Creating a beautiful work of art is hard by itself, but when it comes to putting a price tag on whatever we made, it does tend to get even harder for most of us artistic types. The question for today (and a few future blunders) is therefore: How much is creativity even worth?

If you ask somebody on Fiverr, well, it’s about 5 € give or take, on UpWork they’ll probably up that excuse of a pay-check to about 10€ or 20€, but I reckon (or at least hope) we can all agree that making whatever it is one does for a couple of beer’s worth isn’t really going to make anyone financially independent in the arts — or any other profession for that matter. Unless you’re literally selling single beers for the price of a couple of beers — this is, as far as I know, the only sound way of using this kind of business model and actually making a decent profit.

So, unless we decide to open up a barter brewery or intend to create a drop-shipping platform and/or beer exchange, there are better ways of tackling this issue and actually making enough to be able to sustain our lives and artistic production in the long run.

And today I’d like to share the method that works best for me; and please don’t worry, there’s minimal maths involved, and the few equations that we will mention are of the sweet, money-generating variety, that — in my opinion — makes them much easier to understand.

Let us therefore put on our green accountant hats (if you have one) and get down to business.

The core idea of calculating value of anything that we make is to first figure out the expenses that making art creates. The premise is quite simple here; we first need to know how much cash we’re actually throwing at a painting or sculpture or performance we’re making, because then we will know the bare minimum of how much it should cost for anyone interested in said artwork, to acquire it. 

In short; the goal is not to starve to death in the long-run.

But that’s also where the first big issue arises; it’s not just materials, studio rent and other “operating costs” we have to take into consideration, it’s our living expenses too! And this is where a lot of folks get it wrong and end up losing money on their work. 

Because, were we only to calculate based on our operational expenses — the expenses we have due to making our work — our sales would only reimburse that segment of our lives. Our eating, sleeping and not-freezing-in-the-winter demands would not be part of the equation — unless you’re living in a place where food is growing on trees all-around you and you’re also living in said tree with 365 day long summers to support you, this quickly becomes an issue.

To adequately adjust our price, we therefore need to think about us as a being; everything we need to survive and thrive on a daily basis needs to be accounted for, because without it, over the span of a few months or maybe years, we will not have the required energy to produce our art.

To start it off, the best way in my opinion is to first put down all of the basic necessities of life; food, water, rent/mortgage payments and all the inevitable costs of being a homeowner (if you are actually one), the cost of transportation, kitchen and bathroom essentials — like a bottle of Main ’n’ Tail shampoo, made for people and/or horses (just as a reminder to never take life too seriously) — and everything else in between. 

The point is to really take your time and figure out everything you spend your money on and a generous estimation of how much money per segment is actually being spent on a monthly basis.

My calculations look a little bit like this:

I divided my costs into a spreadsheet with the following segments: Longterm Investments (this is first for a reason, because 70 year-old you will thank you for it when the economy goes haywire and your pension payments start bouncing), Rent, Food and Health, Home Necessities, Car and Transportation, Digital Services and Telecommunication, Computer and Tech Equipment, Photo and Video Equipment, and Holidays and Fun Things (you’ve got to have those).

All my expenses are adjusted to a per-month basis; this means that anything I use every month (like rent, computer and camera equipment) is divided up into monthly segments. With rent, this is quite straight forward; you pay it every month and therefore you full payment should be in the spreadsheet.

With computers and cameras it gets just a bit more tricky, because — unless you shower with your laptop — you won’t be needing a new one every month; therefore you need to set a realistic amortisation period (the stretch of time any piece of equipment lasts you).

For my Mac I have an overly-conservative 3 year period (it’s my 5th year currently, but this way I can adjust for being a knob and accidentally pouring coffee over my laptop’s keyboard down the line). Then I divide the cost of a new computer by the amount of months (36 in my example) and what I’m left with is the monthly cost of my computer (for me it’s about 100€, because Apple is currently being lead by blind, money-hungry idiots).

When you’re done, you just made an analysis of your “fixed costs” — the costs or expenses you have, regardless if you use the space(s) and equipment for making art (and consequently money) or just binge-watching Netflix. 

The other kind of expenses are “variable expenses”, as the shirt and tie people like to call them. These are all expenses that occur only if we use up the materials they provide; paint tubes are variable for example, because you need to actually use them to run out of paint and therefore having the need to buy more.

Similar to fixed expenses, variable expenses can occur on a monthly basis (like toilet paper and shampoo) and over different periods of time (like fuel for your car if you live in a city with semi-developed infrastructure and only fill it up a couple times a year, but still have to have one, because the buses take an hour to travel 10 km distances).

Here, we again need to calculate each expense and then adjust its price by dividing the total price with the total amount of months that particular expense will last us.

You can even simplify it, and not think about fixed and variable expenses that much; just figure out all the various ways by which your cash is leaving your wallet or bank account and adjust each one of the various streams to a monthly amount. 

