Artists profit from pricing strategy
Recent government cuts to arts funding – including what the arts community has labelled 'Black Friday' – mean arts organisations are having to think of new ways to sustain their programs.
Studio A, a social enterprise that supports artists living with intellectual disability, has sought the expertise of postgraduate UTS Business School students through community engagement program UTS Shopfront, to develop a pricing strategy for its Artisan Props Collective program. The program provides custom-made sculptures and props for corporate or private events.
“As a social enterprise, revenue derived from our activities is invested back into the organisation to increase artistic and social outcomes,” Studio A’s Artistic Director Gabrielle Mordy says.
“We have been producing decorative sculptures for events for around three years, but we don’t have any thorough market research or strategy in place to inform the prices we’re charging.”
“As a social enterprise,
revenue derived from
our activities is invested
back into the organisation"
Students in the subject Pricing and Revenue Management conducted extensive research to determine a financially viable and sustainable pricing strategy.
“Currently, the revenue generated from Studio A’s Artisan Props Collective program doesn’t cover all the costs, and at times even fails to cover the costs of production,” student Laura Diago says
“We wanted to create a pricing strategy that is personalised for customers and that will generate profit for Studio A.”
The group surveyed 30 in-house event managers and studied target segments and consumer behaviour at each stage of the purchase process, as part of their research.
They found that the difficulty with pricing Studio A’s Artisan Props service is that there are so many variables involved.
“We came up with a Price-Cost Simulator toolthat can easily be used to determine
the price of all Studio A’s client jobs."
“Each product has different costs and parameters – the size, materials used, if installation is required and the level of complexity to produce the item,” team member Cesar Baptista says.
“We came up with a Price-Cost Simulator tool that can easily be used to determine the price of all Studio A’s client jobs. All they have to do is insert the information and requirements of each product and the tool will calculate the optimised price.”
The group also proposed a bottom-up approach to pricing: how much are customers willing to pay and what can Studio A offer for that price?
The students suggested a pay-what-you-want strategy to generate additional revenue from Studio A’s range of ready-made, rather than customised products, as well as bundling options for corporate clients that want to support artists with an intellectual disability.
“The group’s report and recommendations are excellent,” Studio A’s Online Marketing and Development Coordinator Harriet Body says.
“Not only did they present us with the user-friendly Price Cost Simulator, which we are excited about and will definitely be trialling, they also had a deep understanding of the Arts sector and the difficulties we face in pricing.”
The Studio A pricing project is part of the UTS Shopfront Community Program that connects community organisations with skilled student teams.
“Not only did they present us with the user-
friendly Price Cost Simulator, they also had
a deep understanding of the Arts sector
and the difficulties we face in pricing.”
As well as enabling organisations to build on their expertise, the program allows UTS students to gain valuable experience in a professional environment, and to see alternative career paths into the community sector.
“The Studio A project allowed students to use the processes they have learned in class in a real-life situation so they can develop a deep understanding of how to approach pricing,” pricing strategist and subject coordinator John Burke says.
“This group showed that they really understood their client’s requirements and capabilities.”
The Studio A pricing project comes off the back of another successful UTS Shopfront community project with Studio A, which involved students in the subject Management Consulting develop a licensing strategy for works created by the artists.
The strategy meant the artworks could be turned into commercial products, increasing income for Studio A and directing profits back to the artists.
For more information about UTS Shopfront, click here.
