Why I have a day job

I recently came across an old business plan I did way back. It had a nifty formula for working out how to price your goods and services.

Ha ha, thought I, let’s look at the numbers for being a full-time artist. Let’s have modest ambitions and work out how much you’d need to sell to get the minimum wage ($25,000 before tax, about $480 a week in the hand).

You need to add two-thirds of the cost of materials (you get one-third back through tax) and then the dealer’s cut. Let’s say (a completely arbitrary) $2000 for materials and assume a dealer’s commission of 40%. If you were doing this for real, you'd work out the cost of materials properly.

Dividing $27,000 (wage plus costs) by 0.6 (to add the dealer’s cut) tells us that, to get the minimum wage, you need to sell $45,000 of paintings each (and every) year.

What if you have larger ambitions than the minimum wage? What if you'd like to live on the average wage ($45,000 before tax)?

You’ll have to assume that, if you’re producing work with a higher total value, your material costs will consequently rise. Let’s say to $3000, because some materials won’t rise much more than a basic minimum you’ve already factored in.

Dividing $48,000 by 0.6 gives you total sales each year of $80,000.

These totals allow us to work out how many paintings of a certain price you need to sell to meet your target. If the average price of a painting is $2500, you need to sell 18 paintings a year to get the minimum wage, or 32 paintings a year for the average wage. That’s a lot (and I don't sell at that price anyway).

If the average price is $5000, you need to sell nine paintings a year for the minimum, and 16 for the average, wage. At $10,000, you need five for the minimum, and eight for the average, wage. At $25,000, you need two and three respectively.

This seems a lot better, but the problem is that, as your prices rise, so the pool of potential buyers shrinks, especially in such a small market as New Zealand’s. Remember that you need to sell this amount of paintings at these prices every year at least until you’re 65 (assuming that the super’s still around then). For me, that’s 27 years.

So, even if my prices were at the giddy heights of $25,000, I wouldn't think I had it made. I'd be worried about selling all the time.

If, on the other hand, you get a job at more than the average hourly rate, you can work part time for the average wage and be able to paint and show what you like, with no regard to whether they'll sell.

Increased prices limit the pool of potential buyers in a highly unsatisfactory way. They select for ability to pay rather than appreciation of the work. For this reason, I'm strongly considering having an application form for people to fill out before they can buy a painting. I'm thinking that they'd need to disclose their religious and political views as well as explain why they want to buy the picture.