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Published on:

25th Feb 2022

How to Build a Pricing Structure

Deciding on how to price your work and what to charge has always been a difficult prospect for artists: what is our worth work, and how much are people willing to pay? What does, "charge what you're worth" even mean in practical terms?

In this episode, you'll learn a simple method for pricing your work in a way that is profitable and sustainable, including:

  • How to define your salary
  • Figuring out the cost of doing business
  • Creating a pricing structure based on the unique business you run and your longterm goals

If you want to learn more about Mastering the Business of Art you can find it here: (replace with links to previous episode topic or related episode)

Learn more about how to think like an artist on The Artist's Forge, and join our growing community of artists on Facebook.

Want to know more about the hosts?

Nicole York

Matt Stagliano

Cat Ford-Coates

Bassam Sabbagh

Bekka Bjorke

Transcript
Matt Stagliano:

Hi, this is Matt Stagliano and thanks for being

Matt Stagliano:

part of the artists Forge. We're a community of creatives who

Matt Stagliano:

help each other think like an artist. By discussing creativity

Matt Stagliano:

as a process instead of a skill or a talent. We believe everyone

Matt Stagliano:

has what it takes to create something amazing. We just need

Matt Stagliano:

some encouragement and inspiration along the way. What

Matt Stagliano:

you're about to hear is a live recording of one of our daily

Matt Stagliano:

discussions on the clubhouse app. If you like what you hear,

Matt Stagliano:

I encourage you to join our private Facebook group, or visit

Matt Stagliano:

us on the web at the artist forge COMM Now on to the show.

Nicole York:

Welcome to morning walk with the artist Forge. I'm

Nicole York:

your host, Nicole York. And today we are going to be talking

Nicole York:

about pricing finances. Ooh, your equivalent in your booths

Nicole York:

right now this is the conversation that you need to

Nicole York:

hear. In fact, if you think you know, anybody who needs to work

Nicole York:

through their pricing, now would be the time to ping those folks

Nicole York:

or share the link with them. Let them know we're here so that

Nicole York:

they can come and hang out. Because this is going to be a

Nicole York:

really important conversation that takes everything that we've

Nicole York:

talked about where business is concerned, and gives it the

Nicole York:

lifeblood that it needs. Because without earning money, your

Nicole York:

business doesn't exist. That's what it's here for. So that's

Nicole York:

what we got to figure out. I have a really simple set of

Nicole York:

procedures that we can go through that anybody can use no

Nicole York:

matter whether they're a photographer, analog artists,

Nicole York:

digital artist, no matter what you can you kind of use these

Nicole York:

steps to figure out what you should be charging, either per

Nicole York:

day or hour, what you need per sale, all of those things, we'll

Nicole York:

be able to figure that stuff out. But the first thing I want

Nicole York:

to do is ask the moderators today, what do you think is the

Nicole York:

most important thing that people need to keep in mind when they

Nicole York:

think about pricing?

Bassam Sabbagh:

My first reaction is pricing is a

Bassam Sabbagh:

consequence of how you want to run your business and not the

Bassam Sabbagh:

other way around. So your pricing needs to support

Bassam Sabbagh:

everything we've talked about so far. And the one thing to keep

Bassam Sabbagh:

in mind is that when you get into the details of what it

Bassam Sabbagh:

takes to run a business, you may have some surprises. So

Bassam Sabbagh:

following us process, following, you know, step by step of how to

Bassam Sabbagh:

look at your cost, how to look at your cost of goods sold your

Bassam Sabbagh:

cost of doing business, your direct and indirect costs. And

Bassam Sabbagh:

all that stuff we're going to talk about is critical to be

Bassam Sabbagh:

able to be sustainable as a business. And we often

Bassam Sabbagh:

underestimate that up front, because we use a simplistic

Bassam Sabbagh:

approach to pricing say, Well, this is what I'm charging.

Bassam Sabbagh:

That's how much I'm putting in my pocket, hey, I'm making

Bassam Sabbagh:

money. So just the recognition that it's a bit more complex

Bassam Sabbagh:

than that. And you have to really understand some of the

Bassam Sabbagh:

fundamentals and shape your pricing in a way that supports

Bassam Sabbagh:

everything we've discussed about how you want to run your

Bassam Sabbagh:

business.

Nicole York:

With one caveat, that's a great.

Bassam Sabbagh:

One caveat, you brought up a very good example

Bassam Sabbagh:

yesterday, sometimes you don't have a choice for pricing, you

Bassam Sabbagh:

gave the example of being a writer and writing books, that's

Bassam Sabbagh:

set by the market. And it's a completely different way of

Bassam Sabbagh:

looking at things. So maybe pricing drivers the way you do

Bassam Sabbagh:

your business in that case. So there's no fast rule. But in

Bassam Sabbagh:

general, for the type of people we have in the crowd and the

Bassam Sabbagh:

type of businesses we most of us run, I think it's the pricing

Bassam Sabbagh:

supports the business as

Nicole York:

opposed to? Yeah, I agree. And I think it's really

Nicole York:

fantastic that you mentioned the fact that many of us kind of

Nicole York:

start out with a really simplistic view of what this

Nicole York:

looks like, and how often young businesses will begin based on

Nicole York:

what somebody else does. And so we look at somebody else's

Nicole York:

business model. And we make the assumption that because it's

Nicole York:

working for them, not only will it work for us, but it's it's

Nicole York:

going to kind of provide us the life that we need. We don't

Nicole York:

actually look at the hard numbers and ask ourselves, if I

Nicole York:

were to follow this and do what they are doing, is that actually

Nicole York:

going to provide for me because we don't know whether people's

Nicole York:

bills, we don't know what it's cost them to live their life and

Nicole York:

run their business. And so making assumptions without

Nicole York:

really digging into things definitely leads you to that

Nicole York:

place of having to restructure your prices later on. Because

Nicole York:

you just didn't take the time to look at all of the subtleties

Nicole York:

that are involved in that. So definitely really important for

Nicole York:

us.

Bassam Sabbagh:

Yeah, the other the other thing trap we fall

Bassam Sabbagh:

into is often we looked at our personal situation and say for

Bassam Sabbagh:

example, I have a I have a job right now I'm making 20 bucks an

Bassam Sabbagh:

hour or whatever it is 25 bucks an hour. And oh, by doing

Bassam Sabbagh:

photography, I can do a photoshoot charge 300 bucks.

Bassam Sabbagh:

That's like $100 an hour. That's much better than what I'm doing

Bassam Sabbagh:

now. That becomes a trap. That kind of leads us down not being

Bassam Sabbagh:

satisfied with $300 without even knowing what it takes to

Bassam Sabbagh:

actually run that business. That's bringing in 300.

Nicole York:

Right, and then also making the assumption

Nicole York:

you're getting all $300. Also, right, and then not factoring in

Nicole York:

the fact that that $300 has to expand to pay for the time that

Nicole York:

you're working, but not earning. And that's something we're going

Nicole York:

to talk about as well. So yeah, really, really fantastic

Nicole York:

examples besom. For the rest of the mods, what should we really

Nicole York:

be keeping in mind about prices and financing? Before we get?

Bekka Bjorke:

I'm going to swing away from the practical a little

Bekka Bjorke:

bit, this is an interesting question. I think learning how

Bekka Bjorke:

to take your emotions out of your pricing is game changing,

Bekka Bjorke:

absolutely game changing and essential, and it's really,

Bekka Bjorke:

really freaking hard, especially for we artists, you know, our

Bekka Bjorke:

self worth is so closely tied to the art we create. And, yeah, I

Bekka Bjorke:

think being able to emotionally detach, or if we get back into

Bekka Bjorke:

cats divorce conversation a little bit, is probably the

Bekka Bjorke:

number one of the number one or, you know, top five most

Bekka Bjorke:

important things to consider with your pricing. It's not

Bekka Bjorke:

about your feelings, it's about sustaining that business.

Nicole York:

It's not a batch of feelings. And I'm really glad

Nicole York:

that you brought that up, because that's going to kind of

Nicole York:

be the first point that we cover, when we break into the

Nicole York:

actual, here are the steps that you take, we have to start

Nicole York:

there. Because man, there's there's so much bad advice out

Nicole York:

there tied to to pricing and how we should be feeling about it.

Nicole York:

So I'm really glad that you brought that up.

Matt Stagliano:

I think one of the things that ties into the

Matt Stagliano:

conversation we've had about business is knowing what it

Matt Stagliano:

costs to run your business, right, you can't just

Matt Stagliano:

arbitrarily pull a number out of the air and say, you know, John

Matt Stagliano:

is charging this much, and Susie's charging this much. So

Matt Stagliano:

I'm just gonna kind of be in that area. Well, their

Matt Stagliano:

businesses may be running completely differently than

Matt Stagliano:

yours, they might have a whole different set of reasons why

Matt Stagliano:

they offer what they offer, and how they do it. And their

Matt Stagliano:

overhead is going to be different their business is not

Matt Stagliano:

your business. So you need to understand what it's going to

Matt Stagliano:

cost to run your business. And then think about taking home

Matt Stagliano:

profit, and then thinking about taking paying your taxes. And

Matt Stagliano:

you've got to look at all of that, and start pricing

Matt Stagliano:

according to the hot, cold, hard facts of how your business is

Matt Stagliano:

being run. Rather than like Becca said, the emotion or you

Matt Stagliano:

know, like all the stuff that Hassan was referring to a minute

Matt Stagliano:

ago. So you have a cost, First, understand how your business

Matt Stagliano:

needs to run, then we can talk about pricing.

