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ROI - Do We Think Like Business People?

by Moshe Mikanovsky on 7/29/2010 8:43:25 AM

This article is by Moshe Mikanovsky , Regular contributing writer for FineArtViews.  You should submit an article and share your views as a guest author by clicking here .


I had a bit of an online heated discussion with a fellow artist friend recently. It was via emails, so we all know how things can be misunderstood with a chain of emails and we are both Israelis, so it is in our blood to say what we think first, then try to win our case or meet somewhere in the middle. I want to share with you some of my thoughts about ROI and where do we, as artists, fit in. Part of me has some notion about what I think is correct and what is not, but in most parts...I need your advice! So here we go!

ROI, or Return On Investment, should be the ABC of every business plan. The math should be very easy - how much you spend on any given project should always be lower than how much you make from that project. Therefore you earn money. Isn't that what the bottom line of business is?

So, if we take an example in our world, let's say our next project is to sell in an outdoor art show (did I say I will not speak about this again?) . We have many expenses, including show registration fees, setup costs, vendor fees, the cost of the art we make especially for the show, framing, and other materials like packaging, marketing materials, transportation to and from, accommodations, food, etc. The total of all these expenses is our cost. Now we want to make some money, right? So if we sell enough art to break even, we don't lose any money. But if we sell even more art, we covered our costs and make some earnings. Quite simple.

Now, there is the future earnings potential - clients following up on commissions or to buy some art at a later date, gallery owners find you and want to represent you at their venue, your resumé with that show on it gives you future entrance to other shows and galleries, and more. It is really hard to measure these against the specific investment we put in the initial project, the art show. So, we could say that some portion of our spending in the show goes directly to "General Marketing" of our art business, rather than directly to our show.

The percentage of this portion depends on how new you are to the business of selling art. Usually in the beginning, you have to spend more than later on when established. But the marketing budget is directly calculated from your net sales revenue, usually starting with 10%, then going down as you are more established. To me this is still tricky, mainly because in the beginning you have to sense your marketable your art is. And with art I find it quite hard to know.

Anyway, assuming some portion of your project's cost is dubbed "marketing expenses" for your business (not specifically for the project in hand), then we take that number off the project's expenses to get to our project's ROI. So far so good.

Here comes my point of argument with my friend. Since I don't know if I will sell enough art to make money or even break even, at least I want to have the potential to do it! And not only from an art show, but from any opportunity. So if I submit a painting to a juried art show - if accepted I have to pay participation fees (on top of the jury fee) and the show will also take their commission if my piece is sold.  I want to make sure that at least I have the potential to make some money from that specific opportunity. If my art is sold for $250 and participating in the show costs $20 to be juried, another $150 to be part of the show and it will cost me another $30 to ship the art to the show or to schlep it myself over there (cost of transportation/gas) - then the gallery will take 40% commission when selling the piece --- I basically lost $50 (not even taking into account the cost of making the art and framing it, assuming I had the piece from previous projects).

True, it will be great to have on my resume. And true, this will go into my future marketing.

But still, don't I have to think about ROI for every project I am getting into? I thought I should. My friend thought I shouldn't.

I think most of us don't think in these terms. We just do it. We are artists, thinking with the right side of our brains. Creativity is all that we care for. But at the bottom line, we have to think business to make it a real success.

That's what I think. What do you think?



Note:  The investment world has some complicated scientific formulas for calculating ROI and comparing different investments to each other using these calculations. I have tried to simplify things here for the sake of discussion. By all means, I am not a financial adviser or accountant who can help you make these numbers work. I need one myself...

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Related Posts:

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Getting Started At Selling Your Art

Topics: art marketing | sell art 

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Michelle McSpadden
Most artists aren't good at business strategy and sometimes, I think that's because it is not stressed very much, if at all, in art education.

Pricing art is very complicated and there are many variables invovled: career level of the artist, time, cost of supplies, show fees or commission rates, marketing, etc. When considering all of the above, at the end of the day, I have to have peace about my pricing and one of the questions I ask myself is "If funds weren't an option, would I buy this painting priced at ______?" If I struggle with that price, I know that I need to make an adjustment.

Helen Horn Musser
Hi Moshe, This is definitely a post we all need to pay attention to. Thank you for reminding us of our cost and if we are getting anywhere financially or losing a lot of money. I have mixed emotions on this; muct sort myself.

Claudia L Brookes
Moshe--Thank you for bringing more on the business side of art to the arist community. I agree with you, and not your friend, about the importance of looking at the ROI for every selling opportunity. However, I think a lot of artists do this unconsciously, whether they have a business background or know what ROI is. They do it by becoming familiar with the potential of repetitive events that they put into their calendar for the year. You can never predict your sales, but most artists get a pretty good sense of a "can't win" situation," and then they have to look to the more intangible advantages, as you discussed. I would be surprised if most artists do not sit down after an event and run their ROI, although most may not know the business "label" for what they are doing.