And don’t forget to include the not so obvious expenses like gifts, insurance, drinks and nights out and everything in between; the more in depth your expenses are formulated, the better and especially the more exact your final result will be (you don’t want to figure out down the line that you actually spend 300€ more per month on bagels than you thought — tough delicious, both finically and health-wise, this can obviously become an issue in the future).

Now that we have all of our expenses (living and working expenses that is), we can get to the real juicy part of our analysis: we need to figure out our resources and we’re starting with the one that all of us have in abundance (unless you’re 80, then you still have a decent amount left).

Time is the only really scarce resource we have and the most important one for all creatives; the point of making creative work is putting our time and attention into a problem and figuring out the best way to solve it.

You can’t outsource your creativity, because you can’t really outsource your own time; you can surely outsource your non-creative work, like writing emails, taking calls and making appointments. But the creative part, that’s impossible. Otherwise the value of creativity would drop to zero, because everybody could do it — there’s a reason why Seth Godin, Chris Do, Spike Lee and the myriad of other propagators on the importance of creativity speak so highly of it.

Also, we creatives always tend to be short on cash, so focusing too much other types of resources doesn’t really make sense for now.

Back to our calculations!

We ended up with the total amount of expenses (mine for example, because Slovenia’s living standards aren’t that high — at least compared to London or New York — are in the 1.500 € – 2.000 € per month ballpark, yours will depend on where you live and how much stuff you want/need in your life).

Now, we need to figure out the value of our time; for me, it’s by the hour, because it makes it easier to calculate my expenses for each particular project, but if you want you can also use a day as your variable — especially if you can’t easily switch between working on different projects and actually need to segment your work on a per-day basis to stay focused.

To give a bit of context, the calculations we are making now serve two purposes; one is to define the minimal value of one hour or day of our work, and the second one is not to starve.

But, because we are not machines (unless you’re one of the 14 bot accounts that I have found so far, which are for some reason subscribed to my social accounts and mailing list), we cannot work 24 hours a day or 7 days a week. Not in perpetuity at least.

We therefore need to set a maximum amount of time we are prepared to work. This time also includes all research and “non-making” activities, like taking long walks and thinking about your work, because they are all needed to create the finished work.

For me — because I fear boredom and leisure time like medieval folks feared bathing — it’s about 80-90 hours per week, for you it’s however much you are prepared to work and wherever your work/life scales are tipping towards.

By the way, there are 168 hours in a week in total and about 720 in a month, if you’re calculating that way.

The goal is to be realistic, and I can’t stress this enough; it has to be realistic, because if you just want to work 50 hours a week but end up doing 20, you’re not going to get by in the long run and will not be happy with your pay either!

Let’s say you decide to work 40 hours a week and enjoy the other 128 by socialising with friends, eating, sleeping and everything else we humans like to do. That’s 8 hours per day, excluding weekends.

There are about 4 weeks in a month, so 4 x 40 is about 160 hours of work per month. If we now take the total sum of our monthly expenses and divide it by the total sum of hours we are prepared to work, we end up with about 10€ if for example our total work hours are about 160 per month, and our total expenses about 1600€.

We are now left with our own personal minimum hourly-wage requirement.

Note, that if like me, you’re not only working on making enough money to survive, but as well as working on your own project to eventually be able to stop working for food-money (financial independence), you shouldn’t divide your total expenses by your total work hours — only with the amount that you are willing to put into making enough cash to survive during the time you are working on your future.

In other words, it’s the difference between how much your day job or whatever commercial projects you do take up your time, and the total amount of time you spend working. For me, it really depends from month to month; sometimes you get a high-paying project that you can live off for a couple of months, but only need a few weeks to complete, and sometimes you’ll work 40 hours a week for a month, just to pay the bills.

If we now get back to our personal minimum wage, we can of course modify it to be higher (but, by the love of logic and/or any deity you’re fond of, not lower), than the average hourly rate in our industry is.

For example:

If you’re a frugal website designer monk that works 40 hours a week and only need 400€ per month to survive (and for some reason have access to the required web design tools and equipment), your time shouldn’t be worth less than comparable web designers in your area or market segment, that have higher monthly expenses.

You can always set your price to about the average price of everybody else and use the surplus of cash to fund your other goals (like having LAN parties at your temple or getting high-speed wi-fi to all the monasteries in your country).

But you could also do the same by just knowing you are (and actually being) better then most other professionals in your field; a good painter should not charge less than a bad one, the bad one shouldn’t charge at all if you ask me. 

To conclude this maths-heavy blunder (I apologise, but it’s incredibly important to understand these things to flourish as a creative) the point is simple: Know how much you need to survive and thrive and how much you are prepared to work to get it.

And in the next one we’ll take a look at the way other resources interact with our way of making art, how we can use added value as a variable to get more for our work and how to apply our personal minimal hourly-wage to calculate consistent and fair prices for our art.