Reframing the "Real Price" Issue
A friend of mine who owns a highly respected, much bigger gallery than ours shared a frustration the other day. With the economic downturn in full swing, the auction results dismal, and certain other dealers announcing baldly at large events that they're offering up to 40% off the work in their obviously way-overpriced inventory (believe me, it's obvious), collectors who want artwork are constantly sharing their apprehensions about what they call "the real price." For dealers like my friend (and I) who have always been very conservative in pricing our artists' works (because we're working with emerging to mid-career artists and know how important it is to keep the prices realistic), this question is doubly discouraging because not only does it lead collectors to ask for discounts that would put us out of business almost as soon as selling nothing at all, but because the actions of certain other (obvious) dealers confuse collectors, we're left having to try to convincingly reframe the issue before we can get back to selling the work we represent.
So, in the interest of saving lots of time later, that's what I'd like to do now. Open up a discussion, explore the issues, and see how this might be more productively discussed.
What I assume most collectors mean by "the real price" is actually the real value of an artwork. In that sense, it's a legitimate question and can be addressed by a frank discussion about how the artist's prices have (or haven't) advanced over the years...where the work has been placed...what upcoming exhibitions will contribute to the artist's reputation, etc. etc. And the collector can decide whether they then agree the value is what the dealer says it is or not.
If on the other hand, what they mean is what is the real price you're willing to let it go for, then we have a frustrating situation because openly implicit in that question is either that the dealer has intentionally overpriced the artwork (which they may not have intentionally done, even if the market suggests the work is too expensive) or that he/she is now expected to let it go for less than its value to make a sale. Both of these are a problematic baseline for negotiating a sale (because both are insulting to some degree...hence the dealers' frustration) and both represent a short-term gain over a long-term opportunity. The problem, for collectors, when beginning a conversation with an insult is that it can trigger a stubborn pride in the dealer and leave you with fewer options than you might have otherwise had to get a good deal.
Now everyone knows that it's a buyer's market at the moment, which means that more likely than not you will find dealers willing to offer some discount on the work you want. That, in my opinion, is how to begin the discussion productively for collectors and non-insultingly toward the dealers. Rather than starting a negotiation with, "Well, I'm not sure how to know what the real price of her work is with all the confusing signals at the auctions and what I'm hearing from other dealers..." consider an approach more like "How's business these days?" to which you can judge the forthrightness of the dealer by his/her answer (believe me, it ain't what it was a year ago for the vast majority of dealers and if they say anything other, you have your answer). Having established that it's a buyer's market, you can then respectfully ask "Well, in that case, what can you do for me on the price for this work?" The answer will vary, of course, but in general this negotiation will proceed more cordially and, for the collector, more productively. (Remember, it's not all about this one purchase, but your access to future work as well.)
Times are tough, those still supporting the arts deserve the thanks of everyone, and now is the perfect time to establish strong relationships with the dealers working with the artists you like. Suggesting, based on other, non-related factors, that you can't be sure the price they offer you is "real"is not the best way to strengthen that relationship. Approach the issue from a question of value. What justifies that price? This is a question a dealer can answer without feeling the need to defend their integrity. In the end you still have to decide what's right for you and your collection, but there's no need to inadvertently offend someone in the process.
I can see several contradictions throughout this piece already, so I'll open the thread to your takes on the matter:
So, in the interest of saving lots of time later, that's what I'd like to do now. Open up a discussion, explore the issues, and see how this might be more productively discussed.
What I assume most collectors mean by "the real price" is actually the real value of an artwork. In that sense, it's a legitimate question and can be addressed by a frank discussion about how the artist's prices have (or haven't) advanced over the years...where the work has been placed...what upcoming exhibitions will contribute to the artist's reputation, etc. etc. And the collector can decide whether they then agree the value is what the dealer says it is or not.
If on the other hand, what they mean is what is the real price you're willing to let it go for, then we have a frustrating situation because openly implicit in that question is either that the dealer has intentionally overpriced the artwork (which they may not have intentionally done, even if the market suggests the work is too expensive) or that he/she is now expected to let it go for less than its value to make a sale. Both of these are a problematic baseline for negotiating a sale (because both are insulting to some degree...hence the dealers' frustration) and both represent a short-term gain over a long-term opportunity. The problem, for collectors, when beginning a conversation with an insult is that it can trigger a stubborn pride in the dealer and leave you with fewer options than you might have otherwise had to get a good deal.