Coral Barclay
In response to Moshe's question ..I think that it really depends on what stage an artist is at in their career. In the beginning one has to do whatever they can/afford to get shown. Though i also believe that too much of it fosters low expectations for both artists and art buyers. I choose venues very carefully now, knowing while i never know if something will sell, at least the costs shouldnt outway the return if a sale occurs. Artists should be properly compensated for their art and i think artists should collectively try to raise the bar for themselves and other artists. I very rarely donate for auctions for example, as i think it devalues art making, it seems to be a very popular way to raise money for organizations, I get asked frequently. But these are all things that i have learned along the way having been at it for quite a few years.
cheers Coral

Rosemarie Adcock

I appreciate what you have written, and also understand reasons for your friend to disagree. The truth is you are both right. Marketing itself is an investment that costs because we are, for the time or expense, not in production of new work. And perhaps some exhibitions are little more than marketing opportunities, and we fool ourselves with unrealistic expectations. But ultimately the truth is that when we spend our resources, our resources are depleted. And if we don't carefully observe the depletion of resources, it costs us in ways that we have to determine at the outset are worth the risk. Sometimes we cannot bear the risk. Perhaps habitually not determining real costs in advance, thus not making truly informed decisions, is a greater risk to our demise than one or two shows with little return. I recall a quote by Benjamin Franklin, "A small hole can sink a big ship." It's impossible to keep painting for a lifetime in sinking ships.

George De Chiara
Hi Moshe,
Very interesting article. It's something I think about from time to time and can really relate to the point about having to spend more in the beginning then once you are established. Right now it seems as though all my spare money is going to marketing. I also agree with you about doing some projects for the future potential of them. Not everything we do needs to make money instantly.

denise brown
I find it is much easier to give people business advice than it is to put it into practice on my own artwork. However, 'getting out there' is critical, but I do believe an artist can expose yourself to death. You have to be selective about what charity or event you want to be a part of. Each one seems to always cost you at least $500 if you take into consideration framing, delivery, commissions, new postcards, etc. Before you know it, you are losing money again... Why is it the framer or event always seems to make a profit, but the artist does not? And when you adjust your pricing to make a profit, the artwork has a tough time selling. I usually can get a commission from the exposure and often sell some prints or get a referral to something new, so everything is usually beneficial, but rarely do you make that big money to live on and pay your bills with. To continue this obsession and passion, you have to be creative to find ways to survive. Recently, my favorite framer was a bit upset when he saw several of my big paintings in the newspaper that he did not frame. I had to order frames wholesale and frame my large paintings myself in order to afford to be in that group show. You do whatever works. There are no good answers except that you have to keep spending money to make money...You can be forgotten quickly if you don't keep moving forward.

Martha Inman Lorch
While we never want to forget "why we do art", I'm happy to see a post that stresses the business perspective of our efforts. I've found that my background in corporate marketing has helped me focus the business side of my art. In response to your argument with your friend, I'd suggest that you're both right. You're right in that it is important to be aware of the ROI of each effort since you don't have unlimited resources to pursue every attractive opportunity. However, your friend is right in that it's the total "marketing mix" that will make you successful, not any one effort. Each effort (public show, gallery exhibition, competition, etc) contributes to the larger goal of your "brand awareness", even if an individual show doesn't give a high ROI on its own. When the mix is working, the whole is greater than the sum of the parts. So my approach is to focus on getting a mix of my "investments" of time and money that will give me the "return" of awareness, sales, etc. that will make me successful and fulfilled as an artist. At the same time, I evaluate each effort so that I don't repeatedly waste time and money on pieces of the "mix" that just don't make sense anymore.

Maureen Sharkey
Great article!! I always enjoy reading your thoughts.

My sister used to manage a McDonald's a million years ago, and she told me they lose money on every slice of cheese they top a burger with, but make a high percentage return on other items, and it all works out in the end.

I kinda think at the beginning of marketing ourselves we should expect to lose money--just like Wrigley Gum Co. might hire people to stand out on a busy city street and hand out free samples of their new product. Likewise Ocean Spray had a booth at Taste of Chicago this summer and gave out endless samples of their new products.

Tom Weinkle
Interesting post Moshe, thx!

In my own art, and in my business, I try to make sure that i include all the items you mentioned in costs, as well as what our time is worth. I agree with your friend that there are some projects where a hard return isn't really the goal. It may be a part of brand-building, some kind of marketing expense... someone above mentioned that you may or may not see in a hard fast return.

It is an investment to me... the same way learning is. It will hopefully pay off later, but if it doesn't, the knowledge and experience is still valuable for other activities. In juried shows, sometimes the return is really recognition, new contacts, but not a $ sale. I think the business plan to me should anticipate this. Not fun, but some businesses don't seek a profit right away for a variety of reasons... and the investors know that. As the artist, we may have to have the same mindset from time to time.

Peter Drucker said business has only two functions...innovation and marketing...we can assume for the purpose of a return of some isn't always money.

Michael Jordan played basketball to win. He was well paid, and in the end, his brand (not his work activity) was worth 5 billion they say.

Maureen Sharkey
I just had another thought; Marketing classes should be considered essencial in schools.

Recently, a CPA friend of mine, told me to write up a business plan. He said that he wanted to see: 1. How will I finance my product? 2. How will I manufacture my product (who will make the prints)? 3. How will I price my product? 4. How will I distribute my product? 5. How will I market my product?

How simple is that!? We should have all been taught that way back in high school, let alone design school.

Margaret Bobb
Hi Moshe,

I have enjoyed your articles on fine art views very much, and I appreciate the information and thoughts you have shared. I am always happy to see your name listed as the day's author!

I agree with you about the ROI, though I must admit, I did not know what those initials stood for. However, I've always sat down and tried to figure out my costs versus any income from a show...and then, when there is some income, there are always taxes to consider, which in effect, lowers any profit substantially.