Cat Ford-Coates:

Well, and understanding what your business

Cat Ford-Coates:

needs to run on a wing and a prayer when you start, and where

Cat Ford-Coates:

you want to be going and how much you need to be earning net

Cat Ford-Coates:

needs to be figured into that cost space. And I can't tell you

Cat Ford-Coates:

how many photographers I run into that, and myself included,

Cat Ford-Coates:

that want to start and be an affordable photographer, I want

Cat Ford-Coates:

to be accessible to, you know, the majority of people and then

Cat Ford-Coates:

when they start working, they realize like, how incredibly

Cat Ford-Coates:

unsustainable the affordable model is without like a full

Cat Ford-Coates:

complement team. Because high volume is just that it's high

Cat Ford-Coates:

volume. And when you want to actually be creating art. It's

Cat Ford-Coates:

not You're not? What's that mean? That's been going around

Cat Ford-Coates:

like artists have been confused with content creators. And you

Cat Ford-Coates:

know, there's a big difference there between a school picture

Cat Ford-Coates:

and you know, something that you're really crafting for

Cat Ford-Coates:

someone and on your own. It's simply not sustainable to pull

Cat Ford-Coates:

any kind of a living wage for yourself out of a low cost model

Cat Ford-Coates:

that requires high volume on your own. It's just wow, yeah,

Cat Ford-Coates:

cost first, what do you need to earn? What is your business need

Cat Ford-Coates:

to just survive, let alone thrive? And then disconnecting

Cat Ford-Coates:

emotionally to what that number might be? Holy shit, that number

Cat Ford-Coates:

might mean that you have to generate half a million dollars.

Cat Ford-Coates:

Oh my god, how am I gonna generate half a million dollars

Cat Ford-Coates:

if I can only shoot twice, two days a week? Oh, what about

Cat Ford-Coates:

vacation? What about okay, then that means that maybe you're not

Cat Ford-Coates:

in that quote unquote affordable space. Maybe that means that you

Cat Ford-Coates:

are delivering a higher end service. And there's nothing

Cat Ford-Coates:

wrong with being there. That's a place to own some pride. But

Cat Ford-Coates:

definitely building your pricing around that sustainability of

Cat Ford-Coates:

being able to do that. And if you're not coming trouble there,

Cat Ford-Coates:

you can also make the decision to keep it as a hobby.

Bassam Sabbagh:

I'd like to, yeah, I'd like to just add

Bassam Sabbagh:

something, maybe take a 30,000 foot view, before we get into

Bassam Sabbagh:

some of these elements. We're talking about pricing, we're

Bassam Sabbagh:

talking about cost extremely important elements, I call them

Bassam Sabbagh:

levers within a business. And there's multitude of levers

Bassam Sabbagh:

within the financial health of the business. But fundamentally,

Bassam Sabbagh:

if you look at it from a higher level, there's three aspects to

Bassam Sabbagh:

financial health of a business, right? There's the profit and

Bassam Sabbagh:

loss thing, right? Like the concept of profit, there's the

Bassam Sabbagh:

the second thing would be the concept of cash flow. And the

Bassam Sabbagh:

third would be financial value creation within the business,

Bassam Sabbagh:

right. And eventually, maybe we'll talk about financial

Bassam Sabbagh:

statements and how that fits in there. But at the end of the

Bassam Sabbagh:

day, profit, cash flow and find and value creation, and I'm

Bassam Sabbagh:

talking about equation from from $1, and cents perspective in

Bassam Sabbagh:

your business and goodwill. And then within those, there are a

Bassam Sabbagh:

multitude of elements and what I call levers to contribute to

Bassam Sabbagh:

that you can actually affect those three things, with

Bassam Sabbagh:

pricing, with cost, with investments, with way of doing

Bassam Sabbagh:

business, there's so many levers you can pull. And I know we need

Bassam Sabbagh:

to get into pricing and class than we will because they are

Bassam Sabbagh:

probably the most you know, they're their fundamental and

Bassam Sabbagh:

the easiest, or at least the most influential levers in the

Bassam Sabbagh:

equation. But there's a very important aspect that people

Bassam Sabbagh:

underestimate as many businesses go bankrupt, not because they

Bassam Sabbagh:

don't make profit, it's, you know, you know, the thing, cash

Bassam Sabbagh:

is king, most bankruptcies is because people ran out of cash.

Bassam Sabbagh:

And they may be extremely profitable, but they run out of

Bassam Sabbagh:

cash. And then you have other examples where companies don't

Bassam Sabbagh:

make any money. And for some reason, they have cash flow. So

Bassam Sabbagh:

let's not ignore cash as as an important aspect, as we go

Bassam Sabbagh:

through the

Nicole York:

roof, you guys have brought up a lot of really

Nicole York:

fantastic things for us to keep in mind. So I'm really glad that

Nicole York:

we started out with this, because there are certainly

Nicole York:

several aspects of this that we're obviously going to cover

Nicole York:

today, some that will probably be extended. But these are

Nicole York:

really important things to keep in mind, because what we're

Nicole York:

about to talk about, for most folks is one of the most

Nicole York:

difficult parts of starting and running and maintaining a

Nicole York:

business, in part because of a lot of those issues around money

Nicole York:

that we all have we talked about earlier. And then in part,

Nicole York:

because it's just a big complicated machine to run. And

Nicole York:

there are a lot of things to keep in mind. And strangely

Nicole York:

enough, and I'm going to go ahead and begin with this.

Nicole York:

Strangely enough, as artists, we just get a lot of really bad

Nicole York:

advice. And which is kind of frustrating, because most of us

Nicole York:

are not inherently business people, many of us artists, we

Nicole York:

just want to make things. It's great to earn money from what we

Nicole York:

make, we need that to live. But also our brains often don't work

Nicole York:

in the way that is best suited to running a business. So we

Nicole York:

have to teach ourselves a lot of this stuff. And so a lot of the

Nicole York:

advice that we get around making money as an artist is not really

Nicole York:

healthy advice, things like charge what you're worth, that

Nicole York:

is well meaning advice. And we do understand the concept of

Nicole York:

don't undercharge you need to earn enough to live to thrive,

Nicole York:

etc, etc, that makes for a healthy marketplace and all of

Nicole York:

these things. But what the words actually mean is that you are

Nicole York:

worth the amount you are willing to charge for your art. And if

Nicole York:

somebody pays that, it's because you are worth it, not because

Nicole York:

the market will bear it, not because you found somebody who

Nicole York:

values it, but because you are worth it. And all of the sudden,

Nicole York:

that becomes a personal emotional tie to money, which is

Nicole York:

not a great idea. This is why cat talks about divorcing

Nicole York:

yourself from emotion where money is concerned. And one of

Nicole York:

the big ways that you can do that is by running the numbers.

Nicole York:

I talked about this before. But that's really the heart of where

Nicole York:

we're gonna start today. And we're going to cover a lot of

Nicole York:

ground. So I would like everybody to be prepared. If you

Nicole York:

want to be taking notes for this. be paying attention

Nicole York:

because it's gonna get complicated, but I am working on

Nicole York:

an article. So that's going to ease things a little bit for

Nicole York:

everybody. But the first thing that we have to do if we want to

Nicole York:

run a business is we have to understand what we need to earn

Nicole York:

individually. This can pretty easily begin by looking at our

Nicole York:

bills now and what we're making now. So

Nicole York:

we can look at our income statements, we can look at our

Nicole York:

bank statements, we can look at what's going out. If you were to

Nicole York:

continue to make what you make now. Could you be happy and

Nicole York:

healthy? Could you be thriving? And you have a couple of options

Nicole York:

here. You can either look at what do I need in order to

Nicole York:

scrape by or you can ask yourself what would actually

Nicole York:

make it worthwhile to run this business. Because like I said

Nicole York:

before, you could very easily go to work for someone else, and

Nicole York:

make money. Oftentimes, as beginning entrepreneurs, we

Nicole York:

would be making more money working for someone else than we

Nicole York:

do for ourselves. So, at least in my opinion, it's better to

Nicole York:

start out understanding what would I need to make in order to

Nicole York:

live a life that I love, because I can always drop things later

Nicole York:

on. But it's harder to build them if I start small. So I'm

Nicole York:

going to start with my sights set on what would I need to earn

Nicole York:

in order to thrive. And you as you're taking all of these

Nicole York:

notes, as you're writing down the current expenses that you

Nicole York:

have, and including things like your mortgage, or your rent

Nicole York:

payment, your car insurance, about what you spend on

Nicole York:

groceries, your utility bills, all of these things, you need to

Nicole York:

include all of that stuff. I'm also going to include what, what

Nicole York:

what I need to earn, if I wanted to take a couple vacations a

Nicole York:

year, what would I need to earn? If I wanted to make sure I was

Nicole York:

investing? What would I need to earn, if I wanted to save 10% of

Nicole York:

every check, I'm going to do those things. Because if I have

Nicole York:

to step down a couple steps from those, I can do that. But if I

Nicole York:

start off going, what's the absolute minimum I need in order

Nicole York:

to survive, I'm leaving myself number one, no room to to enjoy

Nicole York:

the funds that I'm earning. But I'm also going to make it harder

Nicole York:

for myself to step that up later on. Because not only have I

Nicole York:

already entered into my business with a kind of poverty mindset

Nicole York:

with a not enough mindset. But I'm also entering into it,

Nicole York:

giving my clients the expectation that my services and

Nicole York:

my products will cost a certain amount. And when it's time to

Nicole York:

raise that later on, I either have to charge my customer base

Nicole York:

more and my returning clients may not be thrilled about that.

