My love affair with art began when I was at the beginning of my career and I worked as an accountant at Price Waterhouse (today PWC). I’ve already established that the art world has been a catalyst to propel me out of the black and white world where I lived. My world evolved from black and white to technicolor because of my exposure to artist and art, but it didn’t evolve so much that I wasn’t still keenly interested in “how pricing worked”. Art pricing is a complex topic and today I just want to scratch the surface on some basics. Art pricing rules are filled with exceptions, just like “I before E, except after C”, but let’s start with a foundation, the exceptions will become obvious along the way. After all, art is similar to the stock market, it takes a buyer and a seller. If no one buys the art, the price is somewhat irrelevant. Like the stock market there is a backbone to the prevailing price trends, and like the stock market, it is also subject to human characteristics like greed, stupidity and heard mentality.
Art come in all shapes and sizes and the prices fluctuates widely. So how do you determine if an asking price is a reasonable? The easiest answer is that’s it’s practically impossible to find an answer that is 100% accurate, but there are some guidelines you can apply to see if the price is in a reasonable range.
I can still vividly remember standing in a gallery in Paris in the 80s looking at original works by Andy Warhol and thinking “these prices are a fad”. They aren’t worth this asking price and they will never hold their value”. Boy was I wrong! In 0212, again in Paris, I made a similar mistake with a piece by Japanese artist Yayoi Kusama. We stumbled across a piece of her work that that the gallery priced at about $65,000. In the discussion with my partner, I didn’t see opportunity for significant appreciation. Today, her popularity has skyrocketed and benefited from the increasing interest in Asian art. The price today would be worth over $1,000,000 and it has made for a great story in our relationship about the “one that got away”. The bottom line, I didn’t have the knowledge to see the value in either of these situations. Hopefully today we can fill in some of the gaps if you find yourself in similar situations.
In considering what is a reasonable asking price, the most straight forward situations happens when you are dealing with an artist who has an auction history. The auction records will allow you to see past sales prices. However, this is just a beginning point, and you are still left to decide the relevance of a past price’s impact on today’s market. On a few occasions when buying art from an artist estate we found the asking price was higher than past auction records. In these cases, we had conversations with the gallerists and knowledgeable friends to try and rationalize the price. The auction records also gave us some leverage with the gallerist to ask for a discount on the asking price. In the end, the few times this happened our due diligence resulted in us buying the art. The auction records were a guide, but not an absolute.
I believe that four main categories that influence how art is priced are:
· Medium,
· Recognition by the art world of an artist’s talents
· Popularity of artist and their subject matter, and
· Knowledge of the buyer.
The first category, medium, was the original answer passed on by my first mentor. It turns out there is somewhat of a hierarchy to the various forms of art which in simple terms is (from low to high):
1) Craft objects (generally clay, glass, mixed media)
2) Multiples. Prints and photographs
3) Original one of a kind works of art.
This categorization is used in two ways, when comparing art from different artist to each other and comparing different art from the same artist. The later is probably the most reliable because of the other categories we will discuss in a minute. Neither does this hierarchy mean that all original works of art are more valuable than all pieces categorized as craft. A wonderful ceramic piece by the famous ceramist Ruth Duckworth, will be more valuable than many original works by newer painters.
Two of the other elements:
o Recognition by the art world of the artist’s talents, and
o Popularity of artist and the subject matter.
The quality of the artist as it relates to price is generally determined based on how the art world views the artist’s talents. One scale to consider, might be summarized like this (starting with lowest recognition and building to highest):
1) The artist is self-represented or sold in a “retail store” that does not specialize in art.
2) the artist is represented by one or more galleries (indicates that an independent party knowledgeable about art sees value in the work). This is usually independent of any ownership interest by the artist in the gallery.
3) The artist has had several solo gallery shows or participated in significant group shows.
4 The artwork is part of the collection of several local or national collectors.
5) The artwork has been purchased by local businesses, hospitals, colleges, libraries or schools.