I still remember my high school art teacher saying, "Be very careful how you price your work. When you undersell your work, you hurt not only yourself but you hurt other artists as well." She is the only art teacher I had that ever said that. I don't think the general public realizes how many costs artists really have.

I am blessed to have a husband who is supportive of my art, otherwise I'd either be living out of a car OR I'd be working at a 9-5 someplace else and then be too tired to create art.

I think about ROI all the time - every time I enter a show. There has to be the potential for a tangible benefit of some kind (prestigious resume builder, good sales venue, branding/visibility, possibility of commissions, etc.) or it gets taken off my list. Good reminder, Moshe.

This question is for bigger minds than mine, but a minor comment: this is the first time I've heard of 'participation fees'--yikes! What the heck is that??? There are some art marketing writers who have a problem with entry fees if there is a commission taken from any sales form a juried show, so to slap a participation fee on top of an entry fee and a commission seems to be really pushing things! Sorry for this tangent, but I'm kind of shocked.

Interesting conversation that I can imagine ending with no definite answer. ROI depends on how you define it. Yes, you need to make money. Consider, however, the $50 to be spent on getting your name, your artwork out there in front of your audience. (That's what marketing boils down to.)

Within the following month or two after the show, tally up potential clients or pieces that have been sold. Ask customers how they found you. If they saw your work at the show or heard from a friend who went to the show, that goes into the ROI of that show.

As with any business/product, if no one sees it but you, there is no potential patron or revenue. So better to lose that $50 to gain some awareness and potential than to be stuck at 0 with no possibility of moving forward.

Also - depending on how your pieces sell, you can gauge customer interest. Produce more related pieces that clients showed interest in and invite them to find it on your website, etc.

I like to work for the future and if $50 can ensure a brighter month or two going forward, I can justify that expense.

Sue Martin
Moshe and all, I agree that it's important to do the math on every project. It can influence other decisions - size of artwork, pricing, how much to spend on publicity, etc. At the same time, there are risks and opportunities - risks that you won't break even and opportunities for wider exposure and future sales. Some of the risks are minimized the more we think analytically and the more experience we have on which to base assumptions. This is good and necessary left-brain exercise!

Aline Lotter
The theory of ROI is good, and works for someone who is deciding on a truly optional business venture. For the artist, you are doing it (the art) already, and the big decision is whether to spend more money on getting your product shown. Clearly, showing is needed to produce sales. And sales are not predictable--at all! So most of us just head straight ahead, hoping for the best but sometimes falling over the cliff. I still don't know whether I am headed for success or over the cliff. If only we all had brothers like Theo Van Gogh to front the marketing for us, but that didn't work out so well either.

In these hard economic times I think a reassessment of the bottom line is going to be essential to make it through to the end of each month. Of course keeping an eye on how I spend my money for promotion, and endorsement is going to take much more research on my part.
When you aren't able to pay your bills and it comes down to choices of paint, jury fees, or lights and gas, I know I'll be much more careful about my art show choices and promotional endeavors.

Phyllis OShields Fine Art
Oye!! ROI gives me a big headache. The only way I can put it into perspective is creating a very detail Business and Marketing Plan every January for a two year period. By creating a road map with detailed marketing projects laid out and then go back and evaluate the results of each one by the end of the year I have a clear vision of how well or how poorly each project worked and then decide if they should be repeated. This tracks the ROI for the year in a way for me that shows clearly - Do I need to find some other marketing avenues or which ones to keep.
Over all ROI is very depressing to me, it seems like many marketing venues just are not able to quantify results. So you are left with looking a your years road map and making a good guess sometimes at what to do. Thanks Phyllis O'Shields

Sharon Weaver
Evaluating venues must be approached with different motives. I enter shows for so many different reasons. All have fees so I am careful to think about the positive effects each will have on my career, my resume and , yes, my ego.

anonymous artist
A friend in the business world once told me that a secret of success is to "chase the long dollar", meaning that we should thoughtfully plan for the bigger picture (plan how to make that next $10,000 sale) instead of wearing ourselves out looking for the next $5.00 sale. It's easier said than done, especially when money is tight, but it pays big dividends to plan bigger and be patient. Most $5,000-$10,000 sales I've made have taken months of planning, but every $5.00 sale (I'm thinking of greeting cards and such) usually ends up taking weeks of it's obvious which has the bigger value in the end. Ultimately, I think it's best to look into the future to see what will pay off most in 6-12 months or more.

Helen Horn Musser
There you are Anonyma, all the comments have helped toward my sorting. Yours does especially mostly since I've yet to earn 10,000. It's a leap of faith that our art will be meaningful to others as well as to ourselves. Just want to keep on painting.

Tom Weinkle
anonymous, beautifully said... whoever you are!

Something interesting I heard on Charlie Rose last night from the billionaire guru: in the past businesses spent the most on wide marketing and advertising and the least on making the product the very best, but in the age of social networking markets are more targeted, consumers have greater empowerment, and word of mouth drives a lot of he says the new business success paradigm is to expend most of one's effort on having the best product and then word of mouth through targeted social networking will best facilitate your success. I don't know if that's true or if it would apply to art marketing, but I thought it was interesting, nonetheless. And he is a billionaire ; )

Marilyn Gilis
I learned a long time ago that artists should include in the price of their works: supplies, time, marketing, show, and living expenses.
Then take the art to where it will sell for that price.

