Be an Informed Business Owner

I saw this post on FPBA and I thought it would be good to post here for our users. (I asked her permission first) This was posted by Wendy Grace and is something to think about when setting our rates. I know I've been afraid to charge too much, but have slowly raised my rates each year and this kind of post makes me feel more confident that I'm not overcharging when I think about all the expenses and time that go into it. Here's her post:

First I would like to state clearly. I do not wish for people to start
flaming or seeking the people out whom under charge for their
services. I have a firm belief they simply have not executed a viable
business plan or are not Artists by profession. I felt so compelled to
speak on this. Those who know me, know I am sweet in nature and not
one to gossip or speak ill of others. This post is NOT meant to be
inflamitory but educational.

In the past month I have had several people call me and tell me they
found a face painter who is charging $75 per hour in my area and told
them "anything over that is a rip off." I found it odd and with the
volume it is not a coincidence. I finally had some one refer me to a
face painting person's web page. This person charges $95 for the 1st
hour and $60 for the following hours and on her website answers the
question, "Why is the price so low? Some people just want to make a
living, not a killing."

I find this so profoundly offensive I am flabbergasted! This person
obviously has either not done the math (common in sole proprietorship
businesses and is why most fail in the first year) and/or is NOT doing
this for a living, but is a hobby artist.

BOTTOM LINE: When I say I charge $150 per hour, I am really saying,
hey you at McDonald's, if I remain healthy and everything goes ok,
you and I will be in the same tax bracket this year!

The research I did before starting my business:

According to California State Law minimum wage for an unskilled worker
is $8 per hour. It is generally accepted a work week for traditional
"jobs" is 40 hours a week. This unskilled worker a year makes $16,640
gross (before taxes/expenses). Not a living wage here, but still..

Now for me, educated by internationally acclaimed professionals in my
highly skilled trade, who I, just like a carpenter invested $1,000s in
supplies and still keeps my supplies and my training up to date. Often
spending $1,000 or more per year on training and supplies. Keep in
mind my expenses for running my business (phone, electricity, license,
insurances, advertising...) are carried by ME and not some faceless
corporate conglomerate and my self employment taxes are often higher
than what uncle Sam takes from an employee.

For me, if I want to make that same yearly income an unskilled laborer
would at $16,640 gross. If this is not a hobby for you and you are a
serious professional artist you recognise we are seasonal workers.
March - October is our work year (similar to some skilled construction
tradesmen). Our yearly gross income work year is 23 weekends (Thats 46
days as opposed to the 260 days the regular unskilled labor at
"conforming jobs" get.)

If I charge $150 per hour, I have to work 111 hours per year to get
that minimum wage gross yearly income. The average party is 1.5 hours
so you know that 111 hours divided by 1.5 hour = 74 gigs. Now remember
our work year is 8 months and not 12 months. So 74 gigs divided by 8
months of working season = 9.25 gigs per month or 2.31 gigs per week.
THIS IS EVERY WEEK THE WHOLE 8 MONTHS! I don't know about you, but
that is not likely for me even with my marketing and advertising
strategies in place.

Now, I grant you that some artists are working year round and paying
all their expenses including mortgage and food. This is true and just
like unskilled laborers, some may make more by working over time or
getting other jobs (read learn other trades like balloon twisting,
henna....). It is the same for us too.

So please don't feel sheepish or guilty about charging $125 - $200 per
hour, depending upon what your local market will bear or your skill
level. You are trained in a field that takes a highly skilled artist/
worker to execute even marginally well. Be confident and proud. You
are a professional.

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