The Importance of Pricing in the Arts Industry: A Guide

by | Sep 14, 2023 | 0 comments

Category: Business

Hold on to your hats, for in my unwavering loyalty to us all, imma say some things that may feel prickly. Please know I say these things without judgment. Rather, with a weighty concern for artists and teachers of the arts.

I said some of this on Facebook a few weeks ago and some people – how do you say? – lost their minds. Hey! That’s okay! We all need a little mind losing in order to be free from the tyranny of historical action.

I’m going to flesh out here what I was talking about there: Economics and Pricing.

So, content warning and all that jazz. I know the money injury runs deeeeeep.

Affordability is Not Nobility

Being “affordable” is not noble. Just as the label of noble cannot be bestowed upon oneself, neither can the label affordable. Affordable is in the eye of the be-payer?

Claiming to be affordable while undercharging is hubris.

Hubris, by the way, isn’t arrogance. The two are closely related and are synonyms of the other. However, arrogance is one’s excessive pride relating to how they are better than others, whereas hubris is extreme self-belief in one’s abilities (i.e., to help) and may have nothing to do with others at all.

Arrogance is external. Hubris is internal.

In service-based businesses that prepare people for a specific industry keeping rates low because of one’s belief about their overestimated ability to “help” and “pass it along” undercuts the entire economy of that industry. Which, of course, does the exact opposite of their perceived goal of helping.

The desire to “help” clients by undercharging does not set them up for the very real cost of doing the thing they are paying you to learn to do.

The desire to “help” clients by undercharging does not set them up for the very real cost of doing the thing they are paying you to learn to do.

Michelle Markwart Deveaux

If we are coaching someone or teaching someone a skill that must become marketable, then they will need to develop that skill and create an offer that delivers that skill, then market and sell that offer, then manage the administrative weight of that “container of skill”. It’s a lot of skill-ing!

Undercharging creates a vacuum in our client’s future budget. It sets an expectations that expenses will not be covered by income streams. Or, clients fail to plan appropriately because they did not learn the true cost of being viable in their chosen field.

Let’s apply this to performing artists (like singers). If we want to get the performance arts to a place where we are not self-perpetuating poverty, we must collectively raise the mean income of all artists.

Members of the community who undercharge are keeping rates tethered low, and are therefore impacting not only their peers but their client’s financial futures. Which means, essentially, an entire industry economy.

This is not an attack on any one person. This is about economics. Economics is a social science. Collective.

The pursuit of economics is to figure out the most logical and practical use of resources to meet social goals.

What makes up different economic models is not a question of an individual’s choice based on their personal needs. Economic models are collective by nature- the outcome of many decisions that manifest across a system. Capitalism isn’t capitalism because of Jeff Bezos. Socialism isn’t socialism because of Marx. These economic models are the result of how a society (industry/culture/etc.) group-thinks and group-acts, including their government’s policies and responses to economic downturn.

It is collective arrogance, and individual hubris, to say that the individual’s choice does not, cannot, or will not be part of a dataset that drives an economy.

Of course, we have individual choices in a free market. Those choices have ramifications. How many branches of ramification one is able or willing to assess may help determine a choice, or at least give an “eyes wide open” approach to said choice.

Understanding the Role of Pricing

If you are feeling that internal “uh oh,” or even angry or spicy with me, that’s okay. I am not here to shame anyone. I am desperately trying to educate so that we can make better decisions and change the arts economy.

I am not advocating that service providers, voice teachers, or any artists charge rates that “gouge” or that are out of alignment with markets in general.

If a business requires a person to sell 1:1 sessions for $500, $800, or even $1000 each, more power to them. Nice work if you can get it, and you can get it if you try!

These prices are on the extreme end of the perceived market – they tend to be outliers that are often part of a pricing ecosystem in which several revenue streams force 1:1 services to be the most limited, and therefore most valuable.

The bigger concern here isn’t that pricing has been deeply misunderstood as ONLY a way to pay bills. Anyone who has spent enough time around me knows that I have strong resistance to using the market to determine fees as the first step and encourage looking at market rates as the last step in pricing services.

We look at the market last because, ultimately, pricing is a marketing and sales tool.

Here is the kicker, though: One can only use pricing as a marketing and sales tool if they understand its role in marketing and sales.

Additionally, one cannot view pricing as a marketing and sales tool until one understands the business model they are entering into AND their own business and personal budgetary needs, financial outcomes, and the consequences of market behavior.

