Established Prices Never Die, They Are Just Discounted Away...Or Are They?
An art dealer stakes his reputation, in part, on being correct about the market value of the work he sells. In addition to not wanting to see clients who learned they overpaid coming back unhappily, there is an ethical obligation to pricing appropriately. Even more than that, however, there are potentially long-term implications for the market of any given artist should collectors conclude that her prices were artificially set too high. Dealers can't easily avoid unpleasant conversations about this either. Especially at art fairs, when after three or four intense days of seeing collectors pass at pieces and/or tell the dealer straight to their face that the price is too high, the pressure to reconsider how to price it will be considerable. Indeed, collectors who have been waiting to purchase a piece will wait for prices to drop, but collectors who paid the top prices will be angry if they do.
Hence the conventional wisdom has been that you can't lower established prices for art work. This will be a hot topic in the coming months, especially as the globalization of the art market and increase in total volume and market focus of the art press recently has raised awareness of what artists' prices really are. Josh Baer is already all over it. From The Art Newspaper:
The question for the dealer here, of course, is how to address the pissed off collector who paid 750,000. There are multiple factors that influence the price of a work of art, size being not the most important among them. But still, a drop of nearly 1/3rd will likely not go unquestioned. As noted above, all of this plays into a dealer's reputation. If you're known to not stand by your prices, why would people continue to buy from you? Or so the thinking goes.
What if, however, there were a way to simply work with the pissed off collector. Being up front and honest about the market. Noting that the price they paid made total sense at that time and that now, to keep this artist's market alive (and keep this artist's studio practice flourishing) a corrections will be necessary. Rather than try to disguise the fact that prices have dropped with slight-of-hand discounts, perhaps being bold and transparent about it is indeed the most ethical approach.
During what Bambino calls my Sunday "bullshit chat shows" yesterday, I repeatedly watched a commercial with Charles Schwab who must be getting the most vicious sort of hate mail these days. Imagine how much his clients have lost over the past month. In the commercial, the man whose name is synonymous with investing explained calmly that as nightmarish as it can be to patient at time like these, cycles come and go, and the tortoise wins this race too. Perhaps the same advice is how to address the pissed off collector who paid 1/3rd more for a painting. Knowing that eventually the art market will cycle back up again, there's no reason not to expect a good artist's prices to regain any losses, but that here and now, the most surefire way to cripple that artist's market is to keep the prices as high as they were. In other words, by getting the collector to participate in the continuation of the artist's market, rather than focusing on a momentarily downturn in pricing, both dealer and collector continue to protect their investment. And, of course, in the meanwhile, the collector still gets to enjoy a fantastic work of art.
Then again, I'm not Charles Schwab...and I've religiously kept our artists' prices at their true market value...so consider this free advice worth exactly what you paid for it.
Hence the conventional wisdom has been that you can't lower established prices for art work. This will be a hot topic in the coming months, especially as the globalization of the art market and increase in total volume and market focus of the art press recently has raised awareness of what artists' prices really are. Josh Baer is already all over it. From The Art Newspaper:
With the high prices for younger art “established” by a speculative market where can they go, relative to demand, but down? But galleries never lower their primary prices, so these works will sit in gallery storage racks—with zero revenue-flow for non-brand name dealers. I call this the death spiral for art: sinking prices and sinking demand. [emphasis mine]Or so the thinking goes. But we've never seen a situation like the one we're in before. Sure there have been slumps in the art market...long and painful ones...but never when the playing field was as broad or so many people were involved as they are now. Who's to say new rules aren't appropriate? Some dealers seem to think they are. From a Bloomberg news report on the Frieze Art Fair:
Some dealers appeared to have lowered prices. At London's White Cube, a richly enameled painting by Anglo-Indian star Raqib Shaw was on hold at 575,000 pounds. In June at Art Basel, a similar-sized work by Shaw sold for 750,000 pounds.Damn reporters and their strong long-term memories! :-)
The question for the dealer here, of course, is how to address the pissed off collector who paid 750,000. There are multiple factors that influence the price of a work of art, size being not the most important among them. But still, a drop of nearly 1/3rd will likely not go unquestioned. As noted above, all of this plays into a dealer's reputation. If you're known to not stand by your prices, why would people continue to buy from you? Or so the thinking goes.
What if, however, there were a way to simply work with the pissed off collector. Being up front and honest about the market. Noting that the price they paid made total sense at that time and that now, to keep this artist's market alive (and keep this artist's studio practice flourishing) a corrections will be necessary. Rather than try to disguise the fact that prices have dropped with slight-of-hand discounts, perhaps being bold and transparent about it is indeed the most ethical approach.