Tom Weinkle
Kim, I wholeheartedly agree. What social marketing, and the web have essentially done is to give entré to a whole new group of people who could not afford the cost of entry in the pre web days.

Quality is king, and with the speed of word traveling, it's wise for us to remember that the knife can cut both ways. Our art has to really shine to leverage the access we now have.

Well, you know Tom, I did think that what the guy said echoed much of what I've read here: strive always to improve one's work, and to take advantage of the internet for marketing, among other strategies.

Fiona Purdy
Moshe - one thing that you did not mention and that so many artists forget to factor into the costing equation is not only your direct labor (the time you spend actually creating the artwork), direct materials and all of the other overhead material costs - but you also have to factor in all of your labor working on all of the other parts of being in business. I've heard it called "overhead labor". The time you spend marketing, going to shows, sitting in your booth, unpacking your artwork, driving to the post office, etc - it goes on and on! Lots of artists do not!

I am trying really hard right now researching exactly how to factor all costs so that I can price my work correctly. It is tough! I need to know this so I can make an informed decision on what I need to change in my business to start making money.

Not just money to pay all of my business costs but also money for my personal expenses and money to put back into the business. I am having a hard time getting these answers on how to do this. I plan to attend some courses on this put on by my local SBA.

For some reason so many artist's who's intention is to have their art make 100 percent of their expenses do not want to even think about this.

However because they don't do this then they are actually "ripping themselves off" and subsidizing their client's purchases out of their own pockets! I sure don't want to do that!

If you want to make your living solely from your art work, you have to figure all of this out.

Thanks Moshe for writing this post- I think there is a huge amount of interest in our community about this and we need to help each other with this topic

Sue Martin
Fiona, I agree with you in principle. However at some point you have to balance your time costs with competitive factors in the marketplace. For me, this means that I add up my costs, look at what comparable works are selling for in my galleries and price my work accordingly. I can then figure the "profit" and divide that by the number of hours I've spent on all those things you mentioned. That's my hourly rate of pay and the point at which I ask myself, "...and why did you leave your corporate job?" Yes, I'd like to charge for all my overhead time, but I'll have to become rich and famous first! By the way, in my experience, marketing art is totally alien to the SBA!

Marian Fortunati
Thanks for another interesting post... In answer to your question... let's just say I was proud of myself for figuring out what ROI was before I read your explanation.

Actually pricing all of that out is really too depressing. Also didn't realize that a "standard" for the "marketing" part was 10 percent. That's the very nebulous part isn't it??

Like today... I got home, opened the mail and there was a lovely check for a painting that sold at a show in a museum gallery that I honestly didn't think ever had many visitors, much less buyers... It was a wonderful surprise... I had counted the people I met at the reception as my bonus for getting my name and work out there, but now I have a new collector... and the collector is not a local... so perhaps a few more people will spread the word...

I hope so!!!

We can only try... I always appreciate new ways of looking at things, so thanks again for the post!

Fiona Purdy
I do see your point Sue, but if we do not know your true costs then how can we make an informed decision about how to tailor what we create to what the market will bear?

If you take all emotion out of the equation and view our artwork as products - then what the SBA advises will relate to art!

If we were in any other business most of us would have had to close up shop or declare bankruptcy.

So what you are saying Sue is that you are ok subsidizing your client's purchases. How will you pay your bills, both business and personal?

Fiona Purdy
I want to clarify one thing in my post - what I am talking about pertains to the artists who want to make their living solely from their art.
We all want different things from our art, but if you intend to eventually (note I said eventually, I realize when you are first starting out you may not make enough, that seems to be pretty normal) make your living 100 percent from your artwork then you have to factor in ALL of the costs associated with manufacturing your "product".

If feel you can't price your work to cover all of your costs - then you could do a couple of the following things:

Find a more affluent client base who can afford your work
Find a way to cut your costs
Find another way to sell your work in a different form.

I'm sure there are many other ways - these are just a few.

Donna Robillard
I appreciate all you had to say in your post. It is hard to know how to price your work, and it is a little intimidating. But when you realize your work is original and not a print you are selling, you can feel okay with asking a decent price.

I am with you!! I argue this point a lot. The system doesn't work for artists if you really look at the bottom line. There are so many ways to have your art seen. I am always looking for different opportunities. There must be a better, more profitable way. We must work towards changing this system, lets find a better way to market!!

Judy Mudd
ROI is one of the hardest things to estimate for an artist. We have to be business people and spend our money wisely or we will quickly run out of funds to buy supplies. But, it is the intangible value from participating in shows and exhibits that is hardest to estimate. Even when we pay to enter art shows, especially local art shows, name recognition and advertising has a value, even if we can not put a dollar amount to it. I'm getting ready to enter a painting in a local competition and have been weighing if I should do this since it is for all mediums. I have decided to do it in spite of the fact that I think it will not win an award or result in a sale. But, because the display is up for a lengthy time period in a high traffic location I feel it is worth the investment.

Moshe Mikanovsky
Thank you everyone so much for the amazing feedback! I knew that this post will cause lots of discussion, because, and let”™s face it, most of us are NOT thinking business when we start it...

Which leads me to an interesting thought - many lawyers start with the "change the world" and "save the poor and weak" attitude, and eventually "graduate" into money making machines... Many doctors starts the same way... do we have to sell our artistic souls to make a living?


