As an artist, how do you price your digital artwork? It can be a tricky decision. You don’t want to undersell yourself, but you also don’t want to overprice and scare buyers away.
Understanding how artists price digital art allows buyers to estimate their purchase costs. Creatives generally price digital artwork using a per hour rate, multiplied by the number of hours to create the piece, adding the cost of materials. This rate depends on the artist’s skillset and experience.
This article will explore how creators price their digital creations, the material costs to be considered, and pricing for NFT marketplaces. All this is so that you can make informed decisions when buying or selling your artwork.
How Artists Price Digital Art
When it comes to digital art, there are two main ways that artists calculate their prices:
- The hourly-rate method, or
- Flat fees
It’s hard to escape the “hourly rates vs. fixed rates” camp mentality.
But in reality, your pricing strategy should always be situation-specific, allowing you to select the best approach for your creative and financial operation. And because clients have different preferences, you must be prepared to quote using both methods.
Charging Hourly Rates for Digital Art
The hourly-rate method is what it sounds like: a time-based pricing method where artists calculate how much they want to earn per hour and then multiply that number by the number of hours it took them to complete the piece.
This is the most common way that artists price their work.
Pros and Cons of Charging Hourly Rates
You’ll always get paid for the time you’ve put in. If a client wants additional changes, the extra time can be easily billed without re-quoting anything.
Hourly rates are usually more palatable to clients (because prices appear to be lower than the lump-sum figure of a flat fee), making it much easier to secure clients.
On the downside, hourly rates penalize efficiency, so the more design experience you have and the more refined your workflow becomes, the less money you’ll make per hour because you’ll finish the work faster.
For budget-conscious clients, the hourly-rate system makes it unclear how much the art project will cost upon signing a contract. They will only know the project’s total cost at the end. This may be uncomfortably unpredictable, making them hesitant to commit.
When Should You Quote Hourly Rates?
Use hourly rates when:
- You are new to freelancing
- Unstructured and sporadic commissions
- Working with a project with less-defined specifications
When starting out, hourly rates can be an excellent way to increase your income gradually as you build your portfolio and client base.
Also, when the scope of work is difficult to estimate, such as when doing a few hours of design work here and there or when a project is low on upfront specifications, the hourly rate method is a safer option.
Charging Flat Fees for Digital Art
The flat fee model is self-explanatory: you charge one price for the entire project, no matter how long it takes you to complete.
You are paid on completion, or you receive fixed payments for various completed stages, regardless of the time it takes or any potential issues on your end. Typically, if the project is lengthy, artists will negotiate installment payments.
Pros and Cons of Charging Flat Fees
The main advantage of charging flat fees is that you get paid for the value you bring to the table, not just the time you spend on a project. It is a value-based pricing strategy.
If you can complete a project faster than expected, or if it requires less effort than initially thought, you still get paid the same amount.
Flat fees provide clarity and certainty for both you and the client. The client knows exactly how much they need to budget, and you know exactly how much you’ll be paid.
The downside of charging flat fees is that they can be more challenging to calculate accurately, especially in the beginning.
It’s easy to underestimate the amount of time, effort, and material a project will take, resulting in you doing a lot of work for very little pay. This is why most experienced artists advise using a flat fee pricing method for projects you are familiar with and have a reasonable estimate for how long it will take. This will help you predict the cost.
When Should You Quote Flat Fee Rates?
Use flat fees when:
- The scope of work is well-defined
- The client is looking for a set final price
- You’re experienced with the project and can estimate how long it will take you to complete
Easy Steps On How To Compute An Hourly Rate As An Artist
To come up with a reasonable hourly rate, there are a few key things you need to take into account:
- How much do you need or want to earn per year?
- How many days per year do you want to work?
- What are your business expenses?
- Profit padding?
1. Yearly Expenses
Determine how much you need to bring home yearly to cover your expenses. This tally should include your rent or mortgage, food, transportation, health care, utilities, debt, and even taxes.
Add them all up and add about 10-15% for unexpected bills, up-charges, rent increases, and so on.
For example, let’s say you need to bring home $30,000 per year after taxes to cover your costs of living. Add 10% to this, and you get a yearly target of $33,000. This total is what you need to survive.
To avoid burnout, adding in some extra income for travel and fun is important. These activities are essential and are not frivolous expenses.
Let’s say you want an additional $5,000 per year for these things. Your new target is $38,000 per year.
2. Number of Days You Want to Work
The next step is to figure out how many days you want or need to work per year.
261 is the approximate number of work days per year. But it would be best to account for holidays, vacations, and sick time.
An artist could subtract about two weeks for these things, leaving you with 257 days per year.
