As artists and creatives, we are pretty clear on what our product is: that is what we make. But we are not so clear on what we make, financially.
Establishing your worth is one of the hardest tasks an artist will face. Complicating things is the fact that your worth changes over time; it is not a static thing.
“How much should I charge?” and, “Am I underselling / overselling myself?” are probably the two most commonly asked questions in the arts.
A panel of experts helped navigate the answers at a recent Vivid Ideas talk: What's Your Worth – Income vs Exposure and the Billion Dollar Contribution of Creative Industries.
The panel was chaired by Christina Gerakiteys, CEO at Ideation At Work – a company that strategises with entrepreneurs, creatives and businesses to create innovate products – who said that we are on the cusp of a new movement.
She told ArtsHub: ‘Creative industries are in your face everyday and yet many creatives struggle to make a living. We are here to start a movement, Creativity Equals ... You wouldn’t ask a personal fitness trainer, a barrister or a florist to give you their product "on spec”, or to hand over their IP to trial for free, so why are creatives and artists expected to?'
Founder and Creative Director of creative consultancy firm The Proverbials, Brian Daly, said: ‘What we are worth today in this economy – this capitalist consumerist society we are living in ... is what we need all other industries to recognise.’
His message is that creatives are businesses too. Daly spoke to business leaders across finance, heavy industry, HR and not-for-profits and asked them how creativity impacts, and improves, their business. This was their advice:
- You can’t underestimate the power of a good idea.
- We rely on creatives to create our branding, our marketing, websites, logo development, graphics, videos, storytelling, telephone apps.
- Creative services give us the ability to communicate well to our client base – this is vital to us.
- Find the pain point in a company and show them how you can help solve that.
- The language people speak is the language of numbers – so put some numbers around what you do.
- Be sales people yourselves.
- Develop case studies – use examples of where a creative company has added value to demonstrate that worth.
Image Vivid Ideas panel What's your worth?
While those might be the entry points to making money, the problem of how to manage money and what to charge still remains illusive.
Monica Davidson, Founder of Creative Plus – a company focused on arming creatives with sounds business skills – offers sound, simple advice.
She said: ‘All this information and excitement about creatives and innovation will fall flat if the creatives themselves can’t even make the tax threshold or run their business.’
Here's how to overcome the challenges:
1. Irregular income is normal
Davidson said there is nothing wrong with having an irregular income. ‘It is not the irregularity of my income that is hard to deal with it; it’s the regularity with which I have to spend it. The whole world is set up for people who have jobs.’
She added: ‘To earn, from an employee’s point of view, is being able to predict the future. That is, on Thursday I will have this amount of money land in my bank account. I have never been able to have the “earn conversation”. What you earn is no longer relevant – what you cost is.’
Davidson says that rule number one to working out how much to charge is to know how much you cost – what are the production costs of your business?
2. Know what you can and can’t control
Davidson says she is obsessed with working out what you can control. ‘Stop worrying about the things you can’t control. Rather than thinking like an employee, “this is how much I earn so therefore this is what I can afford to spend”. When you work for yourself you have to flip it: “this is how much I cost so this is how much my business can make”.
‘Stay with what you can control; you should be able to work out what your business costs to run and what you cost as a human being to live. And when you do you will start to get a better idea of what you are worth,’ she said.
Davidson said that one of the things she loves about money is that it doesn’t lie to you. ‘Guessing has no place. It is important to work out what you cost because then you can ask the magical question: what can you charge?’
She used coffee as an example. To buy a take-out coffee will cost anything from $1 to $6, generally, and yet a long black costs about 30 cents to make. The difference is profit. She believes that we have more respect for coffee than art.
‘You would not haggle with the barista over the price, so why do we do it with creatives?’ Like Gerakiteys, she believes that as a sector – an industry – we need to shift that perception and build value.
3. Know your Cash Flow
Creative people are really good at looking into the past, but what we have to do is a cash flow projection, said Davidson.
‘Sit down once a month and look three months ahead at what is happening. Look at what is going out first. And then have a look at money coming in – definite money, maybe money and hopeful money,’ she said.
