If you missed our project budgeting class last week, I thought I'd share some of that information on the blog this week.
We often think of project budgets in terms of either what the Client is looking for (finished product components) or what needs to be purchased to bring the project to life (supplies and materials). In the event that we even submit a budget to a Client, it is a condensed version with very few broken out categories.
However, there are many other items to consider both for properly pricing projects and for ensuring we make a profit. I’ll walk you through the categories we use to guide budget creation and evaluation here at Art Beyond, and include some helpful notes.
Before I dive in, I want to tell you 3 things:
The best way to set up a budget is the way that works for you. If it doesn’t work for you, you’re not going to use it, and then it is no good at all.
A budget is an EARLY project activity and your budget should be a LIVING document.
Budget creation should be one of the first things you do for a project. This will ensure it is viable and profitable (or you at least know what you’re getting yourself into).
Your budget should be updated and changed as you adjust for the real world application of your project.
I am not suggesting that you nickel and dime your Client; I am suggesting that you use the following information in your own “back of house” budget to ensure you will come out of it feeling good about the project, the price you charged, and your potential profit.
With those points in mind, here we go…
Budget Categories we consider at Art Beyond:
Supplies/Materials
Include 100% any special purchases, even if they will outlast the project
Include the cost of replacing materials you have on hand
Contract Labor
Calculate using estimated # of hours
Figure out the maximum amount you can afford and have a contingency plan to complete the project if you run out of funds to pay help (hint - you’re going to have to do it yourself or pay additional money for additional help)
Equipment
Rentals and/or accounting for special equipment you own
Ex. If you own a Glowforge, a lift, etc, you should include a fee for the use of your equipment/wear and tear.
Business Insurance
Every artist should have a general liability policy
You should consider the amount of time you will be on this project and include that portion of insurance in your budget.
Ex. My business insurance is $45 per month. If the project takes 4 weeks (one month), then I should include $45 in my budget toward paying business insurance.
Legal Fees
You should use your own contract for projects
You can have a standard contract for commissions, murals, etc that has interchangeable clauses for specific situations.
When should you have a contract created for your use?
As soon as possible.
We HIGHLY recommend Katherine and Rob at Implement Legal for all of your Creative Business legal needs, especially contracts.
Fabricating/Printing
Are you fabricating pieces for your project/installation/commission?
Will using stencils make the work faster?
Do you need special hangers?
Will you have to pay a rush fee to keep your project timeline?
Research Expenses
This is not a cost to pass on to your Client, but it is one to consider when thinking about how much you will profit from a project.
Do you need to take a class? - this is a tax write-off!
Are you going to spend 8 hours looking up a technique? - this is not a tax write-off, but your time is valuable.
Mockup and Revision
This is a required part of the project but you need to account for your time and efforts
The more decision makers involved, the longer this process may take.
Be aware of this with Corporate Clients
Meals
This cannot be “passed on to the Client” but should be considered when thinking about your potential profit.
Are you planning to bring water on-site for sub-contractors?
Do you plan to treat everyone to lunch after the project is complete?
Travel
Big travel should be negotiated with the Client if possible
Your personal/team travel to out of town projects
Transporting parts/pieces for out of town projects
Some shows/grants/government funded projects do not allow a stipend/reimbursement for travel and this must be considered
Consider your travel differences for in town projects!
Will you spend more on transportation during the project?
Project Contingency
This is money set aside for unforeseen expenses/delays
10% is standard amount (on a $10,000 project, you would set aside $1,000)
This money comes back to artist if not used
Project Management
This line item can sometimes be passed on to the Client (especially for large projects)
Allows you to show up and create
Bookkeeping
Help to track your project expenses
Can feed those numbers into your overall business budget
Assists you in making good project decisions as the budget adjusts for actual circumstances
Using these categories, your “back of house” budget might look like this:
In addition to a good budget, an accurate project timeline is critical. Delivering projects on time is crucial for fostering good Client relationships and maintaining your reputation. You will also want know when to expect payments and when you can schedule your next project.
Mockup & Revision Approval
The time it takes to get a mockup completed and then make requested revisions can vary and should be considered when making a budget and a project timeline.
Is your Client easy to communicate with?
How many decision makers are involved?
Access to Jobsite
If the jobsite hours are limited, it will affect your working hours and how quickly the project will be done.
Some sites are restricted to unused hours
Weather Days Contingency
It is important to consider what weather is expected during your project timeline and what impact it will have on your ability to get the project completed.
Will it be too cold to paint? Too hot? Too wet?
Live Construction Contingency
If you are working on a live construction site, you will spend time waiting on other trades.
Fabrication Timeline
If you need pieces fabricated, will you have to pay any rush fees or perhaps need to select a more expensive fabricator with availability to work you into their schedule sooner?
Hire Assistants
Is it worth the cost of hiring assistants to get the project completed more quickly?
Are there other creatives that you can pay to provide services that you are not as proficient with?
Yes, hiring assistants costs money, but it can make the timeline more compact, enabling you to move on and make more money on another project.
The bottom line is that budgeting and tracking actual income and expenses is an important part of running successful projects and a successful business.
Have questions? Art Beyond can help with that.
We offer both project specific and whole business bookkeeping services for creatives.
We also offer creative business consulting services and we’d be happy to review a current or past project budget with you.
If you have questions, or want to talk about any of Art Beyond’s offerings, feel free to email me: esther@artbeyond.org
❤️- Esther
Check out our all of our classes HERE.
Have a specific question(s) for Elizabeth or me? Book a 15-minute "Ask us Anything" Consultation available HERE.