Industrious Illustrating #43 – Profit Margins

Hello, and welcome back to another week of Industrious Illustrating! I’ve been super busy with midterms and midterm projects this week, but now that fall break is upon us I’ll have more time to draw for myself. I’m currently on the grind making new products to sell at Motor City Comic Con, so I’ve been thinking a lot about how much money I want to spend ordering new products and then how much I want to charge for them, which brings us to today’s topic:

Profit margins!

Profit margins are the difference between the cost of producing a product and the amount of money that the customer pays for them — so, the amount of money that the seller gets to take home at the end of the day. Good profit margins vary between industries and products, but generally the profit margin is at least 2x the original cost of producing the product so that the seller can put the profits toward paying for the production of new products, paying for their own living expenses, or both.

For independent artist sellers like myself, we oftentimes charge higher for our products than a large company making mass-produced goods would, as we make much smaller product runs (10-50 of a product rather than hundreds) and invest much of our own time and energy into making artwork on top of running a business, requiring larger returns on each product to justify the expense. For example, producing 11×17″ prints costs about $1 per print and prints of that size typically go for around $20 or more, but drawing the artwork that goes on those 11×17″ prints took many hours, meaning that we’d need to sell multiple $20 prints just to pay ourselves a minimum hourly wage for the artwork we made once costs have been subtracted from revenue.

As a case study of what a typical profit margin for a smaller product looks like, I recently designed these bottle cap pins which I’ve started selling online and plan to also sell at events in future. They’re made of metal, are about 1.2 inches in diameter, and feature the fanart I drew of a popular video game.

Because I ordered 20 of each bottle cap pin design, the per-unit cost was $1.6 — it would’ve been lower per unit if I’d ordered a larger quantity. However, as these were manufactured by a Chinese factory and had to be shipped to an agent for inspection before they were shipped to North America, I had to pay $18 for them to be shipped out of China, and then another $13 for them to be shipped out with another order of merchandise I’d made through the same middleman. Divided across 120 units of pins, that’s an additional per unit cost of approximately .20 cents, which brings the per-unit cost up to $1.8 a pin. ‘

Currently, I charge $10 per pin for individual sales, and approximately $8 per pin for bulk deal sales (e.g. buying all 6 pins together). This means I have about a 4x-5x production cost profit margin on my bottle cap pins. However, as the initial order of pins cost about $200, I’ll need to sell at least 20 individual pins or 4 $50 bulk deals just to earn back my production costs before I actually see a profit on these. Therefore, I was taking a decent risk when getting these produced — but as long as I can sell at least that amount of pins over time online and at events, I’ll be happy with my decision to try expanding my products into small items like pins.

Anyway, I hope that was a decently informative explainer about one aspect of running an art business, and I hope to see you guys again next week!

Industrious Illustrating #18 – Ten Thousand Buddhas

Hello again to another week of Industrious Illustrating!

Last week I tabled at Youmacon with my tablemate Ria, another STAMPS student. My half of the booth was on the left, while hers was on the right. I blocked out everyone’s faces in the below picture to preserve their privacy.

By the end of the weekend, both of us had recouped all of our production costs as well as the cost of the table spot, and we’d made several hundred dollars in profit on top of that. Our total revenue was somewhere in the low four figures range split between the two of us. While we don’t plan on splitting a table again because we could both use the full 8′ table for our displays, we’re both hoping to apply to Youmacon again and table next year if possible!

Anyway, while I’m currently trying to keep up with a deluge of work and deadlines before Thanksgiving Break, I took some time last night to make a quick painted study of a photograph I took at the Ten Thousand Buddhas Monastery in Hong Kong this past summer. I focused on describing the value relationships and lighting as quickly and efficiently as possible rather than letting myself get mired in the details. Hopefully I can find more time to make these studies so that I can brush up on my painting skills and build up a better visual library in my head.

Good luck to everyone working on exams and projects close to the end of the semester, and see you again next week!