Nicole York:

Or I have to work really hard at finding more people to bring

Nicole York:

them in more often, which is going to stress my ability to

Nicole York:

work because now I'm exchanging all of my time for not quite

Nicole York:

enough money. So I would highly suggest start off this number by

Nicole York:

asking yourself, what do I need to earn in order to thrive,

Nicole York:

include all of your bills, all of your expenditures, everything

Nicole York:

all the way down to your savings account your vacations, if you

Nicole York:

have pets, what does it cost to take them to the vet all of

Nicole York:

those things that needs to be considered. And you may come in

Nicole York:

at $45,000, you may come in at 80,000 120 you I can't say but

Nicole York:

wherever it is, that is the first number you need to know

Nicole York:

what you need to earn per year in order to live a life that you

Nicole York:

love. So not too difficult, most of us already have a good

Nicole York:

reference for that. The next thing you need to do is write

Nicole York:

down what your business will need to earn in order to thrive

Nicole York:

in order to run a business that you actually not only love

Nicole York:

running but is going to be able to grow in the future. So I'm

Nicole York:

going to throw out a couple things I want to hear from the

Nicole York:

mods, what are some things we need to make sure we include in

Nicole York:

these business expenditures, but the obvious things if you're

Nicole York:

renting a space or if you own a space that needs to be included,

Nicole York:

the utilities for that space need to be included things like

Nicole York:

personal development need to be included taking care of your

Nicole York:

gear. So if you need to have it cleaned a certain amount of

Nicole York:

times a year if you need to upgrade those are things to keep

Nicole York:

in mind. So those are a few kind of price things that you need to

Nicole York:

consider your software and you know your hardware that you're

Nicole York:

using you may need to replace those things so you probably

Nicole York:

want to fund for that. What are some other things guys that

Nicole York:

people need to be including in the cost?

Cat Ford-Coates:

All right, you're ready everybody got pen

Cat Ford-Coates:

to with all right contract labor commissions and fees building

Cat Ford-Coates:

and property rent, workers comp entertainment with clients

Cat Ford-Coates:

general business expenses, bank fees and service charges. Cash

Cat Ford-Coates:

to have petty cash on hand especially once you start

Cat Ford-Coates:

dealing with a team is really helpful so you're not having to

Cat Ford-Coates:

hand over a debit card or a credit card every single time

Cat Ford-Coates:

somebody has to go to the frickin post office um,

Cat Ford-Coates:

memberships and subscriptions continuing ed insurance meals

Cat Ford-Coates:

versus travel meals because they're accounted for

Cat Ford-Coates:

differently by an accountant for your taxes, office expenses,

Cat Ford-Coates:

office supplies, shipping and postage, small tools and

Cat Ford-Coates:

equipment, software and applications, payroll expenses,

Cat Ford-Coates:

materials, taxes, paid travel, utilities, any loan payments you

Cat Ford-Coates:

might have and then savings. You definitely want to account to

Cat Ford-Coates:

have savings and not just blow through everything and then

Cat Ford-Coates:

account for like when you start putting aside like taxes for

Cat Ford-Coates:

corporate income tax and sales tax. You can set up those line

Cat Ford-Coates:

items to be calculated based on the cash that you're bringing

Cat Ford-Coates:

in. So it just automatically calculates how much you have to

Cat Ford-Coates:

pull out every week and put into this savings bucket for your

Cat Ford-Coates:

taxes on do the same thing with a savings bucket for new gear

Cat Ford-Coates:

and to stay investing in your business. But those are probably

Cat Ford-Coates:

like, the big standards, the big standard.

Nicole York:

I hope y'all were taking notes, actually, we do

Nicole York:

the replay. So you can always go back for that replay. But that

Nicole York:

was really fantastic. Because it includes a lot of things that

Nicole York:

most of us do not think about when we first get started. So

Nicole York:

well done there anybody else have anything they want to add

Nicole York:

to cats list of things that we need to include in our list?

Bassam Sabbagh:

I think I think that was pretty exhaustive, we

Bassam Sabbagh:

can always add stuff. But I think it's it makes the point

Bassam Sabbagh:

that it's not as simple as we think. And and those are all

Bassam Sabbagh:

have to be accounted for. What I do want to bring though is and I

Bassam Sabbagh:

don't know if I'm doing this out of order, or as we get into the

Bassam Sabbagh:

discussion, is to be able to differentiate in order to kind

Bassam Sabbagh:

of make sense of all of the all of it is to differentiate the

Bassam Sabbagh:

different products or cost categories, and what goes into

Bassam Sabbagh:

Cost of Goods Sold versus general business expenses. And

Bassam Sabbagh:

the reason I say that is because we have to, I know what I went

Bassam Sabbagh:

through doing my pricing, it was very difficult to figure out

Bassam Sabbagh:

what goes into what I call, the direct costs of doing a

Bassam Sabbagh:

photoshoot are things that are variable things that will only

Bassam Sabbagh:

happen because of that specific photoshoot that I did, and how

Bassam Sabbagh:

to separate that from from all the other expenses. So I think

Bassam Sabbagh:

we need to keep that in mind that I'd like to bring in the

Bassam Sabbagh:

concept of contribution. Because we often think of the top line,

Bassam Sabbagh:

meaning I sold for $100,000. But at the end of the day, to

Bassam Sabbagh:

actually make that $100,000, I had to do so many photoshoots.

Bassam Sabbagh:

And there's some costs within that photoshoots that, that,

Bassam Sabbagh:

really, after I finished those, those that work, I didn't have

Bassam Sabbagh:

$100,000 in my pocket, I had maybe 80,000 bucks, and that

Bassam Sabbagh:

80,000 is gonna have to go and pay all of our most of the

Bassam Sabbagh:

things that can just listed. So that's just that, so that, that

Bassam Sabbagh:

there's their sales, but there's also contribution to your

Bassam Sabbagh:

business of of the sales, which would take care of the cost of

Bassam Sabbagh:

goods sold, the costs that go directly into the photoshoot is

Bassam Sabbagh:

what I call the right cost. And then whatever's leftover pays

Bassam Sabbagh:

for the business, I know it's we're getting a bit ahead of

Bassam Sabbagh:

ourselves, maybe but that's kind of a placeholder for cost

Bassam Sabbagh:

categories that we'll have to deal with, to properly price

Bassam Sabbagh:

things and properly.

Cat Ford-Coates:

So besides the the way that we do that is we

Cat Ford-Coates:

have variable costs, and then we have overhead costs. And you can

Cat Ford-Coates:

keep those things separate in so that you have your your variable

Cat Ford-Coates:

costs associated with each of the units of the thing, right,

Cat Ford-Coates:

whether that's the photoshoot, whether that is the byproduct of

Cat Ford-Coates:

the photoshoot with the artwork that's purchased. And those can

Cat Ford-Coates:

be incorporated into your your standard projections based on

Cat Ford-Coates:

either, you know, past history of shooting or what you're

Cat Ford-Coates:

anticipating coming in the down pack. Right? So you can say,

Cat Ford-Coates:

Okay, what am I going to spend to just simply generate this

Cat Ford-Coates:

amount of money, and then you have your overhead payments down

Cat Ford-Coates:

below that just run on a monthly track, so that you can continue

Cat Ford-Coates:

to see like, Okay, how much is coming in? How much is going out

Cat Ford-Coates:

every month, and then start looking at that break even

Cat Ford-Coates:

point? And when you're running your projections, you can say

Cat Ford-Coates:

okay, well, I know if my typical overhead, including salary for

Cat Ford-Coates:

myself, right? Because you want to make sure that a salary is

Cat Ford-Coates:

somehow placed into those so that you can earn and it's not

Cat Ford-Coates:

just by project like, oh, okay, I can actually get paid now, as

Cat Ford-Coates:

an employee in my business, whether it's through an owner

Cat Ford-Coates:

draw or whatever, but if you know your total overhead is

Cat Ford-Coates:

$25,000 for the month, okay, well, what how many photoshoots?

Cat Ford-Coates:

Do I need to do to bring in the $25,000 and still cover the

Cat Ford-Coates:

costs that I need to produce those photoshoots that bring in

Cat Ford-Coates:

the revenue to cover that salary? And that's real.

Bassam Sabbagh:

Absolutely, and one of the easiest way that kind

Bassam Sabbagh:

of think about what, you know, what are these variable costs?

