Pricing. It’s the game that we never feel like we’ve mastered but every single one of us has to play if we want to put food on our table. We all start a business because we want to do what we love every single day… but charging money for it? That’s not as easy.
In this raw and value-packed episode, Jenn and Doug talk through how to cover your initial overhead BEFORE you quit your 9-5, how to learn from industry masters, how to build your confidence and charge what you’re worth and all of the nuances in between.
Don’t forget to subscribe to ThrivTALK. You can find show notes online at starvingartistmyth.com.
Turning Your Talent into a Business
Doug: So, you have a talent, and it’s something you really enjoy. You find yourself doing it often because it makes you happy. One day you’re playing around with your craft, sharing with your favorite people, and someone says, “You should do that as a business.”
Doug: Then, lets hope some wheels start turning. You are intrigued by the idea. You see others utilizing the same or similar talent who seem to be making good money. And you think, “Okay.” And you let your brain go there. You could also see yourself actually making money, doing what you love. But you may be asking yourself, “How do I put a price on something I already get so much joy in doing. Is that allowed?” Can I do that Jen?
Jenn: Absolutely. In fact, yes, yes, yes. So too many creatives shoot themselves in the foot by underestimating what each job really needs as far as compensation, and that’s what we’re gonna talk about today. Excuse me. I wanna explain how that’s gonna lead to burnout, often times too early, and maybe even before the ball even starts getting rolling.
So in this episode, Doug and I, we’re really gonna go and think back to those many moons ago when we were starting out business, or starting our creative journeys, and retell them. Those times of transitions, the times when we were considering utilizing our passion, like many of you guys out there are doing now. And the knowledge, and the talent to start bringing in some income.
We’re gonna touch on some key factors to consider when you make these decisions, and you decide to start asking for compensation. And if we have time today, we have a bonus topic to talk about, so-
Jenn: Okay Doug. Can you remember?-
Doug: Can’t wait, can’t wait-
Jenn: God I’ve missed you, it’s been too long. Can you remember back when you had this feeling that, “Maybe I could get paid, and I could start utilizing my craft, and creativity, and actually getting compensated by that.”?
Doug: Absolutely, as a young musician I started to feel that way. I started playing with friends, and then my friends started becoming older, and older people, while I’m still young. Just kinda of following the road that you’re driving on, and meeting new musicians, and next thing you know you’ve got shows, and you’re like, “Waw, I’m really doing this.” At that point, I realized I could make money, but I didn’t know what to do. I just knew it was possible at that point.
Jenn: SO you’re kind of like, “Okay, here it is.” And you’re not knowing really how to make the transition, and so there was a good possibility that you could be undercutting yourself and lead to burn out-
Doug: I was working for whatever was given to me. And I was so excited to do it, but at some point you realize, “I should probably be setting rules for myself.” And it didn’t mean I was gonna start saying, “I’m $100 and hour.” I wasn’t gonna do that, but I was definitely gonna know where I would say no to the money offered, maybe. So I wasn’t really setting my price, but I knew that I was worth more than $5, or whatever, and a beer underaged.
Jenn: Beer underaged. [crosstalk 00:03:16]
Doug: “Hey kid, I’ll give you a beer.”
“Okay, Done, sir. Thank you.”
Jenn: So what are … looking back on those times, what are some takeaways that you had? What are some key factors that you really could give to help somebody going into it-
Doug: I’m gonna use a better example. I’m gonna use the example of me in the education business, and not me as a individual musician, but it can apply to individual musicians.
Doug: The first thing is don’t reinvent the wheel. So look at others who are creating and selling similar products, research your competitors. In your mind, be someone else’s customer, someone else in your field, be their customer in your mind. And shop them, and if you’d pay for a competitors cost of the same product or service you’re selling, that’s a good starting point to figure out what you would charge for your product or service.
Jenn: And real quick, another idea wrapped behind that is that they’ve kind of done the research, and they know what they need to do to create stability with that price. That marketed competitive price. So without trying to figure that out yourself, you can get a really good idea of what it is-
Doug: That’s the quick and dirty, right?-
Jenn: Yeah, quick and dirty.
Doug: … Just look at everybody else’s stuff. Before you start philosophizing on why you do what you do, and how important it is, just look at other peoples prices.
Jenn: And see…
Doug: And what do you like and what’s similar to yours, and then use that as a starting point. Then you can philosophize all you want after you’ve … you got a starting point.
Doug: Cuz you wanna get into business, you know?