During what Bambino calls my Sunday "bullshit chat shows" yesterday, I repeatedly watched a commercial with Charles Schwab who must be getting the most vicious sort of hate mail these days. Imagine how much his clients have lost over the past month. In the commercial, the man whose name is synonymous with investing explained calmly that as nightmarish as it can be to patient at time like these, cycles come and go, and the tortoise wins this race too. Perhaps the same advice is how to address the pissed off collector who paid 1/3rd more for a painting. Knowing that eventually the art market will cycle back up again, there's no reason not to expect a good artist's prices to regain any losses, but that here and now, the most surefire way to cripple that artist's market is to keep the prices as high as they were. In other words, by getting the collector to participate in the continuation of the artist's market, rather than focusing on a momentarily downturn in pricing, both dealer and collector continue to protect their investment. And, of course, in the meanwhile, the collector still gets to enjoy a fantastic work of art.
Then again, I'm not Charles Schwab...and I've religiously kept our artists' prices at their true market value...so consider this free advice worth exactly what you paid for it.
Labels: art market
posted by Edward_ at
8:02 AM
51 Comments:
So, Ed, u r telling me you set the retail price, and not the artist?
Marilyn,
The artist, being owner of the work, has ultimate say in the retail price, of course, but most contemporary art dealers rightfully have input in how the work is priced through their gallery. Usually artist and dealer are on the same page, though, so it's not as contentious as your question might imply. When I say the dealer overpriced the work, I mean to implicate both the dealer and the artist, but the collector works directly only with the dealer, so they're not part of that previous conversation.
Sometimes, however, a dealer should speak up or back out when they know the artist is making a mistake. If an artist insists that a painting be priced at $100,000 when the dealer believes its market value is $40,000, for example, the dealer would be wrong to price at what the artist insisted on. If the artist still insists after a respectful conversation, at that point they should part ways. The dealer has the markets of his other artists and how his reputation impacts them to consider here as well.
I always sold very little in my career (of course thanks to gallerists who are more interested in selling than in art, and many dealers who simply don't have a clue) so, snidily, I am quite happy that the market is going down. Of course I don't want galleries to close down or artists going back to their day jobs, but many positive things can happen out of a time of "not overinflated art selling". I distincly remember the time before the YBA phenomenon swamped London. Cork street, a short road populated only by galleries, was shut down almost entirely in the early nineties. So artists would ask landlords to borrow their empty shops and have short terms exhibitions there. I remember seeing amazing shows in places like that. I still remember an excellent show by Gavin Turk in a sort of hidden depot off Charing Cross road, where he showed "Pop" for the first time. No one was selling anything then, but one day Charles Saatchi woke up and it all changed.
So hopefully we'll see these times again - and the crap art made only in order to make money go away! I see much more interesting artwork on Myspace than in the trendy galleries area in Milan. Then again maybe Chelsea is different....
You touch on the key difference I'm seeing among artists in response to this, Stefano. Few artists I know who are selling their work consistently are as interested in seeing the market go down as those who are not selling consistently seem to be. No big surprise there.
I think there's a distorted view of what happens when the market is strong though. Interesting things still happen, people host exhibitions in empty shops, and artists still take big risks on projects. The difference there is in what people choose to focus on. When the big galleries can afford double-page ads in the glossies and other high-impact means of competing for your attention, of course it's going to look more as if that is all there is going on.
I still maintain that the quality of art created is independent of the market. It's all in where you look.
You're right, of course. But it's hard to look away, when my Arforum subscription doesn't get delivered to me in Zola Predosa because it's marked as "heavy parcel", so I have to pick it up from the post office!
Edward and readers:
Any thoughts about artists raising prices in this market to cover increases in artist expenses, such as art supplies and shipping costs? It almost feels counterintuitive to raise prices during a market downturn, but I want to cover my expenses as they continue to rise. I haven't decided yet if I will, and I'm curious about what dealers and artists think.
It's a pretty sorry collector who would get thusly pissed off. One would hope that genuine fondness for the work itself would take the sting out of a price hit, which is of no fiscal consequence unless the buyer was hoping to flip it. Expecting the value of assets not to fluctuate along with the rest of the market is already pretty nuts, but to do so regarding art, which consists almost entirely of perceived value, is downright mental. Not working with them might be a good long-term strategy for your mental health if not your bottom line.
It's a buyer's market right now anonymous, which means that the more you raise your prices, the more you're likely to see work not sell.
Costs do go up, for artists, for dealers, and even for collectors.
Whereas you must still pay your studio rent and suppliers to keep making your work, and a gallery must still pay the rent and other bills to remain open, no collector actually needs to keep buying art.
