As artists, we’re asked to be experts in a lot of different fields.
Not only do we hold the creative vision for our work, but we also have to be marketers, teachers, secretaries, amateur lawyers, and the least exciting of all—bookkeepers.
For most artists, money can be an emotional topic. But it doesn’t have to be.
If you are committed to making a lasting art career, you will need to understand the expenses that come along with your art practice so that you can get a real picture of your net revenue.
Luckily, Artwork Archive makes it easy to not only track the expenses related to your art business like marketing expenses and studio rent but they also just added a feature to easily track the individual production costs of each artwork. This means that you can now get a closer look at understanding the true cost of each painting, sculpture or installation so that you know how much to price and what artworks are most profitable for your business.
Why it’s important for every artist to understand their expenses.
At its most basic, everything you spend money on for your art business is an expense. It’s so important to keep track of all these items in order to make informed decisions so that you can get a clear picture of how much you are actually generating from your business.
It also takes some of the emotion out of pricing your artworks. Knowing how much each artwork cost to produce helps you price each piece from a more objective perspective. It can also help you hold firm to your pricing in the face of a price negotiator and see ways in which you can cut back on costs.
And perhaps most importantly, knowing your expenses can help you better predict for the future of your art business. As artists, we don’t rely on a steady paycheck. There are busy months and months that see just a few sales trickle in. Knowing what your expenses in the past have looked like can help you budget for your future.
How to get started understanding your art business expenses.
With Artwork Archive, you can easily enter expenses tied to each of your artworks as well as more general expenses.
Each time you enter an expense tied to your artwork, you will see a figure for the total production costs, sale revenue and revenue - costs.
What do these figures tell you?
Total Production Costs: This number is exactly what it sounds like. It is the sum of all the individual expenses tied directly to this particular artwork. Your canvas, framing costs, fabrication costs, and anything else will be added together in this sum.
Sale Revenue: Your sale revenue is strictly the amount that you made from the sale of that work (minus any commissions and discounts).
Revenue - Costs: This figure tells you the final profit that you made from the sale of the artwork minus the commissions, discounts, and material costs.
When adding your expenses in Artwork Archive, it is also important to categorize them for accounting purposes.
Having accurate records about these categories become important at tax time so you know what you can write off and what is a business expense.
You can find a full list of the categories that you can track for your taxes in Artwork Archive here. But, a few of the categories you can easily assign to your artwork expenses in Artwork Archive include commissions & fees, supplies, fabrication, framing, services, and shipping.
By using these categories, you can filter each of your expenses to easily total the amount you have spent on fabrication costs or framing within a certain time frame.
What happens after you enter your expenses?
If you’re currently using Artwork Archive to manage your art business, you can easily manage your bookkeeping as well.
Say you are working on an installation for a new hotel in your area. After you document the work in photos and record all the details about the artwork such as dimensions, location, and any notes about the work, you can associate costs with the artwork.
If you purchased paint or materials specifically for that work, you can enter them as an expense. If you hired someone to help create a part of the installation, that’s a fabrication expense.
After you enter those expenses and their categories, you will see them not only attached to the artwork record but also in your “Revenue and Expenses” tab on your account.
Not only can you see an overview of each expense category, but you can also easily generate an income report to get an idea of your overall profit.
Benefits of tracking your expenses
Now that you have an idea of what you’re spending and how your spending relates to your income, get savvy. Do you need to tighten expenses? If you do, here are some questions to ask yourself when evaluating costs that you are on the fence about.
Does this expense create enough profit over time that it’s worth paying for?
What line of work is the most profitable after expenses are considered? Should I make more of that line of work?
Is there a less expensive way to do the same thing that this expense allows me to do? If so, will the quality of my work-around be comparable?
What value does this cost provide?
Likewise, sometimes spending more is just as important as cutting back on expenses. If you’re thinking about how to intelligently invest in your art career consider the following questions as you evaluate a potential new investment.
What is the financial cost for this potential expense? Will I be okay if this investment doesn’t pay off?
What new value will this investment provide to my art career?
How is this investment similar to or different from other expenses that have been a part of my art career?
What is the timeline for being able to see this expense come to fruition?
The bottom line
Tracking your expenses is not just about making sure that you don’t lose money while building your art career. Tracking your expenses allows you to thoughtfully shape your art career and align your finances with your art career goals.
No matter where you are on your art financial journey, you can continue to benefit from staying on top of tracking your expenses. The best advice? It's better to start early and to stay consistent. It's much harder to retroactively try and sort through receipts to catch up with past expenses.
As you keep tracking expenses and learning the ins and outs of your finances over time, it will become easier to make it a habit and the insights will become more powerful.
Want to start managing your art business expenses?
You can try Artwork Archive, the all-in-one platform for artists, free for 30-days. Artwork Archive is the leading platform for artists to manage their art business, including their artworks, expenses, contacts, and galleries all from the same place.
From inventory and consignment reports to sales and invoices, contacts management, and location tracking, Artwork Archive provides all the tools you need to get organized and manage your career.