Now everyone knows that it's a buyer's market at the moment, which means that more likely than not you will find dealers willing to offer some discount on the work you want. That, in my opinion, is how to begin the discussion productively for collectors and non-insultingly toward the dealers. Rather than starting a negotiation with, "Well, I'm not sure how to know what the real price of her work is with all the confusing signals at the auctions and what I'm hearing from other dealers..." consider an approach more like "How's business these days?" to which you can judge the forthrightness of the dealer by his/her answer (believe me, it ain't what it was a year ago for the vast majority of dealers and if they say anything other, you have your answer). Having established that it's a buyer's market, you can then respectfully ask "Well, in that case, what can you do for me on the price for this work?" The answer will vary, of course, but in general this negotiation will proceed more cordially and, for the collector, more productively. (Remember, it's not all about this one purchase, but your access to future work as well.)
Times are tough, those still supporting the arts deserve the thanks of everyone, and now is the perfect time to establish strong relationships with the dealers working with the artists you like. Suggesting, based on other, non-related factors, that you can't be sure the price they offer you is "real"is not the best way to strengthen that relationship. Approach the issue from a question of value. What justifies that price? This is a question a dealer can answer without feeling the need to defend their integrity. In the end you still have to decide what's right for you and your collection, but there's no need to inadvertently offend someone in the process.
I can see several contradictions throughout this piece already, so I'll open the thread to your takes on the matter:
Labels: art market, Collecting, selling art
posted by Edward_ at
9:40 AM
18 Comments:
The "real value" of an artwork is a sort of existential, or at least intangible, unknowable thing. I know you mean the monetary value, but even that fluctuates. Isn't the monetary value of an artwork the price that someone can convince someone else to pay for it? If something sold at auction for X dollars 5 years ago and this year was resold for 70% of X, has not the "value" of that piece gone down? I know you can use various things to justify asking a certain price (upcoming shows the artist will be in, what collections she is already in), but really, doesn't it still boil down to the fact that the market is created by perception (or illusion or whatever you want to call it, depending on the spin you want to put on it), and the dealer is one of the players creating that perception/illusion? It's not like gold, where there is some accepted consensus about the value, or a car, where there is a "blue book" listing. If you, as a dealer, can get a certain price for a piece, isn't that, by definition, the value of that artwork? I guess you're bringing up the issue of how that perception is formed, what forces coalesce to justify that perception. I understand those forces on one level, but on another level, it seems pretty arbitrary, kind of Emperor's new clothes-ish.
In a true 'Artworld Buyer's Market', an auction would be the best place to find the lowest price. But it's not, so this is not a true buyer's market. Buyers just have a little more say in the issue nowadays.
Look around at some of the regional art markets of the U.S., markets which have not been wildly inflated for the past 9 years, and you will see that it is still a seller's market.
Greed is as greed does.
Slightly off-topic, but still relevant: that whole donation/tax deduction discrepancy between creators and purchasers is more evidence that convincing someone else to buy the object is what gives it its value. (There is much talk about getting this changed, but I'm referring to the tax provision that lets collectors deduct the "market value" of an artwork when donating it to a non-profit institution, but only allows an artist to deduct the value of the materials used.) The very same piece that is sitting unsold in my studio on Monday is only worth a $10 deduction if I give it to a benefit auction on Wednesday, but if I sold it on Tuesday for $1,000 to Mr. Collector and he donated it to the benefit on Wednesday, he could take a $1,000 tax deduction. What has transformed that object? The fact that someone spent $1,000 on it.
It will be interesting to see the numbers from tonight's gala @ The Art Show at the Park Avenue Armory, high/medium resale and then the Armory Show and other fairs in 2 weeks. Could be some very good dealing tonight and it may be a sign of what's to come price wise, wish I could be there.
It's hard to explain to non artists or sunday painters who were never at a loss for a good idea what it takes to make something that feels real (note I'm not saying art becasue I don't believe in Arrrrrt).