This was a great post, thanks Ed!
My favorite line put so succinctly:
"Few artists I know who are selling their work consistently are as interested in seeing the market go down as those who are not selling consistently seem to be. No big surprise there."
So true, so true....
Excellent post...
When someone buys a piece of real estate the year before a crash they are going to be unhappy. There is no guarantee that their investment will hold its value. There may be an expectation, but not a guarantee.
Same thing with an expensive work of art.
It's a little more complex than just how much a collector likes that one piece, though, Franklin.
Major collectors tend to buy in depth from the galleries whose programs they like. If Collector X bought a painting in 2007 for $60,000 when Artist Z was hot as hell, but then sees a similar sized piece in the booth in Miami for $30,000...it's not only a question of whether he really liked that first piece. It's a matter of whether he should trust any of the prices the dealer has in the booth in Miami. By not sticking to those prices, and not talking directly to the collector before he sees the new price (the gist of my post) the dealer is undermining his credibility.
I agree with you that a there is no immediate "fiscal consequence unless the buyer was hoping to flip it," but there are other sales and relationships to consider.
Finally, even if a collector was hoping to flip a piece, that does not give a dealer an ethical right to overcharge them for it.
Okay, if you're going to compare Schwab to the galleries, then you might have to subject yourself to my extended treatise on why I think Schwab is the best bank in the universe, even though this is going to make me sound both richer and more uptight than I actually am.
To start with your quip, I actually don't think Schwab is getting a bunch of hate mail right now, and I think this is true because they have a business model that is about being incredibly straightforward and going out of their way to be honest and trustworthy. This is not about marketing. This is about deeds. They have a checking account with very high interest; they reimburse every single ATM fee you ever get; there are no transaction fees for transfers to brokerage accounts, etc etc. I don't think I have ever given Schwab a single dime of my own money in fees, even when they have automatically transferred funds from my brokerage to checking accounts because I overdrew. The last time I met with one of their brokers, they straightforwardly showed me where the index funds are, and showed me how to read the aspect ratio, so that I could save myself money, instead of trying to sell me highly-managed mutual funds with high fees. Whenever I call because I have to do something, they offer the free solutions first.
I have intense loyalty to Schwab, even though my IRA is looking very sad and scary right now, because they are always proving and reproving that they are not going to game me like every single other bank on the planet. I trust that they are into growing a healthy organism, in which I am a healthy part. So when I get my emails from Schwab that tell me to sit tight, I do that. I keep investing my paltry sums, and actually lately I have been obsessive about bringing lunch so that I can throw a little more at my IRA every month. Why not? My bank isn't going anywhere, I am within the SIPC guidelines if they do, and stocks are "on sale."
This seems like an effective way to market art, although I don't know what the correlative trust builder is, since I am sure galleries don't charge collectors fees. Perhaps the attitude surrounding buying art will change, with no more "too good for you" attitude that drives in some galleries (certainly not yours, Ed). I know that Stux just started a blog--maybe galleries will be more generally open and transparent. Who knows? I am out of my depth when I speculate about galleries building trust.
But in a trusting atmosphere, I can see how art might be correlated with the market in a way that is different than what we've all been used to. We are all accustomed to that overly quantitative, speculative way of buying contemporary art that created this bubble in the first place, and that is probably addicted to this destructive requirement that prices never go down. What if that's replaced by a collectorship who's favoring a buy-and-hold strategy? Those collectors won't be as perturbed by short-term price fluctuations for two reasons:
1. They will see lowering prices during a downturn as being good for the organism as a whole. If nobody buys art for five years, then the chances of their long-term investment being sold are much lower.
2. They'll see lowered prices as a "sale" and not as a betrayal.
So says me as a totally loyal Schwab customer. But whether that has anything to do with the gallerist's reality? I don't know... what do you think?
Mei and Moses did some research showing that returns on blue chip art has tracked returns on the major stock indexes over time. The average returns which could be expected are roughly 8% compounded. Over the last five or six years art prices have inflated at a rate far in excess of what would be considered normal. I think it is going to become apparent that at the high end of the market prices are going to revert to the long term mean, meaning a decline of between 25% and 50% could be expected. Of course, these numbers are "on average" and dependent on the individual artwork but the parallels with the real estate, "it can never go down", market is apt.
Artists with marginal markets should not be happy about this for the low end of the art market becomes illiquid, there are fewer buyers and art works become difficult to sell.
