How to determine the 'right price'of an artwork?
This is a question that has plagued many an emerging artist, dealer and gallery. It is also one that every art collector should ask before purchasing an artwork. Art is one of the few purely ‘subjective products’ available in the market today. It is difficult to price art on the basis of ‘brick and mortar’ components alone – infinite elements like creativity, appeal and technique have to be taken into consideration. At auctions, an added element of the collector’s ego to own an artwork comes into play in pushing up prices for an artwork that would otherwise not be paid by the same collector in a gallery. There can never be an exact formula to determine the ‘right price’ of an artwork, but in this article we offer you the main variables that come into play while pricing art.
Pure Economics: There are those of the opinion who believe that the value of an artwork can be determined by a simple addition of various cost components to the artist. These include the basic cost of canvas, paints and other materials. The cost of rental of studio, exhibition hall etc; total the number of hours it took to complete the artwork, multiply that by the hourly wage one would perceive the artist’s time is worth. Add to this total 33% as gallery commission and you would have reached a ball park figure for the artwork.
Comparables: Another good way to reach a decision on the right price would be do some research. Find comparable artists who have similar level of training and education in art, create art in a similar genre and are contemporaries. There should be competitive pricing of the artwork under consideration, to be able to attract buyers.
Experience: It is but common sense that an artist who has had more shows, been represented at auctions and has a good demand for his artworks, would price them higher than one who is having his first show. Along with that, we would like to use ‘experience’ as an umbrella term that would also include the prestige of the art school attended, critical reviews of the artist’s works, awards that the artist may have won, participation in international art fairs, exhibitions etc.
Laws of demand: Even as we refer to the art ‘market’, it follows certain basic laws that are applicable in any marketplace. The demand for an artist’s works would necessarily determine the price and also consistent price hikes. Demand for art can be quantified by assuming that if at least half of all the artwork produced by an artist is sold within a six-month period, his/her art is in demand, such an artist would be justified in a 10-15% increase in his prices annually.
Availability: Supply also plays a factor in determining prices; for instance the prices for an artist who can produce 10 works in a month would be lower than for an artist who painstakingly produces only 3 artworks a month. Moreover, if the artist is no longer alive then of course, prices would sky rocket.
Realistic: For an artist, dealer or gallery to maintain any credibility in the art market, pricing of artwork has to be realistic. While art buyers may bargain for artworks, the buffer maintained should not be more than 20%.
Emotional Connect: Sometimes an artist may make the mistake of pricing art according to the emotional connect he feels with the work or the angst he experienced while creating the work. An artwork should not be priced based on emotions – the artist cannot play on the fact that the subject is close to his heart or connected to his life and thus hike the price up. The buyer also need not be swayed by the artist’s emotions, if the artist has an emotional connect with the work then it should not be up for sale.
Of course, art also tends to follow the vagaries of the global market, so one does have ‘boom’ periods when prices escalate beyond reasonable levels and then ‘bust’ periods when depression hits.
One cardinal rule for all artists is to maintain consistency in their pricing, they cannot have a different price for a gallery and a different one for ‘studio’ sales; else they could well find themselves struggling on their own with neither gallery or art dealer to support them. This consistency in prices also helps to build buyer confidence in the artist.
Fast Facts to ‘right price’ of art:
- The costs of materials, rentals, artist time, gallery commission are the main ingredients to pricing of art
- Laws of demand and supply work in the art market
- Pricing of artists practicing similar genres and having similar experience levels should be comparable
- The more experienced and appreciated an artist, the higher his price
- Artworks are priced according to quality of the work and not emotions of the artist
~ Razvin Namdarian