Cheers :-)

Esther J. Williams
Well, I think that ROI is a pipe dream lately after doing an art show that flopped saleswise. I invested hard physical, mental and creative labor, plus around a thousand dollars of materials and didn`t make one sale.
What do I say after all this, it still was an invaluable experience, I met former buyers, friends and family there. Money can`t buy that. I analyzed what people did buy and asked myself if I could paint that or would I rather be a poor starving artist. Luckily I have a semi supporting husband, by semi, I mean he gets fed up sometimes when he sees I don`t make a profit.
In the end I look at the investment into art shows, juried or not as DUES I need to pay. To get to that place high up on the totem pole. Some shows like this last one, I will cross off my list in the future. The odds were against me and I truly felt the silver hammer hit me in the head on that one. But I have seen my art and prices come a long way, it is a slow freight train or as they say the long tail.
We pay our dues and then the accolades will come. I certainly hope so, we artists have blind faith.

Sue Martin
All excellent points, Fiona. And, yes, I must do some other types of work as I develop my art business. The key, as Clint keeps reminding us, is to have spectacular art. Then we can compete more effectively in the marketplace and get the prices we need to stay in business. I'm really glad you brought this into the discussion....I'm in the midst of pricing paintings for a show next month!

Sue Martin
Moshe, that's a really good question..."sell our artistic souls?" I've been thinking about that a lot lately as I watch some of my artist friends sell prints and "crafty" items on eBay - quite successfully. I've decided that's not the type of artist I want to be. I think we have to be careful how we position ourselves (our brand) as artists if we want to be taken seriously by top galleries (now or in the future).

Sue Martin
Esther, there are risks in any business. If you don't spend money to produce work and take it to market (i.e., shows), then you certainly won't sell anything! Sounds like re-connecting with your buyers was a good investment for you.

The cold hard reality of any business is that you gotta spend money to make money - and the startup years of any enterprise mean plowing everything back into the business. Yesterday I spent everything I made at a show last weekend on a set of ProPanels so I can make a better presentation at an upcoming show toward the end of the year. Hopefully this "plowing back" phase will end sometime, but my guess is that future earnings will go to more distant travel, more expensive frames and so on. It's just the nature of the beast in any industry.

I come from a background in film and video production and we constantly look at ROI as we upgrade our gear. Just when we get something paid off there's be a new video format to invest in and it starts all over again. I guess unless one is a highly paid poet laureate and needs little special equipment to ply one's art, we are mostly in the same boat together.

Joanne Benson
Lots of great comments and advice here! I have never formally looked at my ROI - probably because I don't make my living at my art. I do however informally calculate the advantages/disadvantages of different venues, etc. in my head. My guess is that I'm lucky to break even. I do allow myself to order supplies when I make a sale but my time is probably never compensated. I would need to do much much more to get to that point. But as was pointed out in previous posts....I love making art and fortunately have a supportive spouse and a part time job to support my art.

Fiona Purdy
Moshe - I don't believe that we need to "sell our artistic souls" to make a great living from our art. We all want different results from our artwork. Some want to be in a gallery, some want to self-represent, some want to be in a museum,. Every one requires a different way to get that result.

I know what that phrase means to me. I'd be curious to hear what "sell your artistic soul" means to others.

Tom Weinkle

I certainly am not making judgments on those who“ sell their souls”ť. To me, it simply means painting what other people want you to paint instead of solely what you might want to paint. If one finds personal satisfaction (and many do), then I am happy for them.

Being a graphic designer for 25 years, i can confess there are many times when I made decisions to do what the client wanted and let go of my own ideas. Sometimes, I would look back and say I was right to let go, and other times, wrong.

I look at my art as solely what I want to create, because I did enough head banging, and there are easier ways to make money.

Margaret Bobb
Hi Fiona (and others)...

The phrase "selling your artistic souls" does have a meaning for me, and while I'm sure there is more than one meaning, I know that I have sold mine in the past.

I took a keen interest in drawing as a child. At first, my parents were happy about that, as one of my dad's aunts had been an artist. I guess it created a real sense of family for them. However, as I got older and started painting, and then started talking about majoring in art at college, it really scared my mom. She had bought into the you'll-never-make-a-living-at-that scenario. She then sent me to a private college that didn't even have an art department. After changing my major three times... blah, blah, blah... I ended up joining the Air Force (I'm proud to have served my country!) ...I got married, had kids, and my art really got put on the back burner. I always wanted to go back to college and get that art degree. It never happened. My husband's job had us moving all over the country for quite a number of years. As my kids grew up, I'd dabble in art here and there, but with the many responsibilities that come along with married life, kids, a dog, part-time jobs, etc. I had little or no energy left for creating art. But, those other things were important to me, too! However, I kept thinking that one day I'd get my slice of the pie. I still dreamed of going back to college for the art degree, but I'd be stuck at work and daydream about painting. I believe I sold my artistic soul for a "normal" life.

Well, fast-forward to the present. After getting a stage-IV cancer diagnosis three years ago, I kept working for about a year, and then I was told by my alternative doctor that I had better quit. Stress is not good for anyone, let alone a cancer patient...and I did have a stressful job. My husband agreed to let me quit, and I started pursuing my art. For the past two years, I have been taking weekly lessons in acrylics from a lady who has a master's degree in painting, so while I haven't been able to go back to college, I feel like I am getting a great art education, and I'm PAINTING!!! I have participated in several local shows over the past 2 years, and I even won a 2nd place ribbon at one of those shows! I've been trying to educate myself in the business side of art by reading things on the internet, and I just purchased that book, "I'd Rather Be in the Studio" by Alyson Stansfield.