Gallerists could explain to disgruntled collectors... that their artwork
10. Has out performed the stock of most banks which are down 70% this year.
9. Has out performed the US stock markets which are down 35% this year.
8. Has out performed gold which is down 16% this year.
7. Has outperformed real estate which is down x% this year.
6. That "other one" which sold for less wasn't as good as yours.
5. That "other one" which sold for less wasn't as seminal a piece as yours.
4. That "other one" which sold for less was smaller (where appropriate)
3. That other one which sold for less was price distorted by currency conversions.
2. You can enjoy experiencing it instead of worrying about your investments.
And the number one answer is...
1. Do you want to be on the waiting list to sell it?
The overhead for a gallery like Eds must be staggering. I would imagine most galleries don't have massive reserves to get them through tough times; that most galleries depend on a steady (large) stream of cash coming in every month. Two or three months of poor sales and most galleries probably have to shut down. And I think we could be looking at several tough years in terms of sales, not just months. I just don't see how most gallerists are going to be able to keep their doors open if they hold the line on pricing- especially when their competitors are beginning to cut prices in a desperate attempt to keep their doors open. As for artists complaining about their prices being lowered; if your gallery goes under I think there will be a good chance you won't find another for a long time.
An auction house will respond immediately to bad market news and drastically cut the estimate.
Great entry and great comments. Seems to me that many younger artists are hanging themselves in the end with high prices. I think part of the mentality is to cash in as quickly as they can while their 15 minutes are still ticking, so to speak.
An auction house will respond immediately to bad market news and drastically cut the estimate.
Which tells you all you need to know about how interested an auction house is in the long-term career concerns of the artists whose work they sell.
"An auction house will respond immediately to bad market news and drastically cut the estimate."
Not so. The last couple of sales saw 60% of the lots go unsold. The general reaction among the buyers what that the reserves were set to high.
Sotheby's is out (as in lost) $15 million on art they "guaranteed" prices on. BID, Sotheby's stock has fallen from $60 to $9 so far this year. I don't expect them to go bankrupt but the stock should break $5 (down another 50%) in the next 12 months.
clasherm
Comparing auction houses to galleries is apples to oranges.
Ed, your suggestion:
"Being up front and honest about the market. Noting that the price they paid made total sense at that time and that now, to keep this artist's market alive (and keep this artist's studio practice flourishing) a corrections will be necessary....it is indeed the most ethical approach."
would, I suspect, not go over well. It's time to put ethics aside. There is a good possibility that mid-range galleries will be put out of business by this downturn. Galleries need to do everything in their power to stay open. If it means extending a discount that only nets you 15% instead of 50%, but still keeping your artist's prices where you want them, you should do it.
Initially it was believed non US-based clientele might keep Chelsea et al. afloat, but this bugger's bigger than anyone thought and purse strings are being tightened in Moscow, London, Dubai, Tokyo, etc.
Did in-gallery prices drop in '89-'90-'91? I wasn't around for that, so I don't know. But maybe it's something to check in on?
You know, Edward, I was just re-reading your initial post, and it seems like one good way to adjust the market is to get a whole new crop of artists into galleries.
There are thousands and thousands of perfectly good artists who do not yet have a market price established for their work, and who I am sure would be more than happy to sell their work for at least a third less than the artificially inflated market prices of yore, with no loss of face for any collector of any work that is priced too high to sell in this market.
Artists with market values keep their prices (but not their revenues) intact. More artists join the pot. No mass restructuring of how art gets purchased necessary. Galleries stay open.
It seems as win-win as you can get given the current nasty situation. Is there something I'm missing?
You know, Edward, I was just re-reading your initial post, and it seems like one good way to adjust the market is to get a whole new crop of artists into galleries.
Not if your prices are justified, it's not. Then you're losing the work you did to build name recognition and loyalty among collectors and starting from scratch with total unknowns when people are looking for reassurances.
Louise was right. The artworld is a world for spiders.
Cedric
The question here is, if you discount your brand what does that say about its "luxury" status? It's quality?
Are diamond importers discounting their best diamonds? Is my question.
Firesale prices signal a loss in confidence, and yet some must sell in order to live. Do they value their loss any less in their necessity?
BUrn baby burn!
Not trying to pick a fight, Edward, trying to understand.
You're framing this as a problem with no solution, or worse, as a Sophie's Choice. Either drop your prices and ruin your reputation and hurt your artists, or refuse and let the whole organism die.
But neither of those things are going to happen--it's just not likely. It's more likely that some model for trudging on will formulate itself. Don't you think? I mean, that's what people do--we are an adaptive bunch.
Not trying to pick a fight, Edward
Sorry if it read like I thought you were. Dealers are all a bit anxious right now and the notion of legions of unrepresented artists sending off cold-call submissions at the moment probably wouldn't meet a warm reception. Of course the entire process moves forward, but the idea of bringing in a whole new batch of artists, especially as in the beginning of that relationship the gallery tends to spend a lot more than they bring in to promote someone new, isn't one I'd recommend to anyone.
