One of the many challenging things you deal with as a gallery owner is the pricing of art, and no matter the price, art always seems to be expensive because it isn’t a necessity. But I’m fairly certain there is another factor driving our perception of goods as expensive; on some level we unconsciously assume we would enjoy more of them, including art, if the producers and sellers weren’t profiting so “grandly”; after all, they’re in the luxury trade, aren’t they? The truth of the matter is that art collecting is the domain of the prosperous and if you’re going to collect you need to understand how it works.
Just as in any endeavor, there are greedy and manipulative people in the art business. But putting this to the side as an altogether different subject, I would like to give you my thoughts on how art is priced and how I would encourage you to think about it.
Since there would be no art without artists, let’s start with them. Artists have to make a living and unless they are rich and just amusing themselves, the art they make and sell must cover their costs of living; which include food, shelter, utilities, health care, transportation, clothing, insurance and miscellaneous expenses. Add to this the costs of their materials, which for painters include paints (small mid-quality tubes of oil paint cost from $6.00 to $30.00, while some tubes of good quality oil paint retail for $199 depending on the pigment), pencils, pastels, paper, stretchers, canvas, gesso, and studio models; for photographers: cameras, computers, software, printing and framing, and travel to locations; for sculptors: metals, machinery and castings. The maintaining of a studio is another expense they must undertake and this includes rent, utilities and upkeep, to name only the basics. Finally, there are the costs involved in marketing and preparing for shows. These include professional photography, creating and updating a website, framing, pedestals, shipping and art insurance, travel, entertainment and time.
We must also factor in the cost of education and the years and sacrifice that are necessary for an artist to develop their skills, craft and vision to the point where they can make a living from their art. It has been my experience that the majority artists don’t, or can’t, hit their stride until their late thirties. Because artistic development involves exploration and changing direction, often many times over, art sales are generally hit and miss during this formative period. Thus for every artwork that gets sold during those years of finding one’s voice many more will go unsold resulting in a lot of unreimbursed expense and time in their creation. This has to be offset through the pricing of artworks that do sell (more about this later), from either alternative means of financial support and/or living and creating on a shoestring. In my case, I lived with my parents for four years, just to stay afloat while I started the gallery. This allowed me to keep the prices lower during that period, but once I was on my own I no longer had that luxury.
The other basic element that figures into the price of art is the cost of representation and marketing. If an artist works through a gallery, the gallery has its own expenses, which include rent, utilities, advertising and PR, computers and software, accounting and credit card merchant fees, insurance, photography, website, framing entertainment and salaries. The duplicative nature of these expenses can be avoided if the artist sells their work directly, but the cost of marketing and the time it takes doesn’t go away and without the benefit of a gallery representation, artists must find and front the money themselves. By selling art directly from their studio an artist can lower their prices vis-à-vis what they would sell for in a gallery, but as you can see there is a tradeoff. More problematic for an independent artist is that if they want to be taken seriously by the art market and have any chance of becoming part of the complex and sometimes distorted dynamic of “investment art” he or she must have gallery representation to give them shows and access to collectors; the positive aspect of this is that gallery representation also gives them more time to create, which is what an artist wants to do.
The fact that art will never be a necessity is another crucial factor in its pricing. Whether you’re spending $300, $30,000 or $3,000,000; money spent on art is money that isn’t needed for life’s basic expenses. However, just because an artist is creating a luxury their expenses don’t go away and throughout their careers there will be periods when what they create will not sell well and what sells has to offset what doesn’t. The lack of sales happens for several reasons: the art isn’t in line with what people want; the artist is in the process of changing direction; the artist reputation is suffering; the economy doesn’t support luxury spending, or ultimately, the reality that too few people appreciate art and have the resources to purchase enough art to offset the costs of making it. Unlike smartphones, a product that everyone needs and one that easily finds buyers in the current market, art rarely sells out; supply and demand work differently and collectors pay a premium for the quality of the work and the joy of ownership.
It’s a nice idea to think that artists would sell everything if the price of their art came down. But the truth is that price does not make a luxury into a necessity or drive desire for art. Yet when we see an artwork priced at $30,000 we reason that if it were priced at $3,000 people would line up to buy. The reality, however, is far different. Given the same conditions, the same buyers would mostly be lining up because they hoped to pocket $27,000 on the transaction. Of course the truth is that the effect of lowering the price from $30,000 to $3,000 would wreck both the artist’s and the gallery’s reputations and the market would have to be rebuilt from scratch. It would also destroy the market value of all works by that artist that had previously sold; much like what happens when mortgage comps in a neighborhood fall dramatically.
From my experience there are only two ways you can buy “inexpensive” art. You either purchase it from novices or Sunday Painters who don’t need to make a living from their sales and are simply happy be noticed, or you collect art by deceased artists that are (perhaps only temporarily) out of fashion. Either way, the costs of living and maintaining a studio have been removed from the equation. However, any artist who takes their art seriously and wants to continue to create will have to set a price that figures in the costs I have listed, and they will do this even if they don’t have to make a living from it. They do this because they know that art buyers compare what they understand and part of this equation is the value the work has in the market. A good artist who undersells their work will not be taken seriously for very long and will not have any chance of moving into the bigger leagues where image, and maintaining it, are a costly enterprise.