But if you want to be conservative, let’s say you only want to work 231 days per year.
3. Business Expenses
Now you need to take into account your business expenses, which can include:
- Website Hosting,
- Computer hardware, software, upgrades, etc
For example, we’ll say the business expenses total $500 per year.
4. Profit Padding
When calculating rates, it is vital to consider more than just how much money you need to live. You also need to think about your future. If you don’t make any profit, you will only be able to survive paycheck to paycheck. This can be a problem if your pay is not regular.
Artist, Xavier Coelho-Kostolny, advises adding a padding percentage of (15%-25%) to account for savings, days when you don’t have clients or sales, or when your current rate isn’t able to cover all your expenses.
Now that you have your total expenses, you can start to figure out how much you need to charge per hour.
(Yearly Expenses) / Number of hours worked per year = Daily rate
If we take our earlier example of needing to bring home $38,000 + ($500 business expenses) + (15% padding) = $44,700.
Daily Rate/ 8 hours = Hourly rate
$44,700 divided by 231 (number of work days per year) = $193.72 per day that you need to make.
$193.72 divided by 8 (average number of hours worked per day) = $24.21 per hour.
This is how much you need to make each hour to cover your expenses and have a little bit of savings.
And, of course, you can play around with the numbers. This is just a framework to get you started. Here’s a good freelance rate calculator spreadsheet to help guide your estimations.
Easy Steps On How To Compute A Flat Rate As An Artist
The second method to estimate a rate is to calculate a flat rate. This estimation is generally more manageable for the buyer as it considers the value the client is getting from your work.
Let’s explain this using Anoosha Syed’s book cover illustration as an example:
Anoosha, a professional illustrator, has two clients who want her to design a book cover.
Since Anoosha has designed book covers before, she anticipates that the project will take about 60 hours to complete (about a week).
Using her established hourly rate, she estimates her baseline price is $1800.
But she charges client A $2000 and client B $5000. For the same work and same time, two clients have different rates!
Why is this?
Anoosha is taking into account the different values her clients are getting from her work.
Client A is a small indie publisher that doesn’t have much of a budget yet. They are not expecting to sell many copies of the book.
On the other hand, Client B is a large publishing house with a big budget. They expect to sell many copies of the book and therefore will make more money.
Client B’s value from Anoosha’s work is much higher, so she charges them a higher rate.
This is just an example to illustrate how a flat rate considers value. You can use this same logic to create a flat rate for your work.
Here are some factors you need to think about:
- The time it will take you to complete the project
- The value the client is getting from your work
- Visibility of your digital artwork
- The client’s budget (size of client)
- The client’s deadline
- Rights (the more rights you allow, the more the price)
Once you have considered all of these factors, you can give the client your flat rate quote, and then you can start negotiating what’s fair for both parties.
How To Price Digital Art For Selling On NFT Marketplaces
You may be looking for new ways to sell your work as an artist. One option is to use NFT marketplaces. But how do you price your digital art for these sales?
While there is no surefire way to price an NFT perfectly, there are a few things to consider that can help you arrive at a fair price. These are:
The more unique and rare an NFT is, the more expensive it will be.
To determine the rarity of your NFT, use an NFT rarity calculator. The higher the rarity number, the higher your price tag on your NFT.
It would be best to consider the minting fee and transaction fees to avoid pricing under what you paid.
Minting fees or gas fees are what you pay for the energy used to place your NFT on the blockchain. Transaction fees are platform commissions that each NFT marketplace charges.
Another thing you’ll want to consider is whether or not you want to charge royalties. If someone buys your NFT and then sells it later, do you want a percentage of that sale? If so, make sure to factor that into your price.
Buyers: Understanding Artists’ Pricing
A lot goes into an artist’s pricing for their work. It’s not just the time to create the piece, but the cost of materials, uniqueness of the piece, use of the piece, and so on.
For example, a digital artist may charge $5 for their work that can be used as an avatar or wallpaper. The same artist may charge $100 or more for a high-resolution file that can be used commercially.
By understanding the factors that affect art pricing, you can be a more informed buyer. And when you’re a more informed buyer, you can feel good about the prices you’re paying for the art you love.
Financial Disclaimer: This content is for educational purposes only and is not suitable as financial advice. Opinions and statements expressed herein are those of the author. They do not reflect the views of Data Overhaulers or its owner. Data Overhaulers is not a subsidiary of or owned by any ICOs, blockchain startups, or companies that advertise on our platform. Investors should do their due diligence and meet with a licensed financial advisor before making any investments in any ICOs, blockchain startups, or cryptocurrencies. Please be advised that your investments are at your own risk, and any losses you may incur are your responsibility.