You're framing this as a problem with no solution,
I actually thought I was framing it as a potential solution. Be up front and honest with your collectors. Lower the prices, but call the folks who bought other works recently and tell them you are. Don't surprise them with it at the fairs.
It might backfire (don't know, haven't tried it...don't need to), but it can't be any worse than their reaction when they stumble into your booth in Miami and see what you've done then.
re crops, Ed's right.
I'm assuming we aren't entering a world wide period of deflation, which is unlikely.
Fairly set, primary market, gallery prices could remain stable, it's also true that adjustments might be made in the "discount" given to some collectors. It's true that less art might be sold. Lowered prices will reduce demand
Secondary market prices, back room and auction prices might be more volatile since the individual sellers might have different and non-art related reasons for selling the artworks. For example, Lehman Brothers had a large art collection which will be sold, most likely at auction, the pricing will be different because it could be set by the bankruptcy courts. (just "sort-of" as an example)
emakerat
Also, this is probably the most intense period of financial stress any of us will ever encounter.
Rather than panicking about pricing, the best approach might be to just wait and see what the next few months bring. Decisions made under stress like we have at the present moment are often emotional and incorrect.
chill
watch this at 2:18
spread the wealth!
"Then you're losing the work you did to build name recognition and loyalty among collectors and starting from scratch with total unknowns when people are looking for reassurances."
Why would you be starting from scratch? Not enough room for the old artists? Or are we assuming the whole stable gets scrapped?
Johnny C. Veblen
Why would you be starting from scratch? Not enough room for the old artists?
hmmm...I see I read that as indeed starting with a brand new program. Not sure why...perhaps because "whole new crop of artists into galleries" suggests just that, not working with the existing ones....but I can see where it might mean just adding new ones as well.
Deb? what did you mean?
yeah deb. the guillotinis are waiting.
drink up!
As a conservative reactionary with a great respect for the ancien regime (too much respect to try to be an artist, even!) I like to preserve and protect in the service of the grander guignol!
But that Biden fellow, he knows when a question is frames as a lose-lose proposition.
This just in:
skinhead plot foiled! (I'm watching Fox News)
and check this inside baseball blast from the past:
here
bridge to nowhere indeed!
who is going to rebuild Chelsea?
Have you hugged a sock puppet today?
Don't forget a gallery's relationship with it's artists. If you shed your stable of artists to bring in a new group of fresh and inexpensive artists, you lose credibility with the artist community. If a gallery doesn't have a good reputation for being true to their artists, soon they will only get the opportunistic artists who don't plan on sticking with the gallery beyond a few shows.
The problem is probably not that prices are too high but that there are fewer willing buyers. For the present argument, I'm suggesting that the gallery prices were reasonably fair and that the "price" is the established posted price without any discount.
There are fewer willing buyers because the world financial situation is in turmoil with no apparent solution on the horizon. Consumers, all consumers, not just art collectors, have cut back on their purchases over the last month. It will take a little time, and a new president, before this situation will change.
Debs suggestions aren't solutions they just shift the problem around and create more confusion in the process. Gallerists who have made intellectual and aesthetic decisions about their artists should continue their programs within the available budgets.
The idea that lowering prices will increase sales is misplaced. It may have some affect short term but it will decrease overall demand as other collectors wait to let the dust settle. Further, lower prices mean you need greater volume to achieve the same revenue. As mentioned, volume is most likely a bigger problem than price. The best solution is to try and reduce operating expenses and fiddle with the discounts
In past market declines artists might have made smaller artworks as a way of reducing the price but keeping the overall price structure as it was.
mondene
Hey Edward,
I totally understand the tension, thanks for the clarification.
I wasn't suggesting flooding the market with more artists as much as I was trying to grasp at the problem by positing solutions. You know as well as I that I don't know what I am talking about here--that I am just stabbing at things.
I was responding to what I took as an unwillingness to come down on either side on your part. On one hand, you suggest lowering prices, on the other you castigate auction houses for slashing prices.
In situations like that, people tend to do a whole lot of weird things that don't make logical sense, but they do avoid the pain of the rock and the pain of the hard place. The first thing that came to my mind was avoiding the pain of lowering prices on existing artists by increasing the size of the stable. Perfect solution? No. Could it happen? Why not?
Case in point: I'm researching an article right now, and Barbara Gladstone consistently presents Matthew Barney as a product of the last fat art-market downturn, and I find that interesting. Her story is always: why not take a chance on a kid from Yale with some weird new thing when shuttered doors are right around the corner?