Jenn: Mm-hmm (affirmative)-
Doug: I know that, for me, when someone was charging at the highest end of the spectrum and killing it, but I didn’t feel that price was in my personal comfort zone to charge a client, then I had to listen to my gut, because I couldn’t sell if I wasn’t confident in the price I was asking. You know?
Jenn: Yeah. The confidence is key right there.
Doug: Right. Now I believe I’m very close to being the most expensive game in town. And for me, I didn’t have to be the most expensive, and people would often tell me, “You need to be the most expensive.” Because of the value perceived by being the most expensive, right?
Jenn: Yeah. Yeah, yeah, yeah.
Doug: And although now I believe in that perception, back then I didn’t. Cuz I’m like, “What are you talking about? Nobody perceives me as anything. I don’t know, I’m just starting out.” So I really couldn’t think about it in that way, back then. But where I am now, I know that I definitely don’t wanna be the cheapest, because I’m gonna be cheating myself. And I don’t have to be the expensive, but I do agree with the logic behind customers valuing higher price points.
Because from my perception it’s the best. Even though I’m not rolling in the binges right now in my life. If I’m shopping for the best in something I care about, cost is secondary to quality every time.
Jenn: Every time.
Doug: And so I have to remind myself that I am a customer too, and what would I pay? What would I do? And not just worry about how I’m perceived by charging this price, you know?
Jenn: Right. Because it can work both ways on the spectrum. Like you said, being a more expensive endeavor, you attach automatic thought of experience without even explaining the experience you’ve had. And on the lower end, if you are cheap, you’re gonna be perceived as cheap.
Doug: That’s right. So if the scale is from being too sheepish to pitch an expensive price, or being embarrassed to say … or even mad that you’re only charging this price, cuz you know you’re not gonna make any money on it. So where is the balance in there for you?
Doug: With the bottom to the top, where are you in the middle? And that’s where you find your decision.
Jenn: Right. And to take that a step further too when I’ve been working with up and coming creatives, they think they need to gain experience, they need to have this, and they need to get all that. And that’s in another podcast we’re about to go through, but that idea is they don’t understand that this is where they can fall into burnout. By undercutting or charging too little, and then they’re working their butts of to get through it-
Doug: Yeah, you feel like the time to make the donuts commercial. You’re feeling like you’re working 24 hours a day-
Jenn: Yeah, and it’s not worth it-
Jenn: … and you get burnout, and then you walk away.
Doug: … and then you can’t afford your overhead, and you’re like, “What’s going on?” Well, it’s because you’re not charging enough. Now that leads me actually to what my next point was. It’s like, don’t just think about your materials and your time for reimbursement. Because you’ve got to think about all of your overhead. Even if it’s imaginary overhead that you won’t have for a year or two from now, include it in how you price.
Jenn: Right, and we talk about a lot of that in the Thriv Series for creatives. As members, we talk about all of that, and how to find and figure out that price.
Doug: That’s great, that’s great. Cuz right now some people may be a landscape architect, and making their money to cover their light bills, and so when they create a sculpture for someone, they’re only charging for the materials. They’re not thinking about the future. They’re not being the business today that they wanna be tomorrow. You know what I’m saying?
Doug: So you have to … At that point, you really have to start thinking about how to cover all the overhead now, and stash the extra profit away, and allocate for overhead when you do drop your nine to five, and pursue your craft.
Jenn: That’s great.
Doug: Yeah. That’s what I did-
Jenn: Say that again, say that again, that was awesome.
Doug: Well, what I kind of said was what? You think about how to cover all of your overhead now, and stash that extra profit away, so you could allocate it for overhead when you do drop your nine to five to pursue your craft full-time.
Doug: And that’s one of the things I-
Jenn: Setting yourself up for success.
Doug: That’s right. And I’m smarter in the past than I am in the present. Like I’d think I’m an idiot, and then I did something form myself on a deadline, and I’m like, “Hey, I did that already.” Do you do that? Do yall do that?
Doug: I’m always surprised at myself, that I did that for myself in advance. And I’m like, “Hey.” You know?
Jenn: Hey, it works.
Doug: But in this case, I was smarter in the past than I, I guess had given myself credit for, but I was-
Jenn: Your instincts where there, huh?
Doug: Yeah, they were there. And it wasn’t … I don’t know, I don’t know. I’m just impressed with myself that I did this, but when I first set out on my own with a business, I was fortunate enough in the fact that I helped a client’s son get a scholarship to Belmont University, and he was really appreciative of that. And when I looked for my first building to lease as an official business, I had no money. So he offered to let me squat in one of his buildings for free. The power was already on, everything was already rocking. I didn’t have a sign yet, I just had this little space.
