market analysis or simple trial and error.
In my line of work, we regularly have a significant competitive advantage which makes option 2 far more attractive. By way of example, if I used option 1 with a standard 20% margin added, I would charge the client around $50k per day for our services. Option 2 allows me to charge $150k per day.
Checkout my blogs at www.mrgrowthmentor.com for further insight.
I would be happy to talk through your specific situation at your convenience.
In this case you would need to start figuring out the willigness to pay this facilities have for this service. What is the main benefit of the service? Updated paintworks, worry free maintenance, lower investments?
So, if a hotel is willing to pay $300 a month for the service, you should give back to the painters a proper return on investment depending on the value of the artwork. For example, if a painting has a value of $1.000, I believe its fair to pay them a 10% anual return ($200 year / $16,67 monthly). If the painting is sold you could negotiate a commission of 5-10% and you can also make money on the installation.
Hope this helps you.
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