Ed,
With regard to "slight-of-hand discounts":
These are made regularly even when the economy is not in crisis. I've known some dealers to give up their half entirely to make sure an artist's work lands in a good place. It's not common, but certain situations neccesitate such deals.
If a piece retails (and is labeled) at 1000 and you're able to stay in business by taking $700 for it ($500 to the artist and $200 to the gallery), then why not do it? Isn't it better to sell via secret agreement and maintain the appearance that the artist's value is holding? I'm not sure transparency would help anyone right now.
I have to think that some artists will be compassionate enough toward their dealer to discount their end of the deal, helping both sides of the equation stay in the game.
And with regard to taking on newer artists with lower price points...now is the time. It doesn't mean forgetting about your stable of bigger-ticket artists, you should keep them on board too. But making sure you have goods available that fit with collector's newly tightened budgets will do you a world of good.
Deborah has convinced me to bank with Schwab.
Ed, don't galleries ever work with artists who have already done considerable work to promote themselves? Is there some rule that Chelsea galleries must only show shy, retiring artists who don't do any marketing? I once did a show with a very generous and hard-working artist who liked my style, and who had already built up quite a collector base, selling on the street in Soho. I did as much marketing on her behalf as possible, her collectors loved my gallery, and were happy to pay the higher prices.
Edward, just to say that i so enjoy your blog - who else would have the gumption to have these conversations? i reblogged you on the nasher museum blog (http://www.nashermuseumblogs.org) not too long ago, fyi, and everyone there loves you.
I see this economic downturn as an opportunity for artists whose work is moderately priced. I'm not talking about emerging artists, but about mid-career artists whose strong, well-realized bodies of work, while not bargain-priced, have never attained stratospheric art-star levels.
I suppose this is the "Affordable Art" range, with a few larger works in the $20,000 to $40,000 range. Because the prices have never shot way up, they don't have to drop way down. This should also be a good situation for dealers who represent these mid-price artists, no? While they may need to sit on a storehouse of higher-priced artists' work, their mid-price artists may have a chance to attain visibility and better sales.
I'm posting anonymously, because I'm uncomfortable writing under my own name, but I can tell you that this month has been my best all year. There have been numerous sales of smaller paintings--many sold in multiple to collectors--as well as to modest collectors who can afford my prices (just-under $2000 for a 10x12 painting).
Am I an anomaly? Or is this month an anomaly? (I'll have the answer to that one in a couple of months.)
As for raising prices, I was going to do that the first of the year, as I usually do. But this year, I think I'm going to hold at 2008 prices. And if it means painting a bit less in 2009 and working harder with my dealers to place the 2008 (and 2007) work, then so be it.
Lower the prices, but call the folks who bought other works recently and tell them you are. -Ed
--------------
So u call, text message, e-mail them and say what? I'm selling this painter now in a more modest market than in the one u bought. I know u paid over prevailing prices so I'm going to make up the difference?
I'm also seeing a painting, video, gif as art being categorized as a commodity. As some have implied here, art is not like real estate. A home buyer doesn't go back to a realtor 5 years later and say the people 5 doors away bought the same squ. footage ranch for 25K less, and, demand retribution. They realize that's the whim, arbitrariness of the market. Isn't there some point at which a buyer feels great that they were able to get what they wanted when they could? Sometimes a house u want won't be available when prices are lower. Moreover, I often see people buying more in terms of a gift to themselves, something Wittgenstein who had read Mauss said is impossible. I also read luxury somewhere above, where changes in pricing aren't the issue.
Dealers seem different on this; I've had dealers totally leave the price up to me, so they can always point to me when things change. I have tried to petition them for advise w/ no luck.
10 x 12 painting for $2000?
I'm guessing we're talking inches here? If not, I'd LOVE to see your work.
$20,000 - $40,000 is "affordable"?
I am an artist who fits your description...nice reviews in prestigious publications, have been showing since the mid '90's, and my largest work (modestly scaled, but still) has sold for "only" $6-7,000.
That's still a lot of money. You have to have more than a little change jingling around in your pocket to drop that kind of money on a work of art. Not many people are willing to do that.
A friend described the business of contemporary art as the froth at the top of a cup of coffee. I would describe it as the crumbs falling off the table. It is the first thing to go when wealthy people suddenly don't feel so wealthy. Maybe Ed can correct me here, but I seriously doubt many collectors finance the purchase of a work of art. I would guess that very few middle class people, even upper middle class people who appreciate art and might go to galleries on a regular basis, buy art.