And so, what I did was, for nine months, I saved my extra profit. And when I got my first building, after nine months, he found someone to move into his building. By that time I had already outgrown the space anyway. So I moved to a new space. I had $20,000 in the bank. I saved my upstart cash by creating these fake bills earlier. Just filtering them into a money market.
Jenn: That is genius-
Doug: And then it-
Jenn: … I never did that.
Doug: In the building we moved into, of course now I’m incurring an expense when I never had one on the lease, but it was $1,800 dollars a month. So I knew that if I could afford the rent with just all that savings, I could live for a couple years while I’m building everything else up. So that’s my strong advice to people who especially are relying on other income now.
Jenn: Set a padding.
Doug: Set it up, set your hobby up now as a business, and take that money, and instead of putting it in your pocket, or paying it to your landlord, cuz you don’t have one, you’re setting it in a money market. And you’ve got some upstart capital when you’re ready to make the change.
Jenn: And let me say this right now. If you have this hobby and you are looking to set it up as a business, there is a free download on ThrivCommunity.com that can help you do the first three steps of getting your business legit and visible. Just go to the website and check it out there.
Doug: That’s awesome.
Jenn: If you are hearing this right now and you’re getting on what Doug is saying, go to the website and download that. It’s really helpful, it just segues right into it. That’s awesome.
Doug: That’s great, that’s great. Do you guys have sample profit and loss statements up there, or?
Jenn: Not yet, we’re gonna be doing Thriv Finance, that’s gonna be coming in in release so-
Doug: Excellent, I can’t wait.
Jenn: … yes. You are gonna be one of my men on that one.
Doug: I love and hate finance-
Jenn: I know-
Doug: It’s the best thing to love and hate.
Jenn: … it is a love-hate relationship. I have a coffee mug that says, “I love taxes.” Cuz I just have to get myself into that whole realm of money, right?
Doug: I love money when I got it, and I hate it when I don’t. It’s terrible. And it’s a really volatile business that I’m in as well. Season to season, you’re making dramatically-
Jenn: We’re all going through that, there’s all those ups and downs, that’s in every business.
Doug: Just speaking on saving some money for your official real upstart, when you’re cutting the safety net, in addition to that, moving forward in your business, you should always have some little wells of cash that you can use for a rainy day or when times are slow. That’s really hard for people to think about sometimes too, because everything’s right in your face. Especially when you’re struggling, and you’re just barely making your mortgage payment, and this and this, when you get-
Jenn: Or rent.
Doug: … when you’re getting a little side, you end up getting that piece of equipment you’ve been waiting to get, and you still have nothing left over.
Jenn: Right, right. And to kind of give you another little tap, it’s like, when you are building in that fake bill into your price, your price point for your product or creative services. Then take that, every time you get paid and compensated, make sure you take a percentage of that compensation and put it in a savings-
Doug: Absolutely, that’s right.
Jenn: … taking it a step further.
Doug: And you need to play mind games with yourself to say-
Jenn: I don’t see that money at all, I do do that.
Doug: … that’s due. I owe the landlord that. You don’t have a landlord but you’re convincing yourself this has to go there. Cuz it’s so easy to dip into it, right? And get a new lens you don’t need, new paint brush you don’t need. And just leave it, leave it. Cuz you’re gonna need it at some point, you know?
Doug: S0, I don’t know man. I already like what we’re talking about.
Jenn: I know, its been great.
Doug: It’s fun.
Jenn: It’s been great. So to kind of go at it a different way, when I started realizing that I could do a photography thing, this creative thing for money, I was ready. I had already surrounded myself with mentors, and I’m very fortunate because my two brothers are also professional photographers. And I had the inside to go in and work at a photography company. So when I was deciding yeah, this is something maybe I could, I had already been shooting for almost nine years as a hobby at this point.
And then I started assisting with my brothers and doing assignments with them. But I implanted myself into a business so that I could learn and utilize my skills as business, because at this point I had already had a business administrative minor, which is what the Thriv Series for Creatives is all about, is a business administrative minor.
Doug: Got you.
Jenn: So I had that, but I was able to utilize it with my craft and my creativity, and understand how those two mesh. And getting into, putting yourself in a situation, setting yourself up for success. I wasn’t really having to go out and undercut myself, or try to get experience, or portfolio building assignments that were for free, because I put myself in a position where I could hang out with very established photographers doing their game and doing their creativity. And I was learning and absorbing off of that, and connecting the dots there.
That’s another avenue, like if you feel like you need more experience, surround yourself with people that can give you that experience. Don’t go try to do it on your own.
