Thoughts on Pricing Art Products

There is this phenomena I have experienced myself, and day to day, see artists around me who are trying to build a career experiencing.
It's that "No matter how hard I work, I never seem to get ahead! Where does all the money go?" issue. You know the one.
I don't get it as much anymore, these days, and the reason why is that I've PROPERLY worked out the costs behind all of my products, and am now pricing my items accordingly! Yes, a lot of my products are a bit more expensive now than similar products available from other artists, but the simple truth is that they are underpricing themselves, and shooting themselves, and their careers in the foot. It's easy to do, and as a start up artist it's not such a terrible thing because you can normally subsidise your business from some other employment to keep it afloat. But the minute the change from "hobby" to "business" starts to happen, and those "Why aren't I making any money?" worries pop up, it starts to become a very serious problem.
I remember when I first started out selling merchandise of my art. How do I price things? What's fair? Well, first thing you do is go and see what everyone else is selling that sort of item for. You price based on the market around you. So, lets use fridge magnets for an example. I see others selling fridge magnets for about $3 a pop. Great, I think. If the magnet itself costs me maybe 0.80 or so cents in materials to make, I'm ahead right? So you go with the flow.
Everything is ok for a while, then you start selling products wholesale because stores want to stock them. Retail stores generally EXPECT and demand a 50% discount. They have their expenses they need to meet, and need that 50% profit to cover their expenses and make some money too.
So now I'm selling the same magnet for $1.50. Still making money right? No, actually, we're not.
We've missed a step along the way, a very important step. We haven't considered out costs properly. Just looking at material costs is a tiny fraction of the picture.
Let's have a look at the numbers closely.
We're selling the magnet at $1.50 wholesale.
Material costs are around .80c, leaving us .70c left.
In my business, I have to charge 10% tax on all goods, so that's another .15c gone, leaving us .55c
Waste- it happens. If 1 in 10 magnets is a bust for whatever reason, that's 10% of the material costs on top, so another .08c off, leaving us 47c.
I use sales reps for some of my sales, who take a 15% cut of the profits, so that's another .22c gone, leaving us .25c.
If the sale goes through paypal, they take maybe another 3% of the total, leaving us .21c.
Labour, yes, you absolutely must account for labour. What happens when you want to start employing someone to do it for you? If it only takes 1minute to make a magnet at a reasonable $16 an hour average labour rate, that's .26c labour cost....
Oh...
Whoops...
Looks like we're down to -5c now. So we're losing .5c every time we sell a magnet...
In my situation, I also have other artists I need to pay a % sales commission to... where is that going to come from?
And all year long in my business I have to buy packaging supplies for posting, pay for advertising, buy art supplies, service printers, pay for all these other expenses that don't directly pay for themselves like product materials do. All these day to day running expenses have to be paid for somehow. You need to be making enough profit with each and every sale to cover all those other day to day expenses of running a business. Every product you sell should make you a CLEAN profit (after all those other expenses for the product itself I just talked about!) of at least 30%, or you're in the red and your business will never get ahead.
I look around the internet, from the amazing handcrafts on Etsy to beautiful jewellery and art prints coming from fellow fantasy artists around me, all selling for a pittance, and I want to grab people and shake them and yell "You're paying other people to take your work!!!!"
Because this is what so many actually are doing, at the prices they sell at. Not only are they undervaluing their product, they are undervaluing their ART. The artwork we create as a thriving and inspired fantasy and fairy art community (and other genres as well out there!) is a beautiful, unique thing of GREAT VALUE. And we need to start treating it as such, before I see any more of my collegues out their wring their hands in financial stress and say "I just can't do it anymore, I'm it giving up", and give up not only the business, but the art itself. That's the saddest thing I have seen happen, on more than one occasion.
Our fans and customers might love a bargain, but they probably also don't want to see us sell ourselves out of business.
Someone told me once, when someone buys an art print from you, they aren't paying you for the paper, or the ink. They are paying your for an artwork. An image they've fallen in love with. As artists, we need to stop charging for the price of the paper, and start charging for the price of our art.