Playing with pricing assumes that the business is solvent, financially, to begin with.

In other words, we can’t play with pricing until we are making enough money to, as my friend Randy puts it, eat bread.

There has to be a large enough mean of pricing to allow ALL OF US to eat bread. When I say “$100 is the $60,” this implies that I would like to see the NEW MEAN be $100/billable hour. Which happens when the entire dataset shifts higher.

I would love to see all people who “sell the same thing”, regardless of their personal income needs, or their business, or if they have a full-time job in addition to other revenue streams, raise their rates, even if it is merely $1 per session, per year.

In the long run, this will raise the baseline economic mean and lead to appropriate inflation of 2-4% – which is a sign of a healthy economy and industry.

The Six Pillars of Pricing

Remember what I said about pricing as a marketing/sales tool, and how pricing cannot be a marketing/sales tool until the business is making enough money to operate in the black, month over month?

Well, that’s all well and good, but where do we start in order to get past basic financial needs and into marketing and sales?

This is where the The Six Pillars of Pricing come in – it’s where to start.

It’s a quick n’ dirty framework, for you, dear artist and teacher of the arts. The same six pillars (AKA considerations) I’ve been teaching for years. The “solution” if you will, to the “problem” I have laid out above.

The Six Pillars of Pricing are, in this order:

  1. How much does your business need to make? This number is your salary or owner’s draw + taxes + overhead for the business (how much it costs to run the business) + capital for growing the business + whatever hell else you want to spend money on.
  2. What is the business’s brand and its brand capital?
  3. What is the business’s internal understanding of how it is differentiated in the market? (Business-facing language)
  4. What is the business’s service model(s)?
  5. What is the unique value proposition of the business and its offers? (Client-facing language)

and lastly,

  1. What market does this business primarily serve?

Market is last, always.

Why? Knowing the market to which you are selling your services is about understanding location, ideal clientele, and your position in that market so that you can build a marketing and sales strategy that aligns with your price points and the business’s overall revenue needs.

Using market rates, therefore, is not how one should determine price points for anything that is not a commodity.

But What About MY Price, Michelle?

I’ve been advocating and teaching pricing not only in my own company but at universities and institutions for over 10 years. Some people on this very email list have had me teach this to their own students and heard it firsthand, thanking me for the education and introduction to the concepts.

If you made it this far, I want to thank you and give you two high fives for taking the time to read this and for being a part of the conversation around pricing in the arts industry. It’s a topic that can be complex and even uncomfortable to discuss, but it’s critical that we do so in order to create a more equitable and sustainable ecosystem for artists and teachers of the arts.

Undercharging is an issue that affects not only our own income but also the financial futures of our clients, peers, and the industry as a whole. By raising our rates collectively, we can set a new standard for the value of our work and create a more thriving arts economy.

Remember to consider the Six Pillars of Pricing framework when determining your rates and take the time to truly understand the role of pricing as a marketing and sales tool. This will ensure that you are setting rates that align with your business needs, your value proposition, and the market you serve.

If you’re feeling lost or overwhelmed by pricing, know that you are not alone. There are resources available to help you navigate this process and find the right rates for your business.

We teach these concepts in The SpeakEasy Cooperative, and we dive deep in How to Run Your Biz Without Hating Your Boss. The MTS TapRoom for Multi Teacher Studio Owners, and The VIPRoom.

And now, I am fixing to do a workshop for those outside of The SpeakEasy Cooperative.

We’ll go over how to figure out your financial needs, The Six Pillars of Pricing, the concept of Pricing for Generosity, and figure out your billable hour that will be your baseline for your business’s pricing.

And I’ll leave extra time for questions and coaching around it for participants.

Easy Peasy.

Pull up your calendar and Save the Date for Friday, November 3, 9am-11am Pacific.

We’ll send a link to register when we get our ducks in a row.

And that’s how we will figure out your pricing. In real time.

Let’s continue to have these important conversations and work together to create a brighter future for all artists.

What else would you like to know about economics and/or pricing?

Let me know in the comments!

Michelle Markwart Deveaux blog signature
Michelle Markwart Deveaux

Michelle Markwart Deveaux (124)

As CEO of FaithCultureKiss Studios, LLC, I lead underestimated humans through the personal and professional development needed to create successful solo and team-based businesses.

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