Bassam Sabbagh:

It's what what leaves with the client, right? What does the

Bassam Sabbagh:

client leave with while they leave with the hair and makeup

Bassam Sabbagh:

if you if you did it specifically for them, they

Bassam Sabbagh:

leave with the product and therefore the cost of those are

Bassam Sabbagh:

variable costs. So that's one way to look at it's very

Bassam Sabbagh:

simplistic, but it's a good way to

Nicole York:

Yeah, and we will absolutely be covering this when

Nicole York:

we get down and we start talking about cost of goods as well, and

Nicole York:

how we need to be factoring in the unseen costs to actually

Nicole York:

what we're doing. So what will kind of hopefully use that as a

Nicole York:

meter stick for a way to look at the idea of a variable cost. So

Nicole York:

we'll be definitely covering that as well. But as you just

Nicole York:

heard, there is a lot to keep in mind when it comes to how we are

Nicole York:

looking at our pricing, when we start putting together the

Nicole York:

numbers for what our business needs in order to thrive. And so

Nicole York:

we obviously have the overhead and everything that is

Nicole York:

encompassed by overhead, which basically means these are the

Nicole York:

things your business must have, in order to be alive, you must

Nicole York:

have the space you must be paying the rent, you must have

Nicole York:

the utilities, you must be paying for your contractors, you

Nicole York:

must have your gear, etc. And then you have your startup

Nicole York:

costs. So right now we have how much do I need to earn? What is

Nicole York:

my salary need to be in order to live a life that I love? How

Nicole York:

much does my business need to be earning not only in order to

Nicole York:

exist, but in order to thrive and grow in the future? And then

Nicole York:

how much do I need to get started? What are my startup

Nicole York:

costs, and this is going to highly depend on where you are

Nicole York:

at in the formation of your business. If you are already if

Nicole York:

you're already running a business, but you're like I need

Nicole York:

to revamp this whole thing, then you may have a lot of your

Nicole York:

startup costs already covered. But if you're revamping, there

Nicole York:

may be new things, you need to change your ad. And so that may

Nicole York:

be included in what you need to get started. Of course, you need

Nicole York:

your tools, the tools of your trade, if you're a photographer,

Nicole York:

you need your camera, you need lenses, you need light, you may

Nicole York:

need a computer or software depending on what kind of

Nicole York:

business you run. If you are an analog or a traditional artist,

Nicole York:

you may need brushes and paints and canvases, etc, you may need

Nicole York:

very specific things in order to get started, that's going to be

Nicole York:

highly individualized. So you need to look at those things,

Nicole York:

what do I have? What needs to be added? And if I want to run from

Nicole York:

the get go the kind of business that requires employees or etc,

Nicole York:

then do I need to look to investors and bring that

Nicole York:

business plan that I made? Do I need to look to investors to

Nicole York:

help invest in the startup cost of my business so that I can

Nicole York:

begin on both feet? Or do I? Or can I run the kind of business

Nicole York:

where I can operate very lean for the first couple of years

Nicole York:

until my business is earning enough to get to that place?

Nicole York:

That is a question you need to ask yourself because your

Nicole York:

startup costs need to be rolled into that equation. Alright, we

Nicole York:

have three numbers right now we have our salary, we have how

Nicole York:

much our business needs to earn. And please make sure that you

Nicole York:

include a marketing budget, you may initially decide, I know, I

Nicole York:

want to run Facebook ads, I know I want to run ads on Amazon, and

Nicole York:

I know I want to do one more thing, and it's gonna cost me if

Nicole York:

I if I run one ad a week, it's gonna cost me about this much

Nicole York:

money, or I'm willing to set aside about this much money. And

Nicole York:

then you can make alterations to that later on as you track your

Nicole York:

marketing and figure out how effective it is and what it

Nicole York:

costs you so that you can find out what the CLA or the cost of

Nicole York:

acquisition is. That is something that will be in the

Nicole York:

variable bucket because your marketing is really going to

Nicole York:

vary depending on what the cost per click is, and all of those

Nicole York:

things. But you need to be tracking that because it is

Nicole York:

going to cost you a certain amount of money to bring in each

Nicole York:

client. That includes what you are paying yourself to build and

Nicole York:

run the ads. So we have our three numbers, we're going to

Nicole York:

add all of those things together and come up with the yearly

Nicole York:

combined average of what we need to earn our business needs to

Nicole York:

earn in order to be alive. Depending on where you're at.

Nicole York:

That's going to be different, obviously, because the cost of

Nicole York:

living is in different is different in different places.

Nicole York:

But as an example, you may need to earn $200,000 a year in order

Nicole York:

to pay yourself $50,000 A year for your business to still

Nicole York:

survive. You may need to earn $175,000 a year, you may need to

Nicole York:

earn 500,000 it's really dependent on how those first two

Nicole York:

numbers come together. But what is important is now you have a

Nicole York:

number, okay. Then what you're going to do is ask yourself how

Nicole York:

many days can I work a year.

Nicole York:

Make sure you're including vacation and you're taking that

Nicole York:

out of the time. Make sure you're taking out weekends if

Nicole York:

you're not going to be working weekends, make sure you're

Nicole York:

taking out holidays if you're not going to be working

Nicole York:

holidays. Make sure that you really give yourself a timeframe

Nicole York:

that works because if you overwork yourself your business

Nicole York:

will be dead in the first year. If you under work yourself

Nicole York:

you're not going to earn enough in order to live You can take

Nicole York:

the amount that you're working right now and transpose that if

Nicole York:

it works for you. But for whatever case, let's say that

Nicole York:

you can work for about 250 days a year to eat my husband,

Nicole York:

apparently. So let's say you can work about 250 days per year,

Nicole York:

you take 250, and divide that into your big number that is

Nicole York:

going to tell you how much you need to earn per day, this

Nicole York:

number is important. So make sure you keep it in mind, then

Nicole York:

you need to ask yourself, if you're a photographer, how many

Nicole York:

days can I actually shoot per week? Can I actually be

Nicole York:

photographing five days a week? How am I going to fit in all of

Nicole York:

my business running activities, from marketing to client

Nicole York:

outreach to, you know, taking care of my Year to all of the

Nicole York:

other things that are involved in the business. If you are a

Nicole York:

business that wants to run on bulk, then you need to make sure

Nicole York:

you're considering that when you look at this number, if you're a

Nicole York:

business that wants to run as a boutique business, where you're

Nicole York:

putting a lot of effort into each individual client, and

Nicole York:

maybe you're spending four to five hours with that client on

Nicole York:

shoot day, well, that's a full day of work right there. Because

Nicole York:

you have to set up you have to take down you need to clean

Nicole York:

everything, etc, etc. So let's say for the cost of argument, or

Nicole York:

for the sake of this argument, you're working two days a week,

Nicole York:

you're you're photographing that is your ability to actually earn

Nicole York:

money from those sales, you're doing that two days a week,

Nicole York:

guess what, those two days have to pay for all of the rest of

Nicole York:

the time you're working that week, where you're not actively

Nicole York:

bringing in income. So you have to make enough from those

Nicole York:

individual sales to cover the time that you've spent

Nicole York:

marketing, the time that you've spent keeping your books, the

Nicole York:

time that you've spent cleaning your studio, the time that

Nicole York:

you've spent creating materials, the time that you spent ordering

Nicole York:

your, your products, all of those things have to be covered

Nicole York:

by those sales, including the fact that that is going to be

Nicole York:

broken down after the money comes in. And maybe you made a

Nicole York:

$15,000 sale. And that's freaking outstanding. Guess

Nicole York:

what, you don't keep that $15,000, you are only earning a

Nicole York:

portion of that money that's going towards your paycheck,

Nicole York:

everything else is going back into the cost of running your

Nicole York:

business, it's going to your business savings is going to

Nicole York:

your marketing budget, it's going to your rent, it's going

Nicole York:

to your utilities into et cetera, et cetera. So you have

Nicole York:

to look at that number. Now let's say you need to make

Nicole York:

$1,800 per sale, in order to pay yourself every month in order to

Nicole York:

pay your business what it needs to be paid. And cover all of

Nicole York:

those costs that we've talked about so far. Can you make that

Nicole York:

from each sale? And if you feel uncomfortable with the idea of

Nicole York:

needing to earn that much, but you have decided to build

Nicole York:

yourself a luxury business where in person sales are an important

Nicole York:

thing, then you've got questions to ask yourself. So that's why

Nicole York:

doing this exercise becomes so important. Because once you

Nicole York:

realize what it really costs and what you really have to earn per

Nicole York:

customer. In order to cover the numbers that we've talked about

Nicole York:

so far, you have to take a hard look, I thought I wanted to run

Nicole York:

a I thought I wanted to run a luxury business. But the idea of

Nicole York:

needing the pressure of needing to make $1,800 per sale, all of

Nicole York:

a sudden becomes really heavy. Can I have somebody do that for

Nicole York:

me? And if I do, how much is that going to change the cost of

Nicole York:

running my business? Or can I increase the number of clients

Nicole York:

that I have per week, now I have the pressure of making sure that

Nicole York:

I need to be shooting at least four times a week. Now remember,

Nicole York:

businesses run on averages. So for this month, I may not reach

Nicole York:

the number of clients I need per week. But next month, I made

Nicole York:

double that. And that averages out over the two months. And so

Nicole York:

I have still covered my booty. But that's why we need to know

Nicole York:

per week what we're doing because it gives us a goal to

Nicole York:

shoot for. So that we make sure we are including all of that in

Nicole York:

the cost of doing the business and what we have to earn per

Nicole York:

customer in order to cover all of those costs. So I want to

Nicole York:

pause here and just see if the moderators have anything y'all

Nicole York:

want to add to this. This is obviously a kind of a really

Nicole York:

simple and broad way to approach this just to cover as many

Nicole York:

people as possible, but is there anything you want to add to

Nicole York:

that?

