Formula for Pricing Art from one of our collectors
One of our collectors reached out to me with his formula for pricing art. This collector has purchased several pieces from our group and has several of our artists on his radar.
We have been collecting fine art work for a little over five years. We have focused on representational art including a lot of figurative work and portraits. We started collecting Western art and have branched out from there. I know I still have a lot to learn about the art world.
Early in our journey collecting fine art I had the opportunity to talk with Johny Rosa, Owner, Texas Treasures Fine Art in Boerne, Texas. He introduced me to the notion of looking at two dimension art work on a price per unit area basis (dollars/square inch).
Unit pricing ($/in2) for a particular living artist’s work will vary some based on factors like size of work, complexity, medium, and date of creation. For example small works carry a higher unit cost than larger works. The medium used to create the work also effects price. Oil paintings tend to have higher unit pricing when compared to watercolors or drawings.
Over an artist’s career I think they should aspire to have growth in the unit price something like this with Unit Price ($/in2) on the y axis and time in years on the x axis.
For a very small number of artists that are identified as significant by major art critics or museum curators they will see their values rise very rapidly and potentially to a very high level. For most artists it will be a slower rise and a lower Unit Price at the end of their career. Unit Pricing can also be affected by general economic conditions. For example during economic expansions prices will generally rise. During recessions the rate of rise will slow and pricing may actually fall as demand fades.
When I use the phrase Unit Price, I am referring to retail transactions of living artists. To grow in Unit Price over time artists must create great work and build their brand. A value of a work will be determined by what a buyer and seller can agree on. The value to a buyer will be in part very subjective based on what appeals to them. Other factors a buyer may consider are things that make up the artist’s brand. Some factors that move a unit price higher are:
A repeatable and recognizable style with characteristics that will allow a knowledgeable buyer to identify the work as having been done a particular artist.
Participation and recognition in national and international juried art shows (OPA, IGOR, Portrait Society, and Art Renewal Center Salon). Participation in regional juried art shows is a good starting point.
A consistent body of high quality work
Publication and recognition in art publications (print and online)
Participation and recognition in group and solo shows
Gallery representation ( some galleries add credibility to the value of an artist)
Representation in museum or high profile collector collections
A verifiable price history of an artist’s works.
Perception of scarcity or demand of a particular artists work.
Artists will want to move their prices higher over time. If they go too fast their works may not sell or sell very slowly. Reducing selling prices absent a big change in the overall market can harm an artist’s brand. If you go too high too fast, collectors will look for other works of perceived similar quality instead. Gallery representation can be of great help in coming up with a pricing model and understanding how to grow the unit price over time. Having a perspective of what other artists are selling for can help inform a pricing model. I think most collectors in a price range below $50/ sq. in buy art because they like it, not because they see it as an investment. They probably have hope that over time a collection can hold its value. Art at these price levels is meant to be enjoyed and is generally not an investment.
For representational artists I have an interest in, I track Unit Prices over time for works I can find information on. I would make the following observations:
This table is based on observations of figurative, western, and portrait oil paintings. The break points are for illustration and change across a breakpoint is normally gradual.