Definite money is what we can rely on – a contract that has been signed, an invoice issued, a deposit paid. Maybe money is things that promise money but where nothing is locked down – everything is in place and on the shelf but the “ink is not on the contract”.
Hopeful money is when you walk out of a great pitch and are hopping around the lounge room with your fingers crossed, explained Davidson – a nice bonus if it comes through but never rely on it.
‘Projecting forward finances gives you some empowerment, and if you don’t have enough money coming in to meet the budget, then make some – after all you are an entrepreneur and there is no cap on how much money you can invest in yourself,’ she said.
4. Have an emergency fund
Davidson urges all artists and creative business to develop an emergency fund. When the times are flush put some aside. ‘It will help you to be braver [having that safety net],’ she said.
‘Hopefully, you will have a week’s worth, a month’s worth, or a year’s worth in a bank account. I would rather have six months in a bank account than $30,000 in debt and beholden to a bank – who doesn’t like me as I’m a cultural practitioner,' said Davidson.
5. You must spread your risk
We have heard this one often – but for good reason. Funding cuts across the creative sector during the past three years have demonstrated this need more than ever.
‘Spread your risk! If you want one source of income then get a job. If you want lots of sources of income then you are running a business. Cafes sell more than just coffee,’ said Davidson.
‘If you are a product maker think about how you can diversify your services. If you are a service provider then think about how you can diversify your product,’ she added.
6. Do a cost benefit analysis before saying yes
Before you say yes, always pause. Davidson recommends that sitting down and doing a cost benefit analysis is the soundest business decision you can make.
‘It is very simple – it is about working out if something is feasible. Is the time, money and energy that I will put into this worthwhile in terms of what I will get out of it?’ Davidson encourages all to ask.
‘Rather than "will you work for free", you need to ask, “Should I work for free?” We are all about the coin, but it is not that simple. What is the cost benefit analysis of working for free – are you getting exploited or are you supporting a cause you believe in, for example? Hard money is what it will cost and what I will make, while soft money is everything else – rewarding, fun, challenging, will I feel enriched? These things have value too,’ said Davidson.
7. Understand your worth
The creative sector contributes around $90.19 billion to the national economy annually in turnover. It adds almost $45.89 billion in GDP and helps generate exports of $3.2 billion dollars annually. (Source - Valuing Australia's Creative Industries 2013)
‘A $90 billion industry where many don’t make minimum wage – what’s wrong with this picture?’ asks Gerakiteys.
She continued: ‘We are living in the age of innovate and creativity – those words used to be fluff and now they are not any more, thank goodness, but now everybody wants to use them, from governments to accelerators to agent investors. We are hearing about the value of creatives but we are not paid proportionately.’
Phillip McIntyre, Associate Professor Communication, School of Creative Industries at the University of Newcastle, has been researching statistics within the creative industry for most of his career. He says that there are more than 600,000 people working in creative industries in Australia, and over 120,000 creative businesses, and that ‘the creative industries employ more people on number base than the mining industry in Australia’.
Remarkable numbers, and yet the reality is not so remarkable. ‘For me there is a massive disparity in the stats that are saying how valuable this creative sector is, and the income they earn,’ McIntyre said, adding that the Creativity Equals movement needs to build a swell before we will see an adjustment in rhetorical and the reality.
8. Being a generalist is valuable
‘There is a new term being used for creatives and it is “generalists” – someone who has had that wide variety of career pathways and applies them. It is a really cool term – it used to be just a jack-of-all-trades, but now there is real perceived value in that term, which is exciting for creatives,’ said Gerakiteys.
She concluded: ‘Take some time to think about what your value is.’
Don’t rush it. Plan it, think it through, do the ground work – and if you value yourself and your business then others will too.
A businesswoman in the group reminded us: ‘People have so little time, so what you do has to have an impact. That is where the creative industries can help to get a message across in just a couple of words or in one picture that might take us 10 Powerpoints. You need to recognise that value because it is incredibly valuable.’
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