Jenn: Cuz the only thing you do there, and we’ll talk more about this in a later episode, but the only thing you’re doing there is you’re bringing down the industry for which you’re trying to create stability and maintain livelihood from. But if you’re saturating it with a lower price or a free price, you’re doing yourself and others a diservice.
Doug: Absolutely. Do you know the company I’m rebranding to, The Real School of Music?
Jenn: Mm-hmm (affirmative)-
Doug: I met them nine years ago, and they’ve been my mentors for all that time, for nothing more than just to see us succeed, you know? We’re not in their circ-
Jenn: So they are-
Doug: Realm of-
Jenn: … investing with you, in you, for the betterment of the community. That’s so great.
Doug: They were doing it for the better, and they still are, of course. But that prompted me to say, at a point when I knew I wanted to do this, which is off topic, but, when I wanted to go a different direction, just shed my old skin and go anew, I asked them if we could-
Jenn: You had to re-figure out pricing structure and everything for that too, so yeah this is right along it.
Doug: Yeah, we’re working on that now, yeah. But what I was gonna say is that by allowing yourself to be vulnerable enough to ask other people for help, things you may never thought have happened, would happen positive for you, do. The outcome of this original, just call up a CEO of a company, and say, “Hey, I don’t know what I’m doing, I suck. Can you help me?” And he laughs, and, “Yeah, yeah. I’ll help you out.”
Now, we’re becoming a franchise of theirs across the country. It’s super cool-
Jenn: You never know where that kind of stuff will lead to.
Doug: You just never know … If you allow people to give their input to you, you never know what’s gonna happen out of that. You know?
Jenn: And then surrounding yourself with the people that have already gotten the experience, and that you look up to, or are in line with your goals, and your creativity, and what you wanna do.
Doug: That’s right.
Jenn: Kind of circling back around, I really want to focus on the fact that, you as an individual creative out there, the people that are listening, Doug, myself, the part of us that really is excited about creating, and excited about moving into possibly doing this for a career, or doing this as a career, or evolving our established business, you are alone the unique one. And that in itself is your time, and your livelihood, are your best resources when it comes to that. And setting your price, can you put a price on that? Not really. But it is valuable, and you need to take that into consideration when you’re putting your price.
Jenn: On top of that, we really need to look at all of the expenses, like Doug was talking about. Listing them out, even your personal expenses. Because you do have to pay yourself, you do have to show up in a space where you’re gonna be able to pay the rent, you’re gonna be able to eat, you’re gonna be able to do that stuff. Now, there’s always that supplemental income, there’s things of that nature. I mean, we have a lot of those kind of conversations going around in our Facebook groups, but when you are setting a price, you have to list out … you just have to go and show up and see what all expenses are happening.
If you have overhead, like you have a brick and mortar, a lot of us don’t even, as we’ve expanded and become businesses … I mean I did not have and office until maybe 10, 12 years, really. Until I moved here, and moved down South, I’ve always worked out of my house, I’ve always met at coffee shops, and things like that. So you might not ever need it, but just to understand the expenses, and including in those expenses your livelihood, your time, as the most valuable resource that you are giving to your craft or creative services.
Doug: That’s right. And look, I don’t wanna derail you, but in addition to all those expenses, you also need to think about, what is your company? Is it a sole proprietorship, is it a limited liability company, is it an S corporation? And what are the tax benefits, and what are all your expenses involved with that? Because we all forget about that.
Jenn: Or we don’t know to think about it.
Doug: And then you get hit with something at the end of the year, you know?
Doug: April comes, and you’re like, “What the heck.”
Jenn: And I-
Doug: You really have to think about those things. I know that a lot of people, especially when they get started out, don’t even really need to do much reporting or whatever. But eventually, if you’re serious about it, you’re gonna have to gussy up to the big boy table, and have a Tax ID number-
Jenn: Big girl.
Doug: Thank you, big person table, and … mature person table? Adult person table.
Jenn: Or bad-ass table.
Doug: The BA-table.
Doug: And really understand what that … cuz you could be surprised, and the surprise could not be very fun.
Jenn: And then, also can lead to burnout, or walkaway, distressed, and that is what we’re trying to keep from happening. Cuz the creative endeavors, the creative industries out there, are what’s going to be living in the future. You cannot computerize that, a robot can’t do that, assembly lines can’t do the creative work. We’re always gonna have a need for creativity. And to empower and happen to be in a space where you’re gonna spend time to create is very valuable to the future, and to our society and communities.