Bassam Sabbagh:

No, that was actually very good. Nicole,

Bassam Sabbagh:

it's, it's clear and concise. I do want to re emphasize one

Bassam Sabbagh:

point and a couple of points that I made. You mentioned

Bassam Sabbagh:

something very happens often which is you may have a good

Bassam Sabbagh:

month you may have a bad month, but a lot of people expenses

Bassam Sabbagh:

don't go that way, right, you still have to pay your rent

Bassam Sabbagh:

every month, which brings back the concept of cash flow, and

Bassam Sabbagh:

you have enough reserves to be able to make it through the bad

Bassam Sabbagh:

months, even though overall you're meeting your objectives

Bassam Sabbagh:

in the year, but you could have to dry months that will bankrupt

Bassam Sabbagh:

you and you won't you don't get you can't pay your bills. So

Bassam Sabbagh:

that's just keep that in mind that the you know, all the

Bassam Sabbagh:

keeping a cash reserve is extremely important when you

Bassam Sabbagh:

kind of build your budget, so that you can make sure you cover

Bassam Sabbagh:

those. So that's one thing. The other thing when we get into

Bassam Sabbagh:

more details, and I know I'm getting into details here, but I

Bassam Sabbagh:

want to re emphasize is when you said I need to at $1,800, for

Bassam Sabbagh:

example, per day or per shoot. Let's not assume that that's the

Bassam Sabbagh:

pricing. Again, it comes back to there's a cost of goods sold in

Bassam Sabbagh:

there, you may have to brace it 2200 To keep $100 in your

Bassam Sabbagh:

pocket.

Nicole York:

We are getting there for sure. Yes, absolutely.

Nicole York:

We're getting there for sure. We just want to start with this

Nicole York:

baseline. So we understand what we actually have to be walking

Nicole York:

out the door with. And when we start talking about product

Nicole York:

pricing, that's where we're going to get into understanding

Nicole York:

how we actually have to price things in order to walk out the

Nicole York:

door with the money that we need, recognizing those things,

Nicole York:

our expenses. So does anybody else have anything that you want

Nicole York:

to add to where we're at right now? Or is there anything I

Nicole York:

missed? That we?

Nicole York:

Okay, nobody's unmuting themselves. So I'm assuming that

Nicole York:

we're good so far. All right. So just to recap, if you're just

Nicole York:

joining us, we are talking about pricing. And we need to have, we

Nicole York:

need to know a set of numbers, we need to know we need to know

Nicole York:

how much we need to earn, individually what our salary

Nicole York:

needs to be per year, we need to know how much our business needs

Nicole York:

to earn per year in order to survive. And we need to know

Nicole York:

what our startup costs are if we're just getting started. And

Nicole York:

like besom said, having that cash flow or having those that

Nicole York:

cash on hand, that those liquid assets that we may need in order

Nicole York:

to cover dry months, that can absolutely be included in your

Nicole York:

startup costs, if you're looking for investors, and even if

Nicole York:

you're doing that yourself, you can say well, you know what, I

Nicole York:

want to make sure that I have at least three months of rent and

Nicole York:

utilities paid. So I'm not going to officially start my business

Nicole York:

until I have that money set aside. That's a decision that

Nicole York:

you can make as well. So keep that in mind. All right. So we

Nicole York:

now have those three numbers, we've added them together, we

Nicole York:

know when we add our salary to the cost of doing business and

Nicole York:

our startup costs that we need to be earning this specific

Nicole York:

amount of money per year, we've divided that by how many days we

Nicole York:

can work per year. And then we've looked at how much we need

Nicole York:

to make per sale in order to cover those non income days. So

Nicole York:

if you have an admin day, where I know Kat has mentioned this

Nicole York:

before, maybe Monday is the day that you respond to emails and

Nicole York:

build your marketing for the week and check your ad spend and

Nicole York:

you know, clean and send your gear off to get cleaned.

Nicole York:

Whatever it is maybe Monday is your admin day, you are not

Nicole York:

earning any income directly on that day. But that day still

Nicole York:

needs to be paid for those hours that you spent still need to be

Nicole York:

paid for. So when you make a sale, those sale days, those

Nicole York:

sales that you make have to cover all of the time that you

Nicole York:

have not spent actively earning money. And you need to keep that

Nicole York:

in mind. Because the time that you spend doing the things that

Nicole York:

bring clients in, go into your cost of acquisition, that means

Nicole York:

that the how much it costs you to get a client through the

Nicole York:

door, if it costs you one hour of marketing, if it costs you $4

Nicole York:

per click, and you have a turnover rate of a certain

Nicole York:

percentage, that is actually the cost of bringing the client in

Nicole York:

the door. So you get to deduct that, right? That is the cost of

Nicole York:

acquisition, it may cost you $25 per customer cost me $25 To get

Nicole York:

this person in the door. So however much I earned from them,

Nicole York:

I get to deduct that $25 from that because that $25 is going

Nicole York:

to my business, right? And it's going to be spread out through

Nicole York:

all those things. And part of it's coming back to me. So you

Nicole York:

need to know these numbers. Because if your cost of

Nicole York:

acquisition is $40 and your client is paying you $30 You're

Nicole York:

gonna have a problem. You need to know what that cost of

Nicole York:

acquisition is. That is something that you will learn

Nicole York:

and it's something that is variable, which is why it's a

Nicole York:

difficult one to track but it goes in that variable cost area

Nicole York:

when you're looking at your marketing budget. That's why you

Nicole York:

really want to be tracking those numbers. Okay. So without

Nicole York:

getting too deep into the weeds there, you now have, how much

Nicole York:

you need to make per sale.

Nicole York:

Now we get to ask ourselves, okay, what are we giving our

Nicole York:

clients what are they buying? That is going to cover the money

Nicole York:

I need to earn and let's say we need to make an eight Tene $100

Nicole York:

sale in order to cover everything, what are we selling

Nicole York:

them? Are we giving them digital files alone, which have almost

Nicole York:

no overhead, the overhead for digital files is minimal and

Nicole York:

it's spread out. So remember that overhead does go into

Nicole York:

things like well, I have to use my computer to make a digital

Nicole York:

file, maybe I'm giving them a jump drive, and that is a cost

Nicole York:

of good. Maybe I have to pay for Dropbox because that's where

Nicole York:

they pick their files up from. It all depends on how you

Nicole York:

structure this. But that overhead for that specific

Nicole York:

product needs to be included in your cost of goods, you may do

Nicole York:

prints, it might cost you $5, to have an eight by 10, print,

Nicole York:

printed, and $3 for a mat. And then $50 For the box that you're

Nicole York:

going to preview everything in, all of that has to be deducted

Nicole York:

from your sale, which means that you have to cover that cost in

Nicole York:

your sales. So if you need to earn $1,800 from that sale, and

Nicole York:

somebody is going to be getting a box of matted prints, you now

Nicole York:

have to look at that cost of goods, add it into the sale. So

Nicole York:

your actual sale needs to be 2300. And not 1800, you need

Nicole York:

1800. Net, you need to walk away with $1,800. So all of the cost

Nicole York:

of goods get to go on top of what that sale costs. And the

Nicole York:

thing is you can you can make those adjustments. So let's say

Nicole York:

what happens is you you need to earn your $1,800. And it costs

Nicole York:

you in cost of goods $300, in order to make the products that

Nicole York:

they're going to walk away with, you now have some options. If

Nicole York:

you could, you could create a package that costs $2,500, you

Nicole York:

could create a package that costs $2,000 And then add a $500

Nicole York:

sitting fee, you could make sure that you're doing print and

Unknown:

during

Nicole York:

a lot of businesses will have that buffer of

Nicole York:

something like this is the sitting fee, so that they know

Nicole York:

what the bare minimum, they can walk out with that amount of

Nicole York:

money. But in either case, you need to earn what you're paying,

Nicole York:

you know what you what you're walking away with plus the cost

Nicole York:

that it takes to put this thing together. And at the end of the

Nicole York:

day, if you're a luxury business and you're doing hair and

Nicole York:

makeup, you have to maintain your wardrobe that they're

Nicole York:

choosing from, maybe you had to bring in an additional set, and

Nicole York:

the cost of putting together their album or their prints or

Nicole York:

whatever it is, you may actually need to have a $3,000 sale in

Nicole York:

order to walk away with $1,800. That's why you need to

Nicole York:

understand what your cost of goods are. In order to know what

Nicole York:

you need to make. It's not just that $1,800 It's the cost of

Nicole York:

earning that $1,800. So I know this is kind of what you were

Nicole York:

wanting to get into. But some so I want to leave some space here

Nicole York:

for what this actually looks like in real time. So

Bassam Sabbagh:

Nicole, I hope you don't mind not we don't

Bassam Sabbagh:

script this in advance. And I just want to maybe just bring up

Bassam Sabbagh:

a bit of a I don't want to call it correction, but just a little

Bassam Sabbagh:

clarification of the word variable. Because if you take

Bassam Sabbagh:

the English definition of variable, it's things that vary.