The big hole that was left in my heart by not creating art for so many years is finally getting filled.

By the way, I never did any chemo or radiation. A stage IV ovarian cancer diagnosis should have been a death sentence. And indeed, the surgeon who did my cancer operation told me that if I did not do chemo, I had 6 to 12 months to live. He told me that on June 18, 2007. Instead, I relied on my faith in Jesus Christ, and I started seeing an alternative doctor who radically changed my diet, prescribed supplements, and suggested I avoid all man-made chemicals. I am not only still alive, I am thriving! I feel better than I have in 25 or 30 years...and now I am a real artist... I am so thankful.

Sue Martin
Margaret, thank you for sharing your inspiring story! I suspect many of us focused on other priorities in the earlier parts of our lives and are, like you, experiencing a wonderful freedom in FINALLY pursuing our art. But your health wake-up-call was a powerful motivator. So glad to hear that you are thriving on faith and creativity!

Deborah Weinstein
I want to thank Rosemary Adcock for her wonderful reponse to Moishe's (also great) post. The words "depleted resources" lit up in my mind like neon, and I know they'll stay with me as I sort through all these "why am I doing this" questions for myself.

There are definitely different sets of questions to be asked at different stages of life. I am grateful that I am not a young person trying to make a name for myself in order to support a family with my art. But even as a retired person, I am spending money to make art that could be spent in other ways. My solution - a luxury, I admit - is to keep the business questions off to the side while striving constantly to iimprove my art so as to contribute - first to my family (if I can sell) and then to the larger community (if my art contributes to someone else's life). I may or may not ever make money, or even cover my own expenses. Continuing to make art in that circumstance is a luxury that few young people or those with dependents can afford.

Helen Horn Musser
Tom, I tend to agree with you. In my old age, I don't have the time or the inclination to paint other than my own vision. Kudos for you; paint your passion, it will take you there.

Helen Horn Musser
Fiona, I also would like a post about artists selling their souls

Helen Horn Musser
Joanne, I see you giving thanks for your spouse and I join with you; you are doing your part with a part time job and you should keep working to sell your art. paint the world as you see it.

Alma Drain
Another good article, as artists we have to think as a business, so that we can keep doing art not just for a living, but living to do art. I also loved the remark "as a artist you have a creative instinct dont ignore it or deny it" this is so true. so we not only have a business side to cultivate, we can enjoy it as we go, As a artist i know if i put off doing my art which is oil paintings. its like when i walk past my paints they are saying Pssssst im here you cant get away from me. pssssssst... I am part of you.

Liron Sissman
Thanks Moshe for bringing up such an important topic! As an artist, and as an MBA who advises other artists, I look at both, my ROI and my 'opportunity cost' which is what else could I do with that money if I didn't pay that one venue membership fees, and jury fees, and hanging fees, and shipping both ways, and framing and a commission if that one painting sold. Often, I'm happy to pass.
Liron Sissman

Tina Swindell
Thanks so much for all of your comments. This gives me a lot to consider. I'm just at the beginning and trying to become a portrait artist. I know that I could paint some nice little paintings that maybe would sell quickly but with limited time (still working full time) I feel that I should devote my time to perfecting the portrait since that seems to be my gift and what I'm drawn to. I worry and wonder if I'll ever make any money but, the bottom line is... I have to do it anyway! I'll just have to live on faith and keep a'kickin!

Carole Rodrigue
ROI . . . It's the perennial struggle that most artists fight with, including myself. Thanks for this article Moshe,and the replies are also a great read.

Claudia L Brookes
Fiona--I feel that you are correct in one sense about factoring in the value of your time when calculating what the price of your work will be, but in reality, you can only price it at what the market will bear. An artist needs to price work at the price that their audience will pay, period. In the beginning, that is not likely to be enough to cover anywhere near all the costs of their time. I have mentioned this before in this blog, but I have used a "thirds rule" for the last 12 years to assess all the time I have available to devote to art--whether it's 20 hours a week or 60 hours a week. That time is pretty equally divided between 1) marketing/business, 2) the "craft" side--framing, getting stuff to framers, readying card packs or prints for sale, etc, and 3) actually painting. I have acquired assistance in the last few years, so do less of some things myself, but that just means I do more marketing, can handle more sales events, and keep up with my collectors better. Even though I now have a framer for my watercolors, I still have to meet with her and make decisions, and there is no sense in paying a framer's rate to frame an oil, that I can see, since it is such a simple process, so I do that myself. I also recently hired an assistant who is learning how to keep my Working Artist program updated, helping with sales at shows and all the followup, rehanging my home gallery as needed, reorganizing my home office, and keeping my storeroom with frames, canvases, and supplies in order, plus many more tasks. I could not have afforded such a person until now, but it is clear that her contribution of a day a week frees me to do things that only I can do, such as painting, or that I do better than someone else, such as marketing planning. In a couple more years with this business plan, I hope to be at the point where all my time devoted to art is compensated fully by my art sales.