Jenn: So, I wanna talk about the important … What are those material, what are those overhead costs? So you kind of have an idea, what are those things, the physical things? So we have … You know, if you have a brick and mortar place, if you have rent, office space that is included, office supplies, eating lunch, of course your tools, your equipment that you need to actually produce and create. Do you have office managers? Do you have a need for that-
Doug: Advertising and promotion.
Jenn: Advertising and promotion.
Doug: Taxes and licensing.
Jenn: Taxes and-
Jenn: … licenses, yeah. Especially if you’re selling products. You have the sales tax on top of the federal and income state tax.
Doug: That’s right.
Jenn: And that’s stuff that we really can start getting talking about in the groups on Facebook, and in the members only part. And I am projected to do a more finance driven, that will have all these tax liabilities just kind of outlined for everybody, so they can be better educated. But that stuff is on the internet too. Since I don’t have it for you quite yet, go out there, it’s your responsibility, you have to take ownership. You have to understand people, that you have a necessity, you have a desire that is leading into what other people need, and so it’s very valuable, and very effective when you go at it and you understand everything, so you can make educated decisions.
Doug: That’s right. By immersing yourself into the business side of what you’re doing, and going through the pain of having to learn that’s tuff, you’re ultimately setting yourself free to just be creative at some point-
Jenn: Free, that’s so good.
Doug: … because all those other things, although they’re barring any surprises here and there, they all get automated within you, or within your computer system, either one. And you just don’t understand what’s happening. When you think about stressing, not knowing how to do a portion of the business that’s very vital. You’re stressing about it, you’re wasting your creative energy stressing. So just fricking learn it.
Jenn: Yeah. And ask questions. Get in our free Facebook group and start asking questions. That’s what it’s there for. You’re in the free Facebook group, I’m in the free Facebook group, me and Hilary is in there, Michelle, all these people, we’ve been having these conversations. We’re there for you. So let’s recap really fast on the factors that we went over today, that really led us into setting ourselves up to price.
Doug: Right. My first one was, don’t reinvent the wheel. Try to find information around you, related to your craft, as close as you can get, and really just use that as a buffet for how to select your own pricing.
My other thing was making sure, like we just were talking about, that you’re not just setting your prices for what your cost is. When I mean what your cost is. Your raw material, even your time, that goes well beyond that, and you need to start thinking bigger than that now.
Jenn: Absolutely. [crosstalk 00:24:17]. Right, and I was talking about setting yourself up for success by getting integrated, and touching in with mentors, and understanding how they do business, especially if they are aligned with the same way that you are creating. Or you’re attracted to the way they created, you wanna see if that’ll work for you. Getting yourself surrounded by people that are already in the industry. Cuz it’s gonna both give you experience, it’s gonna give you confidence to actually ask for the price that’s at least market value, instead of undercutting and bringing down the industry as a whole.
And just remember, it’s and industry that you two are also trying to make a living in. So you’re just doing a disservice by undercutting, and going cheap, or free. So-
Jenn: What a great conversation.
Doug: I feel like, waw. I feel like, I don’t know, we’re connecting again, Jenn.
Jenn: We always connect Doug. High five, right here.
Doug: Yeah. We did, you’re right. Hey, you got a call to action for us?
Jenn: I absolutely do, and you guys we’ve talked about it a few throughout this episode, but we have these Facebook groups, and they’re great resources. We have one that’s free, you get in, you join, you can start a conversation. We’re always prompting you to push yourself, and to help you move through a creative journey. And then once you decide to become a member of the Thriv Community, we have a members only group too that’s just a little bit more intimate. And a lot of creatives in there, a lot of potential mentors, a lot of people you can collaborate with, just setting yourself up for success.
But I really suggest, and would love to see you guys all starting to get into that Thriv free group, the Thriv Community, we call it the Thrivsters group.
Doug: I’m a Thrivster.
Jenn: Yeah you are Doug.
Doug: I press like, and love, and stuff on things you know, click.
Jenn: Little “Haha’s”-
Doug: Click, click, click.
Jenn: … every now and again.
Doug: Yup. I’ll do a “Ha ha”. I don’t Lol, but I do H-A-H-A. I’m not sure why. Do you Lol?
Jenn: Yeah, Oh I tot … Come on, who you talking to?
Doug: I don’t remember.
Jenn: I love the love.
Doug: You like to send emojis I know.
Jenn: I do, I do emoji it up.
Jenn: All right. Y’all, thank you so much for joining us today, we really appreciate it, and hope you have a fantastic rest of your day.
Doug: Goodbye Jenn, I love you.
Jenn: I love you too Doug. And I will see everybody, including Doug and myself, in the group.
Doug: Like, peace.