6) Artist has work in museum collections.
7) Artist is collected by a wide range of museums and collectors and has had significant museum shows.
8) Artist has an auction record from known and reputable auction houses.
These factors will have some impact on pricing. As a young artist moves up the continuum, their prices will go up, which is why so many people are obsessed with “discovering young artist” and seeing the value of their collection rise as the artist ascends.
The next factor is popularity. High quality artist can go up and down in popularity. A mentor of mine advocates buying high quality artist when they are not at the top of their popularity. Well known artist like Frank Stella, Jim Dine, and Robert Indiana are just a few names that have gone up and down in popularity. Their popularity doesn’t reflect the quality of the art, but as public opinion fluctuates, prices often go up and down.
Social trends can also reverberate in the art world and create trends which can elevate prices. Many of us find popular trends appealing and it may inspire us to learn and buy art. When buying art that is considered part of a “movement” with a goal of investment, you are safest buying high quality artists. If you are primarily buying because you like a piece and price appreciation isn’t a major focus, young unknown artist you like may be your best option. An example, I started studying and buying the work of black artist like Charles McGee and Gilda Snowden long before the current surge in popularity. As collectors increased attention on black artists a trend materialized and at that point we shifted our focus to several artist we liked who had broader representation in museum collections like Yinka Shonibare and Nick Cave. There is no one way to predict the future, but just go into your decision with your eyes wide open. Not all pieces appreciate the same.
The last item I mentioned, knowledge of the buyer, always helps and it really comes into play when you are buying collectible art. No one wants to be taken advantage. Whether you are buying at a community art-fair or Art Basel we all want to pay a fair price. The stakes get higher as the price increases. Knowledge also comes into play when you are negotiating price. The more you know the better! If you find yourself interested in a piece of art with a high price tag where you don’t feel fully informed to make a purchase of this magnitude on your own, you can engage an independent consultant to help you with the transaction and help with your confidence on the purchase.
I want to circle back to young career artists who aren’t represented by a gallery yet and don’t have an established a roster of collectors, these folks should not be shunned. Every great artist started in this same exact position. This is a time in an artist’s early career when it can be very gratifying to buy their art which literally puts food on their table. Overall, my point is if you love a piece of art, be intentional with your investment. We have tons of work that we love across the spectrum and all are invaluable to us, even if the outside world doesn’t always agree.
My pricing knowledge concerning art is like my price knowledge concerning real-estate. I am also an admitted real estate addict! I follow real-estate closely in four areas of the county. I know pricing trends, popular areas, and availability. When a house comes on the market, I immediately have an opinion about the price and quality compared to other things on the market based on my observations. Today’s blog is intended to extend that same type of pricing knowledge to the art world and give you a pricing foundation. When you see a piece of art you like, do you have the same knowledge as other your other interests (real-estate in my case) to make a conclusion on the price you would pay to but the art.
My final thought, price is relative to all of us but there is no better feeling than taking home a piece of work you love and felling you paid a fair price or invested in a young artist.
Do the elements described in this conversation resonate with you? Do you have a different thought to share with our community? Please share and comment!
From Valerie Parks, check out this podcast from FREAKONOMICS on the art market and pricing from Jan 13, 2022 https://freakonomics.com/podcast/season-11-episode-20/
From Larry
Hi Jeff,
Congrats on this new journey of yours. I’m finding what you’re writing very interesting.
Although I’m an artist, I’m in no way a phenomenal one.
What I’ve found when selling my paintings or my glasswork that the more that you ask for your pieces the more people are willing to buy them. I’ve sold approx. $10,000 worth of paintings in the last four years and the ones that I put a $300-$500 price tag on them seem to sell the fastest. I had a doctor that bought enough paintings to fill his entire office and when I gave him a price of $1500, he wrote me a check without a flinch.
I’m looking forward to reading more of what you have to say!
Again! Congrats Jeff!