Alma Drain
My main paintings are of the beach and Florida scenes, but I have found that you need other items to fill in. I have started to have items for kids, After hearing a remark at a show one year mom saying she wished people would remember to have more stuff for kids, so they can take a little more time to look. Now i have jewlery ,bracelets which i make and sell 3 for $10 dollars. I was surprised how many whiped out the money and buy having 3 of them usually they come with 3 kids, had plenty of thanks and ended up with some nice money, which i can always use.and now they come looking for my booth. i keep the bracelts low cost, its having a filler to make up for when its slow, And they will always buy for kids or pets before themselves. its great for the artist who can do their main thing but im not there yet. so get creative. and just have fun.

Alma Drain
Tina If i did portraits i would take a photo of it then offer to make a locket or earrings, so they could share them with grandparents and loved ones. With todays printers you could do some note cards but only for a 30 day period.
just a thought you might use.

Maria Brophy
My accountant told me once about being in this art business:

"If you aren't making a profit, than what you've got is a hobby. And if this is a hobby, you need to go get a real job."

Words of wisdom...

Fiona Purdy
Maria - your accountant is so right - and I know you as a successful business woman knows all of this so well! Everyone should visit your wonderful blog to learn from you how to be a successful artist!

That's why I brought up about knowing ALL of your true costs -because I want to be successful in my art business and I want as many other artists as possible to be successful too. So many other talented artists are just not making it which is terrible! Artists who want to make their living 100 percent from their art have to stop burying their heads in the sand about business, and stop using the tired myths about "I'm an artist and I'm not good about business, and all the other things that we believe and tell ourselves about the art world that hold us back.

Even if you are doing this part time - you should endeavor to make your costs back at least.

Claudia, yes you are correct in your statement - if you see in my previous posts I did reference "what the market will bear". However - every business is under the same constraints as we are and they either make a profit - or they go out of business!

At least if we know the true and total costs (including all labor costs) of doing business, we can make informed and educated decisions about how we can address the "what the market will bear conundrum" just as every other business in the entire world does.

We are no different, even if we wrap up what we create in a lofty emotional context, at the end of the day what we create is a product pure and simple, and as such the same basic business principals apply.

Fiona Purdy
If anyone wants to watch and listen to a really, really interesting presentation and discussion about pricing go to this link:

It was held at the SNAG (Society of North American Goldsmiths) conference but the basic principals are the same for any creative business, be it painting, sculpture, jewellers etc. The panel consists of some big names but one of the panelists is someone that most of you should know, Bruce Baker.
Be sure to also listen to the question and answer recording, it is quite mind blowing to hear so many people trying to figure this all out, just thirsting for knowledge.

Also check out Harriete Estel Berman's blog. The information she has on her blog is all encompassing, very very helpful and all free! Especially the professional guidelines. It is amazing!

Carole Rodrigue
While I understand where accountants are coming from,it takes an average of 5-7 yrs for a business to reach a profit level. We don't consider "main stream" businesses to be hobbies, and though I've yet to make a profit, I don't consider my art a hobby either. Sorry, but I can't agree with that one. It takes a lot of hard work and time to succeed, but it seems artists don't get taken seriously when they don't make a profit.

Well, my accountant and the state board of equalization won't let me keep my resale license if i don't do better than break even at the end of the year. To the government, your are a hobbyist if you don't make a profit, and a professional artist if you do.

Sue Martin
I just had this conversation with a business consultant friend of mine who said, "If I tried to charge my clients for all the time I spend marketing and doing all the other back office stuff I do, I'd price myself out of the market." I agree with Fiona that you must at least be aware of how you're spending your time. But, as Claudia says, it may be years before you can afford to pay yourself for all the overhead labor you perform.

Esther J. Williams
I just have one thing to say, Van Gogh did not make a profit. He was not a hobbyist.

Maria Brophy
Esther, right you are! I envy Van Gogh for not needing to make a profit. I don't think they had to worry about the IRS and resale certificates in his day! Oh, to live in a simpler time...

Deborah Weinstein
Is it true that the BOE doesn't let you keep your resale certificate unless you make a profit? My tax advisor has told me, at least in regard to the federal government, that you can go along for years without making a profit and still deduct your business expenses, as long as you can show that you are operating in a businesslike way.

Claudia L Brookes
Van Gogh did not have to make a profit because as we know, he had a sponsor, his brother, Theodore. And I assume that the tax structure was not an issue for him, either, but is for present day day artists. Deborah is correct about "operating in a businesslike way," but you might still have to go through an audit to prove that you are not a hobbyist if you have not made a profit after a number of years. And a "businesslike way" means that you form a business entity, pay bills as a business entity, file taxes as a business, pay sales tax, keep appropriate records, and do the things that support your claim that you are in business as an artist, such as teach, market and sell your work, purchase supplies related to your business, and devote a significant amount of time to your business. By the end of my first year after turning to painting as a second career, I formed an LLC, got a separate checking account and credit card for the business, a sales and use tax number, and was very careful about recording and tracking my expenses related to art so that I could submit those against sales. I came out of the first 4 or 5 years very close to break-even, but made a miniscule profit most years. My accountant advised me that being close to break-even was OK in the beginning, even if it was slightly on the "loss" side, but that after several years, I should make every attempt to show a significant profit, and I was lucky enough to be able to do that.

Carole Rodrigue
Varying countries have different tax structures. In Canada, the government places the arts in a category different than typical businesses and we can claim everything we put into our art business, and claim losses for x-many years. Also, many serious, professional artists don't have the luxury of foregoing a day job before their art makes a profit,or replaces the income they currently have. I wouldn't consider them to be dabbling in a hobby.

