How is the price of works of art made up? - this is how you can set your own pricing!

Astonishing prices have been achieved on the art market for many decades. Whether old masters such as Edvard Mundi, Pablo Picasso and Amedeo Modigliani or contemporary artists such as Jeff Koons, Gerhard Richter or Rosemarie Trockel, auctions of their works currently generate revenues in the three-digit million range. Due to the media presence, the prices of established artists are omnipresent. But how are prices for newcomers and emerging artists actually set on the market?

In fact, the monstrous prices at the major auctions at Sotheby's and Christie's are no longer particularly surprising to connoisseurs. Art has long since ceased to be traded just as a collector's or prestige object, but also as an investment and asset. Experts in the market know the factors used to calculate the price of art. In order to be able to calculate the prices of works of art, a certain amount of background knowledge is required. Anyone who spends more time dealing with artists, a movement in art or an era automatically gains deeper insights into the mechanisms that often ensure that the price set for art on the market causes astonishment.

In this article we want to focus less on established artists and instead take a look at the pricing of newcomers and emerging talents on the art market.

How much does art cost – also a question for artists

As difficult as it is for art enthusiasts or potential buyers to estimate the correct price of art, calculating the price is often a challenging task for the artists themselves. How strongly do I value my work and how do I have to initially set the prices in order to survive on the market? Artists who are only at the beginning of their careers and therefore have respect for pricing are faced with question after question.

With a system that is based on several factors, it is possible to set your own prices in a comprehensible manner and to present them quite transparently based on established calculation metrics. This provides security and guarantees that your work will find its place on the large art market. When setting the price of your own work, consideration is also given to possible scenarios in the future.

What options are there to increase prices after successful deals and how does this happen on a meaningful and realistic scale?

1. Pricing art – the relevance of comparison

Where do the artists place themselves on the market and to what extent does this assessment differ from previous sales success and thus the assessment by the buyers? Before the price of a work of art is determined, comparison is always necessary. In principle, the comparison with market prices is not always advantageous, as the so-called artist factor is not automatically shown to outsiders. However, if your own prices are set competitively, then there is actually no way around comparison. At least until artists can set fixed benchmarks for themselves and prices can be determined on the basis of firmly defined variables, artists should orientate themselves on the basis of market research and discussions with experts.

To compare and assess your own work, we recommend visiting exhibitions and galleries, but there are now also a number of platforms online that offer a stage for well-known and widely traded artists, as well as up-and-coming talents. The websites Singulart , mis.art or studenten-kunstmarkt are examples of platforms that are known to a diverse clientele and are therefore good for an initial, careful assessment of your own work. The pricing of works of art takes on more and more shape the longer we look at the current prices of comparable artists on the market. However, many artists who are still at the beginning of their careers notice when comparing that there are factors that are not visible at first glance and require more intensive research. The key word here is artist factor.

2. The artist factor – what it means for art prices

The price of a work of art is often based on the so-called artist factor, especially when working with galleries. This is a variable that is usually multiplied by the size or dimensions of a work of art in order to determine the price. So width plus height times artist factor. This factor, which is not used by all galleries, has the advantage that, on the one hand, the price calculation is based on a comprehensible system and, on the other hand, it ensures consistency in pricing.

The artist factor is based on numerous data, which are, however, interpreted or handled differently on the art market. In most cases, previous sales and exhibition successes and the overall reach of the artists are used as calculation factors. Gallerists often also use forecasts that include an assessment of future price developments. In general, a factor of 3 to 4 is expected for up-and-coming artists who are new to the market. For example, if the work of art you are looking at has dimensions of 100x100cm and you set an artist factor of 4 for yourself, the calculation is: (100+100)*4 = 800 EUR.

When classifying the value of works of art, the artist factor is sometimes viewed critically, as the basis for evaluation is not always fully transparent. Large galleries in particular are moving away from this system more and more and for relatively well-known artists, market demand usually determines the price more than resorting to the classic calculation formula.

I personally see this type of pricing as just a helpful component of my calculation formula and I incorporate other factors into my pricing.

3. Do your own analysis – use social media as a powerful tool when pricing art

How and whether a new work of art that is to be put on the market will be received by potential buyers is generally difficult to assess. At least that's been the case so far. Today, artists have a powerful tool at their fingertips: social media. No matter whether Facebook, Instagram or Pinterest, for example, all relevant platforms now have strong evaluation options that are easy to use even for artists who are less tech-savvy. They offer insights into the target group, the reach and the interaction rates and thus provide important input for the pricing of the works of art. Which works of art were particularly well received, which received the most likes or was perhaps even saved or shared? Such information offers important key figures in the age of digital media and gives a good overview of the relevance of the works of art based on expressions of interest.

In addition to the classic variables such as artist factor and dimensions, I also take into account the interaction rates of my various series and published works when pricing my work. So the price is determined not only by me and the factors established on the market, but also by the people who follow me.

4. The price development with regard to the future

Finding the happy medium in terms of price is not always easy, especially for artists in the early stages. If the prices are set too low, the necessary appreciation is sometimes lacking, and low prices also mean that the prices have to make big jumps as the artists' success and relevance grow. Loyal customers don't always follow along and important regular customers can be lost.

However, if the prices are set too high from the start and the artist's reputation has so far been lacking, this step is often interpreted as overestimation of one's own self and, in the worst case, the sale of one's own works will not really take off.

The best advice is to set prices quite high, but appropriate and fair, and to initially base your prices on comparable market prices. As sales numbers increase, prices can then be continuously adjusted. Demand also determines the price in the art market.

The more transparent you make your sales, the more understandable your price adjustments will be for interested parties. For example, it is very common on social media platforms for artists to publish the sale of their work. I increase my prices especially when I have sold more works than I have produced in this period.

Adjusting prices after publication understandably causes confusion for attentive observers and can create an unprofessional impression. The same also applies to discount campaigns common in traditional retail. These may possibly lead to better sales of individual works, but they tend to have a deterrent effect, especially for art collectors.

A conclusion on the pricing of works of art

The more information and data available through research and your own experience and evaluation, the more key points there are on which the price can be determined. Setting prices in the dark usually goes wrong. What is needed is a comparison and a price framework that allows for sensible and scaled growth. If artists seek opinions on the pricing of their own works, the people selected for this task should be as broadly positioned as possible and have a lot of market experience.

My tip at this point: Anyone who has difficulty dealing with business mechanisms and pricing policies in particular or does not want to spend time researching is well advised to seek external support. The focus should be on creation and creating exceptional works of art. Every person is equipped with different abilities and will be especially happy and creative when the focus is on what a particular passion can be developed for!

The question still remains open as to whether artists should communicate the prices of their works of art transparently on the website. Since this question is very important and also more complex to answer, I will publish a separate blog article on this topic.

If you don't really get anywhere with the topic of pricing, please contact me using my contact form and we'll see if I can support you or put you in touch with a suitable contact to develop your prices.

 


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