There is no doubt that high prices create a perception of exclusivity, but lest you think that artists and galleries simply consider expenses and then inflate the price to create an image of exclusivity let me stop you now. Any serious art professional looking at the long term understands the economic reality that every buyer wants to be treated fairly. They know that over pricing art will quickly put you out of business.
Another reason art seems “expensive” is that so much of what we use and buy today is mass-produced that this has distorted our perceptions. As much as a collector may love and appreciate an artwork, our production mindset makes it easy to forget that art is made by hand; the process is incredibly time consuming and getting to the point where an artist is popular with collectors has involved considerable time, expense and sacrifice.
At TEW Galleries we want the art we sell to be as accessible as possible and we work to find a happy medium between more established artists whose prices are higher and less established artists with lower prices. But we know our clients’ tastes, the kind of art available in the market, the reality of how few artists will make it through the late-thirties developmental curve and what it takes for an artist to create and build a long-term career. Thus to get fixated on lower prices is a surefire way to compromise our ability to sell and your opportunity to collect truly refined works that reflect a personal vision. Let me, however, be clear; I’m not disparaging young artists, low prices, or taking a risk on both. But in general terms, to believe that you are getting more for less would be wrong headed and ill-advised without having a lot more information. The old adage: “You get what you pay for is still valid.
Today, with all of the media splash about art going up in value, we’ve come to want to believe that any contemporary art we buy is, or should be, an investment. This perception is aided by the ever-present fact that many big name contemporary artists also have big reputations and huge prices. It’s important, however, to understand what sets these artists and what they create apart, so you, as a collector, or as an artist, can decide if investment is what you’re about or if your primary goal is expressing your individuality. I am not implying that these two things have to be separate, but it’s wise to understand what makes them the same and what makes them different.
The things that contribute to making a contemporary artist an investment:
No. 1 Current Taste: The ability of an artist to express the prevailing taste of the people who control the investment art world is crucial. These individuals and players include auction houses, critics, media, museum curators and billionaire collectors. Let me be clear; they have diverse opinions, but, in the end, their collective attitudes form an overlay of what is trending as important. Being last, or next year’s sensation, won’t be much help because the prices will be speculative, as, in truth, all investments are.
No. 2 Perception and Image: The question of perception and image haunts how anything is seen. If an artist doesn’t naturally, or can’t, do what it takes to fit the image desired by the power brokers, they will be excluded (gender, race, age, nationality are the easiest examples). This doesn’t mean authentic, strange and oddball characters don’t break through the barriers of taste, and it equally doesn’t mean that an artist won’t rise in the future, but we’re talking about today’s contemporary art.
No. 3 Pedigree: An artist’s pedigree is a powerful means to access investment status; and pedigree includes education, connections and personal wealth. (Here is an article I encourage you to read. “Do you have to be rich to succeed as an artist”) By itself a pedigree isn’t enough, but if you can combine it with one or more of the other factors, you might be well on your way into the investment category.
No. 4 Marketing: Marketing influences everything we do and if you do enough of it you can alter perceptions and access collectors and opportunities. Let me, however, remind you that if Mercedes didn’t have to pay for marketing and advertising, its cars would be far cheaper. It’s the same with art.
No. 5 Willingness: If you’re willing to edit or change your art and/or you have the personality and stamina to engage in the self-promotion and marketing necessary access to this high flying market you’ll have a much better chance at investment success. All efforts will not succeed, but if you aren’t too attached to your personal vision or privacy you might make it.
You, the buyer, are either primarily interested in expressing your personal taste or collecting something that another person, or the art world, says is important. Because these issues are questions of taste and personality one is as valid as the other. It’s important to understand the distinction in order not to think that all the contemporary art you bought is, or can become, an investment. It can, but unless it fits into one or more of the five points made above, I can’t see how. Nonetheless I’m open to having my mind changed.
There are, however, many original and highly developed artists who will not fall into the investment class, at least in the near future. This is because their drive and individuality are focused on expressing who they are and on making a decent living at it. The reality is that investment art is another kind of animal and as a collector you would be speculating wildly to think that by spending $30,000—and this is conservative—on a major piece of contemporary art, it is necessarily going to become an investment. In reality, it’s just a tiny blip in relation to the relative expenditure that it takes to enter and sustain the investment category of the art market. Investment art is a high stakes game and one cannot enter it blindly.
In a world with rating agencies and consumer reports; a world where identical and high-cost products are sold in every major market; and in a society where we are accustomed to also having what our friends and colleagues own, it’s pretty easy to justify lofty purchases of mass production items, even hand-tooled ones. But when it comes art, a one-of-a-kind, hand-made item, this becomes more difficult. “Investment” art neatly fills the gap by reassuring us we’re not doing something wildly irresponsible. But armed with what we know from studying history and markets; the fact that bluster, connections and image potentially have a falsifying effect on how we see and the knowledge that artists’ reputations can rise and fall, often quickly, and sometimes for centuries, you would be naïve to believe that art is a financial instrument with any guarantee or that it is going to reap the kind of rewards you will want when you might need them. Art collecting is the domain of the prosperous and unless you approach the art economy with a benevolent attitude it won’t make sense and you’ll miss the joy of collecting.Thus I come back to the tried and true, tested and retested, best-way to buy and collect art. Do it with your heart as well as your head; remember that art is a creative link to ideas and people that have lit your flame; and know that if you chose it from your core it will enrich you until its purpose is up.
TEW Galleries – One of Atlanta’s Leading Contemporary Fine Art Galleries since 1987