Art may be necessary for the society at large, and for artists it's necessary to make it, but let's face it, it is not necessary to own it. And this is why the art market suffers so dramatically compared to the rest of the economy. Look at the early 90's vs. the late 80's...galleries closed en masse. And this has the potential to be much worse. It remains to be seen, but the shakeout has the potential to be far reaching and long lasting. I don't think discounts and cost cutting will make much of a difference in this situation.
When you are in Times Squares, sugar peanuts are 200 per cent more expensive than in Soho.
Some artists price lower when they are hyper productive (Warhol).
Others because they don't reach demand (their art is less popular or less good. or the market crashes).
If a collector doesn't understand that .... actually he probably does. He's probably just trying to get a post-sale favor on another sale and playing with you.
The worst part is when a dealer change their price every second day depending of who they want to deal with. Or mark the work at high prices and sold out just to create a fuzz, and do their deals in the interim. I'm all for transparency but it's a little presomptuous to assume the artworld deals in clean blankets.
Cedric C
I'm trying to put myself in Edward's shoes, and if a collector would tell me that a work is too expensive, I think I would say "we have delibarated for many months
about what these prices should be right now, but I can suggest you to wait another 6 months or a year and we'll see then if the prices have dropped. Just be aware that they might also raise".
That's it, that's all. Law of the market. But if a client is a regular, I don't see why not offer them a discount. People love to feel special. They will come back if you treat them well.
I have no idea how artists (and dealers) set up prices for their art. I think I would use Ebay starting at 0 cent to see how my art is really worth. I find that in auctions, work that sells for 20millions only have about 3 or 4 bidders. I don't think this is a good measure for wanton. Having a couple rare collectors with big pockets is not true wanton. When you work gets over 100 bidders, that's wanton.
Cheers,
Cedric C
Ed,
Here's to optimism:
"Knowing that eventually the art market will cycle back up again, there's no reason not to expect a good artist's prices to regain any losses"
In every other market, investors are being very, very cautious. Banks are hoarding the money that's supposed to be bailing them out. People are trying desperately to predict when this downturn will bottom out. A month? A year?
Yet the art market carries on.
Is it possible that the one thing insulating the art market is the ability of galleries and art dealers to insist on the value of artwork? Galleries are generally relied upon to bolster the reputation (and price points) of the artists with whom they work. So they now also must become the guardians of those reputations and price points.
This may be stating the obvious, but considering what's happening elsewhere in Things To Do With Your Money, this is kind of a revelation.
No one's arguing that the S&P 500 should be higher than it is.
No one's advocating for Joe Six Pack's property value, which just dropped below his principal.
But as an artist or collector, to know that there is someone out there (besides me) maintaining the value of my assets brings a strange added sense of wonderment to the way this art market thing works.
I'm not calling it insider trading, it's a very simple hedge. And it's linked to an intangible resource which never seems to dry up: Culture.
It's little wonder art is outperforming gold.
http://www.nybooks.com/articles/4280
there is an ethical obligation to pricing appropriately. -Ed
---------------
Maybe u could run us through us through a real or fictional instance of how u price the work of a painter.
Ed, I guess reincarnation DOES happen on blogs....I think I recognize the tone of that question posted above me, from previous posts.
So familiar..
So familiar.
hmmm...maybe...hadn't thought of that, but the question (tone aside) seems valid enough.
1. I don't price the work. I advise on the pricing. Here, and in general, I talk about the dealer "pricing" the work in the context of collectors buying it, because collectors are not discussing such matters with the artists and it gets too confusing otherwise.
2. A typical conversation about pricing with a new artist in our gallery or someone I'm just doing a studio visit with but don't end up working with, though, goes more or less like this [note the conversation generally happens long before we agree to work together, but in the interest of brevity, I'll condense it here]:
ED: What are your current prices?
Artist X: [a] Well, I was hoping you can help me with that. {believe it or not, this is the response perhaps 90% of the time I ask} ---or--- [b] I've been selling a work like "that one" for about $5,000.
ED: [in response to "a"] What did the last piece similar to "that one" sell for?
AX: [1] I've never sold any work ---or--- [2] I sold one out of my studio to my uncle for $6,000 ---or--- [3] I think a piece like this should be about $22,000, what do you think?