I read Olav Velthius's book (and the Thorstein Veblen is by my toilet) - look it up on Amazon. It won't help, but it does show how psychology plays into the mix.
Move on to Duveen (marketing anyone? Bueler?) and then smell the pant legs of Chihuly (it's just glass people) and Schnabel (Hollywood! Hollywooood.... duh).
I had depression era grandparents and fiscally responsible parents - it takes a lifetime to unlearn that teaching. Save everything!
If I sell affordably to the middle class am I less of an artist? (I know I wont make a living at it but still, I wear my heritage like a badge of honor and shame, lots and lots of shame - like collectors who quibble over a few thou).
Irrational exuberance aside most artists can't make an oil painting for under 200 dollars in support materials alone - canvas, wood, screws.
It takes at least a week to make a good painting on average for fast painters.
For the record good oil paint without masses of extender costs over 22 dollars a tube at the store.
What if you experiment with an idea and lose a tube or two? Factor in the failures - double or quintuple the investment.
Add to that the studio costs, research (most industries recognize research as a line item) and risk (the artist is taking all the risk in creating the work - where a dealer and collector takes on any added risk if they are considering the artwork as a for profit investment).
So If we agree that 2000 dollars is a reasonable price for a NY painting or that research is important (for concepts) without any "value added" (branding) then we can discuss branding.
But this is a vulgar term and many people (true believers) think artists should abstain from such arguments.
But thanks to Duchamp (depends on what side you are on bro!) it's ok to make art about anything and everything.
No sacred cows right?
I'd say risk is inherent in a work of art, financial or otherwise.
As Olav Velthius wrote, this may be codified as a sociological "script" to make it seem more rational, but what makes art so interesting (and frustrating) is the irrational nature of the exchange.
And thus we get to 2000+ - what is the rationale for selling fewer works for more money?
I understand galleries pay theexorbitant rents in order to cater to lazy collectors (how hard would it be to cross the river, dudes?
Scout out your own art?
Have your own taste?
Make your own decisions?
Don't have the time?
Neither do I.
But I could show you some art, and if you like it I wont wrap you in plastic and dump your body in the river like the other sheep.
Just kidding.
Take a car, you deserve it.
Thank you for opening this timely discussion. The question of a particular artwork’s value, worth, impact, and price, and how that intersects with collectors’ desires and the economies of galleries and artists is one of the truly fascinating elements of the art world; and one that we are lucky to be discussing at all, considering the pain arising from our current economic crisis.
For a collector, price negotiation can be a parlous interpersonal dance. In real estate, the broker mitigates an offer that may reflect current market realities but disappoint the seller. In art galleries, there is no such buffer. As you point out, building relationships that ensure future access to good work is paramount for the collector. (And for the gallerist . . .) That trust must be built on both sides.
I wonder when the new auction realities will affect some of the ambitious pricing witnessed here in New York City over the past few years.
In specific cases where a gallerist sites estimates published in major auction house catalogs to support pricing, how does the collector then later bring up the hammer price in negotiations—especially if the hammer was a small fraction of the estimate—without offending? (Note to gallerists: siting estimates instead of selling prices is a gamble that helps no one.)
Collectors want to buy the best work they can afford, but no one wants to over pay. The market exuberance of the past few years has be extraordinary, but bubbles are bubbles. The economy will right itself, but no one believes we'll return to the heady days we’ve just lived through.
Those of us who love art and love to collect it, and whose lives are enriched by doing so, are still willing to buy. I believe the art market that will evolve out of this current situation will be exciting and vital, in some ways even more so than in the money-drenched years we've just lived through.
I wonder if this is less esoteric than we may think. I think there exists a tiered pricing system which is established by inference based on the current market demand and economic conditions.
Artists with greater exposure and demand move higher in the pricing tiers. Artists are situated within the pricing system by an assumption which compares pricing between one artist, style and/or medium and another.
The art dealers who sell the art works know what the demand is and how the artist fits into the current marketplace and in the best case attempts to guide prices through the tiered system as high as they can without backtracking.
When the market weakens substantially, like we see currently, pricing weakens across the board. Not because the artists "value" has decreased but because the need to sell the artworks becomes more insistent.