Bassam Sabbagh:

But the accounting definition of variable may be a little bit

Bassam Sabbagh:

different. So I just want to give an example. That we have to

Bassam Sabbagh:

be careful when we do this. In when we figure out financials

Bassam Sabbagh:

when we talk about accounting, right? The simplest way to look

Bassam Sabbagh:

at variable is if it's something that varies with the number of

Bassam Sabbagh:

customers you have it's variable, if it's something

Bassam Sabbagh:

that's there, whether you're making a sale or not. It's

Bassam Sabbagh:

fixed, its overhead. That's one way to delete nearly any ad, for

Bassam Sabbagh:

example. You mentioned Dropbox as an example, right? If I'm a

Bassam Sabbagh:

photographer and Dropbox, I need Dropbox, because my business

Bassam Sabbagh:

model, the way I deliver my product is through Dropbox. I'm

Bassam Sabbagh:

going to be subscribed to Dropbox, whether I have a client

Bassam Sabbagh:

or not, I'm paying a subscription. So to me, that's

Bassam Sabbagh:

not a variable cost that is part of my overhead. Right? And if we

Bassam Sabbagh:

try to take what overhead is and try to piece it up and put it in

Bassam Sabbagh:

the cost of goods sold, we're getting we're gonna get

Bassam Sabbagh:

confused, right? So that's why I'd rather keep the simple

Bassam Sabbagh:

definition, which is, if it's actually something that I will

Bassam Sabbagh:

spend only if I have a customer, then it's variable. Otherwise

Bassam Sabbagh:

it's overhead. That's kind of I don't know if Anybody agrees

Bassam Sabbagh:

with that? But that's the fundamentals, with the word

Bassam Sabbagh:

variable versus over.

Nicole York:

Yeah, I think I might have accidentally strong,

Nicole York:

too many things together. into that circumstance, what I had

Nicole York:

intended to say was if you're delivering digital files in

Nicole York:

different ways, like, if I have a customer who, you know, maybe

Nicole York:

I use Dropbox, but they want to jump drive, and I'm willing to

Nicole York:

do that for them, but I don't do that forever.

Bassam Sabbagh:

Absolutely, then you're buying something that's

Bassam Sabbagh:

specifically because you have a client, that's fine. That's,

Bassam Sabbagh:

that's variable cost goes into the cost to do so. And again,

Bassam Sabbagh:

it's not to get confused, it's actually make it simpler, right,

Bassam Sabbagh:

and know which bucket to put things in write. So in my

Bassam Sabbagh:

business model, for example, if I just do digital files, my cost

Bassam Sabbagh:

of goods sold is zero. All my other costs are still there. And

Bassam Sabbagh:

obviously, the contribution or the money I'm making out of that

Bassam Sabbagh:

shoot is higher than if I had to buy them an album and give them

Bassam Sabbagh:

an album. Right. But fundamentally, my cost is zero,

Bassam Sabbagh:

my variable cost is zero, because my salaries already

Bassam Sabbagh:

covered in the overhead cost.

Nicole York:

And yeah, absolutely. And which is why,

Nicole York:

you know, as we were building these business plans, and as we

Nicole York:

were looking at what kind of business we wanted to run, and

Nicole York:

where we want it to be, in five years, we need to ask ourselves

Nicole York:

those questions. Because the less overhead that you have,

Nicole York:

obviously, the more income you can potentially make from those

Nicole York:

things, the less you have in cost of goods sold, you're going

Nicole York:

to have I just lost the word I was looking for. is gone. You're

Nicole York:

gonna be able to earn more, let me just gonna leave it there.

Nicole York:

And when I remember the word, I'll use it.

Bassam Sabbagh:

I'd like to give another example because I see

Bassam Sabbagh:

that question often on some of the Facebook groups, right, the

Bassam Sabbagh:

put your makeup artist as as part of the cost of the sold or

Bassam Sabbagh:

as part of overhead? Well, the answer is, it depends. If you're

Bassam Sabbagh:

actually hiring a makeup artist as a, as a as a, as a third

Bassam Sabbagh:

party to do that one specific customer and you're paying her

Bassam Sabbagh:

him, that's that goes into the cost of goods sold. But if you

Bassam Sabbagh:

have a studio, where you have an employee who was a makeup artist

Bassam Sabbagh:

who you're paying a salary, that's you don't include that in

Bassam Sabbagh:

the cost of goods sold. That's part of your salaries and your

Bassam Sabbagh:

overhead. So it all depends on your

Nicole York:

Yeah, absolutely. And I even know some folks who

Nicole York:

they allow them to come in, and they're paid by the customer. So

Nicole York:

it, you really have a lot of power here and how you structure

Nicole York:

and run everything. But that's why you need to know what kind

Nicole York:

of business you want to run.

Bassam Sabbagh:

And every accounting question as the

Bassam Sabbagh:

answer is yes, no. And it depends,

Nicole York:

right? Yeah, for sure. So as we're coming toward

Nicole York:

the end of the end of the hour, I just want to go back over what

Nicole York:

we talked about, and then open the space up for a little bit

Nicole York:

more conversation, and maybe a couple questions, because I

Nicole York:

recognize that this is a lot of information to take in. So we're

Nicole York:

adding what we need to earn per year to what our business needs

Nicole York:

to earn per year. And the cost our startup costs if we need

Nicole York:

those, we're dividing that by the amount of days, we can work

Nicole York:

per year. And then we are asking ourselves, How many days can I

Nicole York:

actually shoot per week or per month, if I can shoot two days a

Nicole York:

week, then those are my two opportunities for direct income.

Nicole York:

Those days, I'm actually working directly to get money in the

Nicole York:

door, everything else is still supporting it. But I need to be

Nicole York:

paid for all of the days that I'm not working with customers

Nicole York:

by the customers I am working with. So that may mean that on

Nicole York:

the days that I shoot, I need to be earning $2,000 per client. If

Nicole York:

I am doing that, then I'm working still on an average

Nicole York:

maybe this week, I only booked one person. But next week, I can

Nicole York:

manage to book for by the end of the month, that averages out to

Nicole York:

what everything needs to be. But I need to know those daily

Nicole York:

numbers in order to make sure that I'm covered. And then I

Nicole York:

have to make sure that on those sales, if I have cost of goods,

Nicole York:

that those are being covered by the sale, and it's added to the

Nicole York:

price of the sale, right, we don't earn less money because of

Nicole York:

the cost of goods, we need to cover the cost of goods in that

Nicole York:

sale. Maybe it takes $300 for me to have a piece of wall art made

Nicole York:

and an album made. That's the cost of those goods, I have to

Nicole York:

add that to the sale. So if I need to earn $2,000, and the

Nicole York:

cost of goods is 300, my sale needs to be 2300 plus tax at

Nicole York:

least. So make sure that you keep that in mind. That's where

Nicole York:

we're at right now. And I want to make sure that we open this

Nicole York:

up for some conversation. So do the mods. Do you guys have

Nicole York:

anything to add to that before we ask Jean to share what His

Nicole York:

thoughts are and if there's anybody else in the audience

Nicole York:

today, and you have something you want to add there, where

Nicole York:

price is concerned? And we do have a little bit of time for

Nicole York:

questions. So if you have a quick question, then please

Nicole York:

Raise your hand it come up.

Bassam Sabbagh:

That Nicole, just one quick thing, because

Bassam Sabbagh:

you mentioned something is really important that which we

Bassam Sabbagh:

have to consider, which is taxes. And my, my piece of

Bassam Sabbagh:

advice at this stage is when you do this exercise, don't make

Bassam Sabbagh:

sense taxes, because it's just going to get confusing. Taxes do

Bassam Sabbagh:

affect the business. And you can do that, after you've figured

Bassam Sabbagh:

all this out and see how you're going to manage taxes, whether

Bassam Sabbagh:

it's income tax, or whether it's goods and services, tax, sales

Bassam Sabbagh:

tax, but it gets pretty confusing if you try to include

Bassam Sabbagh:

it

Nicole York:

in your analysis. Yeah, that's a good point, I

Nicole York:

mentioned that as just an understanding that that's gonna

Nicole York:

affect the final outcome. But yeah, when you're, when you're

Nicole York:

trying to figure this out, Don't torture yourself that way.

Unknown:

Like the morning, so I wanted to just offer something

Unknown:

that I've learned as I've been listening to a lot of really

Unknown:

smart people about this over the past year here on clubhouse, and

Unknown:

I connect with what these people say, because I do have, you

Unknown:

know, an educational background in business. And so, you know,

Unknown:

when I hear these things, you know, that it kind of reinforces

Unknown:

it. And, and I love when people who, who may not have an

Unknown:

education in business have, you know, learned all this stuff,

Unknown:

kind of, you know, through the school of hard knocks, and it

Unknown:

all aligns properly. And, and I feel like that's obviously a

Unknown:

much more valuable education sometimes. So, you know, I've,

Unknown:

I've been listening to cat, I think even before I found the

Unknown:

artist port, she was popping in the other rooms that I was in

Unknown:

with photographers. And I've heard her talking about this

Unknown:

kind of stuff for a long time. One of the things that really

Unknown:

helped me that I think would help any other photographer

Unknown:

who's getting started is the idea that we use headshots

Unknown:

because it's a very simple straightforward product, right.

