I have always struggled with the dark art of pricing artwork. Weird magic is involved. I have seen an interested buyer lose interest when I quoted a price that was too low. Oops, I mean… All of a sudden the aura of the work was gone. How could I be a serious artist if I was willing to sell for that price? Could it be that it certain cases, raising the price actually increases the demand?
I was talking about this recently with a friend and he told me an anecdote about a wine seller who had an overstock of a particular wine. When putting the wine on sale didn’t help it move, he greatly inflated the price and suddenly it began flying off the shelves. Does more expensive wine taste better? This Freakonomics podcast explores this question with surprising results. I thought my unsophisticated palette was to blame for the fact that I can’t tell the difference between five dollar and fifty dollar bottles of wine. Turns out I’m not alone. In blind taste tests, the experts may be just as clueless. I think wines with cool labels taste best.
I have discovered that there is something in economics called a Veblen Good, a luxury item for which price equates quality. Art can fit into this category. Economists in the house, please comment. My knowledge of the subject is confined to my recent Google history, but I’m happy it has a name.
At any rate I’m trying to make the best paintings I can. Below is a painting I recently completed. It can be yours for ONE MILLION DOLLARS.
Jamie
on 01 Apr 13Nate, my friend had a similar experience at Art Basel Miami Beach. He was fortunate enough to show work there. He priced one of his pieces at $1,500. The dealer gave him some advice: no one would consider it at such a low price.
So they priced it at $30,000. Sold.
Jason Clark
on 01 Apr 13I’ll give you 2 million so I can feel even more special.
Brad Patterson
on 01 Apr 13The wild truth is that pieces much more impressive, and much less impressive do indeed sell for one million dollars… it’s the storytelling behind them that gets them there… the dark art in some cases.
What’s the storytelling behind this one on the 1st of April?
Mark
on 02 Apr 13There’s no magic, dark or otherwise. Art is worth whatever someone is willing to pay for it. The magic that was involved here is in your ability to create something that intense.
Regardless of whether this is April 1 shenanigans, or not. Show it to the right people, and you can probably name your price.
Mattso Bondo
on 02 Apr 13I think this work is very good, but my 12 year old daughter does abstract paintings of building that are brilliant as well. I talked to here about it and she says if anyone wants to save $975,000, she would be willing to sell one of hers for $25K.
Jared
on 02 Apr 13Wondering what the price’ll be tomorrow…
Benjamin Chait
on 02 Apr 13Art, like most items, is subject to what a person is willing to pay. Curiously, it seems to me that art is a relatively pure form of capitalism with fewer impositions or restrictions by governments than other industries. Maybe that makes it feel more like magic since no one is supporting you through subsidies or creating a price ceiling—other than you and your buyers.
Daniel
on 02 Apr 13On a related note, this TED talk gives some psychological insight on the perceived value of things.
Meelis O
on 02 Apr 13It’s actually the only reason why I would consider doing branding (instead of just marketing or advertising in general). If branding wouldn’t add any psychological value (pleasure) there would be no point. In other words – branding is not a deception. Pricing can be (and is) part of branding as well.
Paul Christian
on 02 Apr 13Art indeed is what people are willing to pay for it, but that works in coherence with other very important factors. The name of the artist, his fame (well known), whether he/she’s alive or not (seems to add quite a bit the the price), the story about the work, and the amount of work the artist has produced. Again, limited supply also makes the price rise. On the other hand, within the art ‘industry/sector’ art prices are very much being manipulated to the point where it would be completely illegal in any other industy. I’d recommend you google ‘The Great Contemporary Art Bubble’ for an isightful look at this process, or read ‘The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art’.
Michael
on 02 Apr 13I had a marketing professor in college who worked for Colgate-Palmolive and P&G for many years. Apparently there is a billion-a-year household item she rescued from the trash heap by tripling its price and changing the colors of the packaging a bit. She wouldn’t reveal its name and I’ve been trying to figure it out since. I’ve also experienced this when selling consulting services (and sometimes it’s exactly like art in that the value is entirely in the mind of the customer.)
GeeIWonder
on 02 Apr 13To be slightly more pragmatic…
Lots of people buy art for eventual resale and/or as a tax shelter. It’s basically an investment. They want Class A shares with a limited supply , voting rights and a known high value—or at least the full faith and credit of the artist. That’s because they’re inherently more valuable as an investment, not because they are prettier or make me happier. Also, lending a 50K piece of art is easier than a 1K piece of art.
I don’t see a convincing case you have to look beyond those clear motivations for the psychology element here, though I suspect it does also exist.
test
on 02 Apr 13test
ecbp
on 02 Apr 13The Hype Cycle opened my eyes to how art (among other things) is valued.
Jonas Bruun Nielsen
on 02 Apr 13Hilarious. Great post, Nate!
Jared
on 02 Apr 13One thought might be that when art is listed at $1,000 it is in the price range that would only really appeal for the middle-class. The average person doesn’t care for art…or at least doesn’t find it high enough value to purchase it for $1,000. Those who do care about art, might not care about authenticity and opt for prints for ‘decorating’ their home since $1,000 dollars can go a long, long way for us.
$30,000 or $1,000,000 brings the piece into the rich/wealthy class. Now it has dark magic since it’s unattainable by the middle class and it now has an aura of status. Now it has rarity value/status, because other people can’t get it (it’s original so you can’t have this one and pieces from the same artist are 30k).
Nate Otto
on 02 Apr 13Thanks everyone for your insights. Pricing is difficult for every artist I know.
The piece I shared in this post is currently on its way to California. I’m heading out to L.A. tomorrow for the opening of a group show I’m participating in at La Luz de Jesus Gallery. If you are in L.A., you should come by on Friday April 5th to see my work and the work of 28 other amazing Chicago based artists. All of my work in the show has already sold so I’m sending some more work out there so I have something to give to potential buyers.
The venerable art critic, Jerry Saltz, is a voice of reason in the crazy, often gross, world of art. If you are interested, be sure to check out his sane observations on art and the art market.
Erich
on 03 Apr 13I’ve seen this in software. A vendor I dealt with in the corporate America raised the price of a particularly development tool ten-fold and found that large development corporations began to take much more serious interest. Same product only 10-times more expensive.
Michael Yacavone
on 04 Apr 13You might be interested in the book, Status Signals: A Sociological Study of Market Competition, by Joel M. Podolny. It addresses the topic at hand, and has the additional benefit of being written by the guy Steve Jobs hired to develop Apple University and transmit the “Apple Culture” to future generations of employees.
Sen
on 06 Apr 13@Nate All of my work in the show has already sold
Congrats on becoming a multi-millionaire? :)
But congrats for real. I used to date an artist and I know how hard it is to organise your own show and sell any kind of art.
Tiana Kai
on 07 Apr 13Where do I mail the check?
I had the same issue with pricing my own work. I got the hang of it after a few months of selling, then ended up helping some friends’ pieces as well. Sometimes you test it out and go for it, see what happens. A sell always feels good!
Navin Harish
on 08 Apr 13I am sure you must have come across the “Chivas Regal Effect” If not, do check it out.
This discussion is closed.