I love pricing theory and would recommend a book used by a lot of MBA courses called : "The Strategy and Tactics of Pricing" by Nagle and Holden
Keep in mind the cost is only one component of price. So is business climate (as we all know!), as well as what the buyer expects to pay (which plays a HUGE part in many consumer and luxury good makers).
A good relationship is never something to spoil , and usually pays back. While one should not be shy in this climate of *asking* for a discount (art or otherwise), one should be mindful that the point is to arrive at an equitable mutually beneficial exchange.
And of course flexibility and customer service is always part of the value! :)
All I'm hearing in these posts is that times are freaking difficult, and I'd love to have ideas but not everybody is ready to make sacrifices. One suggestion is to move away from Chelsea because the rates are ridiculous for a young art enterprise. If the market is cheap in USA, I would consider moving country, where people have money to buy art but not yet overwhelmed by the number of dealers.
When art is really, really good, people don't come to you and
ask for a reduction, because that art is gone very very fast.
For some reasons, I'm often interested in artists where you have to fight your way through to get a seat.
Cedric
Actually, I lied because I love a lot of remote art. Things that escape the market because it's shown in a foreign desert somewhere. I like some adventure.
Cedric
Cedric, it's turning into a global depression, there's no place to hide.
That said, I'd like to note that while discounts are nice, maybe appropriate if you're buying a $25,000 work of art, that for a lot of artists lower down in the food chain, that extra turn of the knife is taking food off the table.
This is a time when visionary collectors will have access to great work and also support young artists, facilitating their evolutionary development. All the "must have" names from the last twenty years are now passée, part of the now "safe" history of what was. It is about more than accumulating artworks in a distressed market, it is also about supporting the artists so they can continue working in trying times.
It would be nice to hear comments from non artists. In the meantime,
how much do collectors set aside from their personal net wealth for collecting art?
Do collectors flinch when they put the cash down, ever? Or is buying art like tipping: a form of self aggrandizement?
How many people choose plastic surgery over art?
How much value does a price confer on a work of art?
Great post. The perceived price-point of the artist's works in general is much more important for everyone than the price of a particular work (up to a point ;) ).
Therefore, as I understand it, reduced prices under a tougher market is not going to occur in the way naive economic theory might suggest... because dropping the price of an artist's average painting from $15K to $5k will have a catastrophic impact on future sales opportunities when/if the market comes right again. An artist not moving up is dying. Better to hold your price-line and try and cover up the discounting going on.
I'm in education rather than deep in the industry, but my feeling from a few conversations is that a lot of collectors kind of know that the discounting is the appropriate response to the times. I agree that it should ideally happen in an inoffensive way, but I think those in the selling position also need to ask how much the rarely-discussed (or poorly documented :) ) reluctance to adjust price to demand contributes to this behaviour by buyers who are obviously looking for value.
When I got into the game I was told that there was an unspoken of 10% discount on any work of art in a gallery. For instance, if something was stated to be $1000 on the price list, when the invoice arrived there was always a line that read:
"Less 10%"
and the total before sales tax was $900
My impression was that the artists and dealers figured this 10% into their pricing structure. Am I mistaken?
Why not just show really good emerging artist work and kill two birds with one weakish stone. The prices will be reasonable, good overlooked artists get exposure, and more people will buy because the work is affordable and exciting. Maybe I'm being naive.
Reply to max mulhern:
I am a collector, and just getting into it.
When I have bought, I always think about the money I am spending, and it doesn't take much for me to feel a bit nervous putting the money down as I have a normal income.
I have not had plastic surgery, and do not plan to, but you can buy a lot of non art for, say, $3000, so it naturally becomes a large budget item if you have normal means.
And when I buy - it is when I am open to it, and have a visceral reaction to it - sometimes immediately, but sometimes over time. The money is my limit, but not the point for me.
Edward, I have a question....
If the gallery decides to lower the price or give a discount, shouldn't the gallery give the artist the comission from the original price, or simply 50% of waht it sold for?
Max-
Gertrude Stein famously used to say that you can have [high-fashion] clothes, or you can have pictures.
For people who don't have unlimited means, it's a matter of setting priorities. I'd rather buy art than Lanvin dresses.
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