Esther J. Williams
Well, I have a resale license in the state of Calif. I show a mild profit every year, but that is due to a combination of resale antiques and dolls on top of my art sales. I just pulled up an annual report in my Microsoft Money account program and it shows a profit, albeit minuscule. I have a DBA that encompasses several products, art, antiques and collectibles. The state has reduced my sales tax reporting times to once a year from quarterly based on my income. They are not revoking it and will not unless I state that the business is deceased and desist. In this economy, I think many artists alone are struggling. To be labeled a hobbyist by the government, well that`s okay. They just want to take so much percentage of our profit anyway. I know who I am and it certainly is not a hobbyist. Let the government set it`s labels and guidelines so the can tax more on profits. Maybe I am taking a sabbatical, I need one. Maybe, like Van Gogh I can be certified, go to the mental ward and create art that will be worth umpteen milions after I pass from this earth.
Another thing, in one of my co-op art galleries we can enter a juried show as a professional or non-professional. I know I have sold many works of art over the past 10 years, but I enter non-professional to save on entry fees and not be put against established, top award winners in the jurying process. I can take that label too.

Claudia Brookes
Whoa, Esther! The government and taxes are irritating, but what would you do with any income you do recieve? Not declare it? Well, that's illegal. I think the system can work in an artist's favor. If I didn't declare my income (and I have heard of artists who don't, figuring that their income/expenses are "a wash" anyway), I wouldn't have a way of writing off my $15-20K or so a year of expenses. I would miss getting a reimbursement in the form of a deduction for my business mileage, which is considerable. For most artists, I think the tax system works OK--all except for the really unfair rules that only allow us to deduct "materials" when we make a donation to a nonprofit fundraiser. That stinks. But that's another topic.

Aline Lotter
I am a tax lawyer and I would like to clarify the hobby rules. First of all, if you make a profit on ANYTHING, hobby or not, the profit is potentially taxable, ALWAYS reportable.

If you lose money on an activity, and it is a for-profit activity, you can deduct that loss against other taxable income you might have. BUT if that losing activity is a hobby, the loss is not deductible against your other taxable income.

Most artists need an outside profitable activity to support the art activity. If you didn't have that other resource, you have the choice of starving or finding another way to make a living. When you choose the starving route, you have no tax worries. But then, after ten years of starving, you win the lottery and oops! Taxable income but no deduction for the art losses, even though you were clearly in it for serious long run.

"Hobby" is just a convenient tax label for a losing activity that crazy people pursue even when it is seemingly against their interest. I've had clients who tried to succeed in a direct marketing pyramid suffer the same label, although they were sincere and hopeful of someday making a profit. The IRS gives you a certain number of years to luxuriate in insane hopefulness, then pulls the plug. On the DEDUCTION.

I hope that clarifies the importance or lack thereof depending on your situation of the hobby loss rules.

Esther J. Williams
Claudia, I do report and pay taxes, never said I did not. Why would I go through all the trouble of working and recording my income and expenses in a Microsoft Money program? Every little receipt and check gets entered into my software program. It goes to my husband`s accountant and he prepares the joint taxes. All legal here.

What I am saying is if we have less income and profit to report because of this bad economy, the government gets less. The more you make, the more you pay Uncle Sam.

When I get my art placed into more galleries, especially the retail/commercial ones I aspire to be in, I will make more $$$ and pay more taxes. I will need a saving account once again to save those wonderful taxes up.

max hulse
Moshe Wow! Looking at the long list of
responses you really struck a chord!

ROI I concur with you. I want to paint what
I want to paint, but I want someone to like it
well enough to buy it. The rent must be paid.

I do give 10-12 paintings annually to charity
auctions, and hope to get some future business.
I just chalk that up to advertising.

Max Hulse

Claudia Brookes
Hi, Esther--maybe you should go and open a savings account again right away to show your faith that money is going to be flowing into it--worth a try--

Esther J. Williams
Claudia, I have an extra account for that, it has 52 cents in it. When the economy is this bad and I speak for many artists here, I do not think we are stashing money into a savings accounts right now. Some artists are in fortunate situations right now. Not I. I am taking a much needed break instead and do not need to be given advice. Luckily I have my husband to support me in these times.

Claudia Brookes
Wishing you the best of luck, Esther.

Clint Watson

I'm late to this thread but after reading your article I had a thought:

In the tech world, startups commonly lose money for several years. I remember speaking with a friend of mine, years ago, who was the CEO of a (now hugely successful public) hosting company. When I asked him if they were profitable he said, "yes, but we're cash flow negative because we're pumping every dollar we make and more into marketing - to build a better future for the company."

It occurs to me that at the beginning of an artist's career - it's sort of like being at the beginning of a tech startup, one might have to lose money in the short term to increase the ROI over the extreme long-term.

I'm not saying this as a fact, just as my first though upon reading the article. My brain had not ever actually put together that there might be a correlation between artists and startups.

Moshe Mikanovsky
Very true Clint,

One of the important things to know about startups is that most of them fail, AND that this is a very important part of succeeding! I just finished reading "Startup Nation" by Dan Senor and Saul Singer, about a subject close to my heart - the success of Israeli startup companies and economy in general, and there is a lot everyone can learn from it (highly recommended).

Now, I am not saying that we should fail when we start as artists. All I am saying is that we have to learn and accept failure even when it happens...



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