Unknown:

So as I was wrapping my head around headshots, it became very

Unknown:

clear that I was doing the same thing as a portrait

Unknown:

photographer, senior portrait photographer, all this kind of

Unknown:

stuff, if you want to be the $50 photographer, you know, you are

Unknown:

going to work your butt off in order to make any kind of

Unknown:

living. And you may want to be in that affordable space, you

Unknown:

may want to be accessible. But that's because you've convinced

Unknown:

yourself that there's not enough people who are willing to pay

Unknown:

you at a higher premium price, in order to sustain your

Unknown:

business. And the problem isn't that and what I've learned by

Unknown:

listening to all of you is, is that, you know, it's not a

Unknown:

matter of there not being enough people out there to pay the

Unknown:

price that you need to pay. It's it's you being in the right

Unknown:

place, the right time, the right marketing, mix, the right

Unknown:

message, and the right value, and communicating that value,

Unknown:

educating the customer, all those things that come together

Unknown:

to help you attack the top of that pyramid, you can grind all

Unknown:

you want, trying to capture all those customers that are only

Unknown:

willing to pay $50 for your product. But if you if you

Unknown:

tailor your message, you tailor your marketing and your product

Unknown:

and your value and all and listen to everything that

Unknown:

everybody is saying here in this room, you're able to target the

Unknown:

the higher tier of that pyramid. And this is perfectly

Unknown:

illustrated in a conversation I had with somebody in a Facebook

Unknown:

group a couple weeks ago, in one of the beginner Facebook groups,

Unknown:

the guy said, you know, I need some advice on editing, I'm

Unknown:

swamped, I'm overwhelmed, I'm shooting five days a week, I

Unknown:

can't keep up with the editing. There's too much work, you know,

Unknown:

are you guys hiring out? Are you guys using different software, I

Unknown:

need some advice. And my response to him. And I'm gonna I

Unknown:

want to give you guys credit for this because this is kind of

Unknown:

what I got out of our conversations. My advice to him

Unknown:

was, Look, man, your problem is in your software and your

Unknown:

editing workflow, your problems your price, a you are a perfect

Unknown:

candidate for somebody who can use price as a throttle. If

Unknown:

you're working more than you want to be working, then look at

Unknown:

raising your prices. Because then, you know, it is very

Unknown:

possible that you can work less make the same amount of money,

Unknown:

if not more, and get your sanity and your life back. And so I

Unknown:

think that's where, you know, I I've really take that's what

Unknown:

I've taken at a very top level from a lot of these

Unknown:

conversations that we've had. And I just want to close real

Unknown:

quick by reminding everybody also, you know that one of the

Unknown:

things that I've always done, I've done this in my personal

Unknown:

life and it's been very helpful in business is to make sure that

Unknown:

I do set aside those funds for things like taxes, but also for

Unknown:

the what I call my yearly Fund, which is for all those accounts

Unknown:

that I'm paying yearly. There's there's nothing in my view, and

Unknown:

I don't mean to be this may sound a little harsh, I don't

Unknown:

mean it to sound this way. But I think that there's nothing more

Unknown:

amateur in a business than when you get hit, for example with

Unknown:

your $599 your Adobe subscription fee, and you're

Unknown:

scrambling to find that money. that that's a $50 a month set

Unknown:

aside, you put it aside, it's done. You don't have to worry

Unknown:

about it. And I do that for everything that I pay yearly. So

Unknown:

everything gets paid out of that account is I pay that account

Unknown:

first all the time. And then it's all done automatically. So

Unknown:

I don't have to think about any of my yearly funds, I just

Unknown:

review it quarterly to make sure that I've added or taken

Unknown:

anything out that I don't need to have in there. So I just

Unknown:

wanted that's just one of the tactics and strategies that I

Unknown:

use to make sure that I'm that they helps with the cash flow

Unknown:

side that the Psalm was talking about, just to make sure that

Unknown:

you're not up against the wall and can't cover something that

Unknown:

you really need that you pay on a yearly basis. That's it.

Bassam Sabbagh:

Yeah, Jean, I'd like to pick up on on something

Bassam Sabbagh:

you said that Dominic just again, really emphasize that

Bassam Sabbagh:

pricing is only one aspect of it. So you gave the example of a

Bassam Sabbagh:

$50 photographer. You know what you can be very, very profitable

Bassam Sabbagh:

photographers at $50 If you have the right business model. So as

Bassam Sabbagh:

an example, I have a friend who has a business doing sports

Bassam Sabbagh:

photography, and they do teams and individuals every year. And

Bassam Sabbagh:

he his customers don't spend any anything more than $20 or $50.

Bassam Sabbagh:

For for purchase. Yet. They're structured in a structured in a

Bassam Sabbagh:

way, he has a system. It's like an assembly line. I don't know

Bassam Sabbagh:

if you can hear me because I'm in a bad area. But he structured

Bassam Sabbagh:

in Yeah, it's almost like an assembly line. He has five or

Bassam Sabbagh:

six photographers that go out and do the thing. They repeat

Bassam Sabbagh:

any and it's just a moneymaker. But he structured his business

Bassam Sabbagh:

in a way that allows that $50.25 to $50 isn't enough

Bassam Sabbagh:

contribution, to make a good living, and, and to run a

Bassam Sabbagh:

thriving business. So it's not about price. It's about

Bassam Sabbagh:

everything else to hold.

Unknown:

Thanks for some nickel, I'm going to close close this

Unknown:

time by just saying I'm going off the fresh tamales. It's 82

Unknown:

degrees on the back end. And Kelly and I hope you guys are

Unknown:

all staying warm.

Nicole York:

Keep bragging. Yes, yeah. But um, and that's, that's

Nicole York:

absolutely why we're having this conversation. Because there's no

Nicole York:

right or wrong way to structure a business. There's just a

Nicole York:

question of, is it sustainable? Is it profitable? And can you

Nicole York:

build it in a way that is going to make the way that you run

Nicole York:

your business, something that you love, right? And so

Nicole York:

McDonald's is a huge moneymaker, huge moneymaker. And people

Nicole York:

spend maybe 20 bucks at the most there unless they're going with

Nicole York:

multiple people. So, you know, bulk is, is a really important

Nicole York:

way to sell. But that requires you to build those systems that

Nicole York:

requires you to have it running like a top in order to make that

Nicole York:

money. And for many of us, if we have decided that we don't want

Nicole York:

to build that kind of business, then the other option is we have

Nicole York:

to be earning more per person. So no matter how you structure

Nicole York:

it, being able to put these numbers together to divide them

Nicole York:

up by working days to recognize that each sale you make has to

Nicole York:

now cover those working days is a really simple way to have the

Nicole York:

numbers, take all the emotion out of the equation, because now

Nicole York:

I'm not asking myself, well, am I worth $1,800? Sales? I'm

Nicole York:

saying to myself, This is not a question of worth, this is a

Nicole York:

question of hard math. I have to make this in order for my

Nicole York:

business to survive, and in order to pay my bills. Now, I

Nicole York:

don't have any negative feelings about saying, how do you want to

Nicole York:

pay for that, because I don't feel like my personal worth is

Nicole York:

tied to this number. I recognize that this is just a simple cost

Nicole York:

of existing as a business person number, this isn't my feelings.

Nicole York:

This is literally, if you don't make this you don't exist

Nicole York:

anymore. So it doesn't hurt my feelings. Now, if you don't want

Nicole York:

to pay that I recognize I just need to move on to the people

Nicole York:

who do. So I see. We've got one more hand I think we've got a

Nicole York:

time. So Joshua, hi, welcome. What are your thoughts?

Joshua:

Hey, thanks for having me up, I just want to say that I

Joshua:

really agree with the sentiments of what you were just saying

Joshua:

about not tying your worth to your price. However, you also

Joshua:

have to be cognizant of what the market will bear and and ensure

Joshua:

that you are creating the value for your customers. Simply

Joshua:

because your cost to create something is $1,000 does not

Joshua:

mean necessarily that it has $1,000 of value to anyone else,

Joshua:

because your costs are not under control. And so you have to make

Joshua:

sure you're staying back and you evaluate that, you know, if

Joshua:

you're paying double what everyone else is paying for a

Joshua:

product, then you can you know, your customers aren't

Joshua:

necessarily going to be willing to pay double just because you

Joshua:

haven't taken the time to figure out how to get your costs under

Joshua:

control. So we I one thing I do see people do periodically, is

Joshua:

use that as a crutch to say, well, this is just my cost

Joshua:

versus okay, this is my cost but I see that the market won't bear

Joshua:

that. How do I get my costs under control so that I can

Joshua:

provide My customers at a price that I can create value for

Joshua:

them.