[I've heard them all for a piece that should be about $5,000]
ED: [depending on whether we're working together or not and whether they have an established selling record or not] Well, my knee-jerk advice is always to work toward a waiting list. That's the fastest way to justify steady increases in your pricing and that requires that your current inventory is sold out and people still want more. The most effective way to ensure people still want more is to have your current collectors participating in promoting your work for you, raving to their other collector friends...and that requires that they buy your work in the first place. The best way to do that is to price the work competitively initially. You don't want to go down in your pricing but [1] since you've never sold any work, I'd recommend you start at $4,500 for a piece like "that one"...making it obviously a good price for a collector who has never heard of you ---or--- [2] between you and me, I feel your uncle overpaid slightly (which is probably ok...uncles should support their relatives who are artists, but you might offer him a drawing as a present to make up for the fact) and you should readjust your prices downward for a while ---or--- [3] what are you smoking and why aren't you sharing? (just kidding...I'd ask why they feel "that one" is worth $22,000, and 99% percent of the time their answer is because they saw a similarly sized piece at Gagosian priced twice that, and they feel their work is at least half as good as that other artists or some interesting calculus like that. Then we have a open and respectful conversation about supply and demand.)
But I get the idea the Marilyn is also asking how I calculate that "that one" is worth $5000 (which is entirely fictional, by the way...I can't see "that one"), and that could take an entire thread unto itself, and without a specific work (because the analysis depends on size, reputation of artist, complexity and quality of work, and what the established market value of the artist's previously sold work is) that is impossible to describe. Yes, that's a cop out, but the details are essential here.
Was that helpful at all, or only more confusing?
With a downturn in the market, artists are less likely to be making art. Jerry Saltz writes that artists will be free to experiment more, but if their jobs disappear, or their sales dwindle, there will be less time for artmaking (as artists look for work) and less money for supplies and business expenses (even as the cost of doing business rises). If studio rents become impossible to pay, there are studio mates to take on, or a relocation to consider. Both options take their toll on artmaking.
With a dwindling supply, prices rise?
Oh, and what I neglected to include in that equation is that with fewer sales, there are likely to be fewer galleries. Do those fewer end up selling proportionately more? Or do things just slow down, period?
Ed, George, any thought on how to do the math here?
And does anyone have any sense of sales at the art fairs?
(I know, these are big questions, but it's a big topic.)
First of all, the price of art goes up and down just like everything else.
This is most obvious in the auction market where artworks either fail to sell because the bids are below the reserve or they sell at the low end of the estimated price range. In the galleries, pricing may be more stable and the gallerist has a number of options which can make his pricing more flexible depending on the client and market conditions.
Today CNN reported that consumer confidence hit an all-time low of 38. In normal periods this number is in the high 90's and today's report is suggesting that the consumer is very frightened by economic conditions and cautious about spending.
The negative psychology applies to all consumers including collectors of art. That said, it doesn't mean spending stops, but that it contracts.
What might we expect in the art market? I'll speculate a bit. First I think that collectors will continue to collect art.
I also suspect that many may continue to collect within the same general price tiers they were comfortable with before, but that they will adjust to the market conditions by acquiring fewer artworks.
Others may choose to acquire artworks which are more affordable, either because they are smaller in size, or a different media like drawings, or the works by less established artists.
However, the total dollar volume of sales will contract and everyone in the business will have to make adjustments to deal with this problem.
During a recession businesses cease to exist, and I suspect that may be the case with art galleries. Some will survive and some won't. When sales decrease, businesses, art or otherwise, which have insufficient working capital or are poorly managed will close.
At the end of a recession you end up with fewer galleries selling less art (dollar volume) than they were before.
I don't know enough about the gallery business to say too much more about what will work and what won't. Generally I'm inclined to think that price reduction is not the right approach, I doubt it will increase sales volume. Pricing flexibility on a case by case basis is a viable tool. What is also good idea is having the ability to offer a selection of art works at all price levels, and make the sale.
I do have a good understanding of market psychology and currently it is as bad as I have ever seen it. So there is a good chance the next few months are the low spot from a psychological point of view. Right now it appears that people are afraid to spend on anything but absolute necessities. In a few months, even if we have more of a recession, the future will be clearer, the negative psychology will ease and the consumer will be able to make purchase decisions.
As an artist, I'd just go into survival mode. Plan for a contraction in sales and cut down on expenses. It's hunker down time.
my captcha word was "trick" no kidding
Ed, your breakdown is helpful, like I wrote earlier, your first point is usually what sticks. I had a dealer who simply said the artist determines the retail value. I realize there are deals like when u get into selling a series or a multiple commission. And I realize it's different w/ regular customers versus pricing for a show. I've shipped once two works for a couple who actually wanted three pieces, but had only seen the third in e-mailed jpeg. So I sent the third w/ the idea if they didn't like it they could ship it back if they paid the return shipping. They kept all three and I gave them a better price for each. The upshot is that dealing has no handbook.
I'm not sure what anonymous is referring to re: 'familiar' and reincarnation. There's no tone here as I'm always curious how deals go down.
Now, lastly, Ed, do you or have you ever been involved in artist royalties on reselling? And, what do think of artist resale royalties?
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