Cat Ford-Coates:

I would really challenge that I mean, I'm I'm

Cat Ford-Coates:

all down for, you know, maximizing your profitability

Cat Ford-Coates:

and getting your costs down and under control so that you can

Cat Ford-Coates:

manage those things. But my price point really doesn't

Cat Ford-Coates:

matter what the market will bear, it will matter how I

Cat Ford-Coates:

educate and deliver on that value.

Joshua:

Well, again, as I said, it's about the value that you

Joshua:

are creating. But my point is that somebody will, somebody

Joshua:

will say, well, I need to have this brand new camera, I need to

Joshua:

have this brand new piece of gear, I need to buy all of these

Joshua:

things. And therefore my customers need to pay for that,

Joshua:

when the reality is that they don't need those things are

Joshua:

using that as as a rationalization or justification

Joshua:

of taking on too many costs to operate their business versus

Joshua:

taking a step back and saying what does my business actually

Joshua:

need to operate an efficient way in a way that can provide the

Joshua:

value for?

Bassam Sabbagh:

Yeah, and I think, you know, I agree with

Bassam Sabbagh:

both of you actually gotten Joshua that said, the answer is

Bassam Sabbagh:

yes to both. Because in our discussion today, our assumption

Bassam Sabbagh:

is that we and we've been talking about this for a few

Bassam Sabbagh:

days now is that we've already gone through and said, we know,

Bassam Sabbagh:

what are we selling? What value are we creating? You know, what

Bassam Sabbagh:

kind of business do we have? So you're absolutely right, Joshua,

Bassam Sabbagh:

the value has to be there. But at the same time, people value

Bassam Sabbagh:

things differently. And what God's saying is that that's what

Bassam Sabbagh:

I do, that's what I deliver, and how I find and sell to those

Bassam Sabbagh:

people that matters. And then cost becomes a lever that you

Bassam Sabbagh:

use to control and make sure that the business is profitable,

Bassam Sabbagh:

and it's going in the right direction. Right. So you go back

Bassam Sabbagh:

to what I said at the beginning, which is what Nicole mentioned a

Bassam Sabbagh:

couple of days ago, if you're selling books in the market says

Bassam Sabbagh:

it's a $12 book or a $15 book or $25 book, you're absolutely

Bassam Sabbagh:

right, you're not going to charge $500 for that book, just

Bassam Sabbagh:

because your costs are high. So you have to find a way to live

Bassam Sabbagh:

within that business model. So the answer is somewhere in

Bassam Sabbagh:

there. And, and and yes, you still have to you're not going

Bassam Sabbagh:

to be in business. If you're not creating value for customers.

Bassam Sabbagh:

It's as simple as that, eventually, you'll be found out

Bassam Sabbagh:

and you people will not come to you. Yeah,

Nicole York:

yeah, I'm really glad that you went ahead and

Nicole York:

came up, Joshua, because we did talk about this a little bit

Nicole York:

yesterday and the day before. So we talked to both about adding

Nicole York:

value and then doing your market research. And that's where you

Nicole York:

really need to understand. So once we have these numbers, and

Nicole York:

we look and we say this is what it's going to cost me to run,

Nicole York:

and I look at the market research, and I noticed that I

Nicole York:

am 50% above everybody else in my market, then I have some

Nicole York:

decisions to make, right? I can either give it a go and trust

Nicole York:

myself to educate my clients and to have a value statement that

Nicole York:

is really going to reinforce the fact that I'm charging more than

Nicole York:

everybody else for a reason. And then I have to make sure that my

Nicole York:

marketing is going towards people who will value what I'm

Nicole York:

offering in a way that's going to be sustainable and grow. And

Nicole York:

that is often a long term strategy. That's not often

Nicole York:

something that we get to step up into right off the bat, I don't

Nicole York:

just get to show up in Phoenix, and charge more than everybody

Nicole York:

else in the market. And go look, guys, I'm awesome without some

Nicole York:

damn effort, right? Because those people have established

Nicole York:

themselves as worth the money that they're asking for. Often,

Nicole York:

it takes me beginning somewhere and working my way up into that

Nicole York:

in order to just step off the boat with prices that are that

Nicole York:

high. Because I need to establish that that value really

Nicole York:

does exist. But we need to know those numbers so that we can

Nicole York:

understand where we fit in that market and what changes we need

Nicole York:

to make in order for what we're asking for to match the value of

Nicole York:

what we're giving. So absolutely, really important,

Nicole York:

important point to consider. And we just did it. I think, you

Nicole York:

know, we asked that question before we even got into pricing.

Nicole York:

But it's important to remember that you need to bring that

Nicole York:

back. As you're looking at pricing, you can't do market

Nicole York:

research, and then ignore it when you're setting your pricing

Nicole York:

that needs to become an integral part of how you how you look at

Nicole York:

the money that is going on the table. And keeping costs.

Joshua:

Oh, I was just gonna say 100% on the exact same page. I

Joshua:

haven't caught all the conversations. So sorry, if

Joshua:

someone was talking about it was covered in previous

Joshua:

conversations. 100% agree with everything you just said. I just

Joshua:

my point is just that we can't be blind to reality because we

Joshua:

didn't necessarily make a good decision. You know, like if you

Joshua:

signed a lease, That's double what everyone else is paying in

Joshua:

the same building. Like, you know, your clients aren't going

Joshua:

to pay for that. That's That's my point. But I 100%

Nicole York:

Yes, yeah. I think we're all on the same page. And

Nicole York:

yeah, no, no need to apologize for that. Because not everybody

Nicole York:

can be here every day. So the fact that you brought it up may

Nicole York:

have been just really incredibly eye opening for some folks who

Nicole York:

weren't here for those previous conversations. So it's still

Nicole York:

really important to include today? All right, although we

Nicole York:

are at the end of our hour, I just met want to make sure we

Nicole York:

have a couple of minutes for final thoughts so that we can,

Nicole York:

anything that might have been missed or any insights that

Nicole York:

might have happened. You know, during the last little while, we

Nicole York:

have a chance to include those in the conversation. So it's

Nicole York:

time for final thoughts, moderators? Do we have any

Nicole York:

additional takeaways that needed to be added to this

Nicole York:

conversation?

Bekka Bjorke:

That's been covered already. But I would

Bekka Bjorke:

just like to re emphasize the importance of considering your

Bekka Bjorke:

time and the time spent. And we talked about this on our last

Bekka Bjorke:

live stream, but that opportunity cost of how much

Bekka Bjorke:

time you're spending on stuff. This is something that I know I

Bekka Bjorke:

have repeatedly undercharged for is not considering how much time

Bekka Bjorke:

it actually takes me to do shit. So factoring that into your

Bekka Bjorke:

pricing is so so so important, because it's so easy to

Bekka Bjorke:

overlook. But yeah, amazing stuff today, you guys are so

Bekka Bjorke:

thorough, great job.

Matt Stagliano:

I agree with both Becca and besom.

Nicole York:

Right on, alright, Joel. So this was the first big

Nicole York:

primer on pricing. And we're going to get a little bit more

Nicole York:

into the weeds tomorrow. And we're going to start talking

Nicole York:

about things like product, and how we can look at the vendors,

Nicole York:

we want to work with how we can factor those things into our

Nicole York:

cost of goods, which of course then contributes to the whole

Nicole York:

thing. So the pricing of individual products, this is

Nicole York:

always something that is a struggle, you hear people talk

Nicole York:

about it all the time, how do I price my prints? How do I know

Nicole York:

how much to ask for them, of course, we're gonna take the

Nicole York:

numbers that we've talked about today, we're bringing that into

Nicole York:

the conversation tomorrow, but we're gonna really get into

Nicole York:

those things specifically so that we feel super solid, about

Nicole York:

being able to price our products and understand what goes into

Nicole York:

making those so that we can be profitable from those things.

Nicole York:

Alright, huge thanks to everybody who contributed to the

Nicole York:

conversation today. Y'all are amazing. Thank you for coming up

Nicole York:

and sharing and sharing your thoughts. Hopefully you will be

Nicole York:

with us again tomorrow morning. And tomorrow is the second

Nicole York:

Thursday of the month. And that means it's going to be time for

Nicole York:

a live stream. So hopefully you will be there to join us for

Nicole York:

that as well. Tomorrow evening at 7pm Mountain Standard Time.

Nicole York:

In the meantime, have a fantastic day. We hope to see

Nicole York:

you tomorrow morning for our Clubhouse morning walk with the

Nicole York:

artists forge at 7am Mountain Standard Time at 6am for the

Nicole York:

West Coast and 9am for the East Coast. In the meantime, have an

Nicole York:

incredible day. Go make something amazing, and we'll see

Nicole York:

you tomorrow morning.

Matt Stagliano:

Thanks again for listening to this live clubhouse

Matt Stagliano:

discussion moderated by all of us at the artists Forge. We hope

Matt Stagliano:

you found the information useful and that it helps you gain a

Matt Stagliano:

little bit of insight as to how you work on your craft. For more

Matt Stagliano:

episodes, please join us each week day on clubhouse or visit

Matt Stagliano:

the artist forge.com and go make something incredible

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About the Podcast

Morning Walk with The Artist's Forge
How to Critique Art
Learn how mindset, creativity, and visual literacy will help you think like an artist so you can create work you love and build a career that matters; bridging the gap between technique and art.

About your host

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Nicole York