Thursday, September 28, 2023

The important things to know about pricing Affordable Art

The really important things to know 

about pricing Affordable Art

There are two things you need to know about pricing affordable art.

The first is that what the PUBLIC think is "affordable" is the only game in time.
It's emphatically NOT what the artists or the art galleries and art fairs think it is.
That's because they're trying to make money for themselves so they have a huge incentive to call it "affordable" but then pitch the price high!

The second is that it's the PSYCHOLOGICAL VALUE of a number that really matters. A poll I ran revealed that
  • Between 64-70% would buy art up to 500 (of whichever currency)
  • Between 70-91% would buy art up to 1000 (of whichever currency)
  • ONLY 9-10% would contemplate buying art above 1000 (of whichever currency)
The important thing is to identify what are the key hurdle prices which change behaviour. It's akin to the notion that you should always price just below an important hurdle price rather than just above.

Why I got interested in the price of affordable art

I became very interested in the concept of affordable art - and its pricing - back in 2010 (post the banking crisis of 2008 and what followed).  

This was a time when a lot of art galleries were closing - mainly because people were not buying and/or because the people who ran the galleries were not good business people and/or they had no concept of risk management and made no provision for a difficult economic context

The main reason for my interest was that artists were trying to sell in a difficult economic context and kept getting their pricing wrong which meant their sales were also plummeting.

They very much needed to understand 
  • what was deemed "affordable" and would still sell.
  • what were the key hurdle prices within the range they considered affordable.
  • how to avoid shooting themselves in the foot due to poor pricing practices.
We've now had 12 months of a very difficult economic climate with inflation and significant interest rate rises. It's not coming to an end any time soon - even if it has improved somewhat. We are still a long way adrift from where we were two years ago.

Bottom line - we are now back in the same territory as 2010 and the same issues and questions apply re. pricing.

What is an affordable price?

In 2010, I was especially interested in 
  • how "affordable art" was defined and most particularly, 
  • how the price of affordable art is determined.
My research at that time and since has taken different paths
  • I researched affordable art on Google
  • I looked in some detail at what the affordable art fairs were doing and how they were defining "affordable" i.e. who were they defining as their potential customers
  • In 2010 I did two polls to test a theory I had about numbers (which proved correct)
  • Subsequently I've repeatedly counted and charted sales at open art society exhibitions - which have repeatedly underlined my assertions about hurdle prices made back in 2010
  • I've visited affordable art fairs to see what prices are charged and which artworks sell.

Affordable art fair definition

In my last post I defined how the art fairs described "affordable art" to both buyers and exhibitors - who get different words. 

I'm afraid their concept of "affordable art" is not mine. Nor does it seem to be based on any sort of market research. 

Poll to identify limits for affordable art buyers

In 2010, I did a poll and then reported the results on this blog. These are the two posts.
The polls were addressed to readers of this blog - mainly on the basis that artists also like to buy art! I know I do - and I like to buy affordable art and I've always operated according to limit prices which govern my purchases.

The poll assumed
  • you have a top price limit -and that you might buy at any level up to that budgetary or psychological limit.
  • affordable art is whatever it is - it could be original art, fine art printmaking, giclee prints - whatever
  • the response varied by country. the question was asked in relation to two different currencies - but made the answers absolutely identical in numerical terms (except for the currency). 
    POLL: What price is affordable art? was targeted at two different audiences. Those living in the UK and those living in the USA. 
    There was a reason - as you will see from the results.
    The November Making A Mark Poll is about affordable art PLUS
    • what price is perceived to make art affordable (in $ and £) and
    • the reasons why art is determined to be affordable.
    What price is affordable art? (Poll Results) contains two charts of the results - in terms of the votes for different price bands (see below). 
    These both indicate very clearly what people considered to be the range of values for affordable art.
    As I expected, the charts of the results - for the UK and USA - look very similar but after one takes into account the currency difference the results in terms of values are significantly different. Illustrating that it is the psychological value of the NUMBER that matters not the finite value in currency terms.

    IN SUMMARY: The pure numbers 500 and 1,000 are hugely influential in terms of people's perceptions of what are the big price hurdles for affordable art.
    • Both produced a peak and very similar values in terms of percentage responses (see below) after which there was very little activity until the next price hurdle was reached.
    • Between 64-70% would buy art up to 500 (of whichever currency) 
    • Between 70-91% would buy art up to 1000 (of whichever currency)
    • ONLY 9-10% would contemplate buying art above 1000 (of whichever currency)

    what price is affordable art in GB£
    what price is affordable art in GB£ - in 2010

    The Power of 500
    • In the USA, 70% of the sample would buy art at less than $500 (£320)
    • In the UK, 64% of the sample would but art at less than £500 ($775)
    • In both countries ONLY about a third of the market would contemplate buying art costing more than 500 (of whichever currency)
    what price is affordable art in US$
    what price is affordable art in US$ in 2010

    The Power of 1000
    • In the USA, 90% of the sample would buy art at less than $1,000 (£640)
    • In the UK, 91% of the sample would but art at less than £1,000 ($1,550)
    • In both countries ONLY 10% of the market would contemplate buying art costing more than 1000 (of whichever currency)
    Bear in mind the exchange rate has changed. Back in 2010 this was as follows
    • $1 (US) = £0.64 (GBP)
    • £1 (GB) = $1.55 (USD)
    Which means in very broad terms $1 = 64pence and £1 will get you $1.55

    The dollar has strengthened against sterling and the exchange rate is now
    • $1 (US) = £0.82 (GBP)
    • £1 (GB) = $1.22 (USD)
    So just bear that in mind when looking at the results.
    Interestingly I think a poll now would get pretty much the same results. That's because it's the pure psychological value of the number that matters - not its actual value.

    The Price of Affordable Art

    Five years later, I followed up with more information to help educate artists about pricing art.

    I created a dedicated page on my Art Business Info for Artists website focused entirely on The Price of Affordable Art  (In the How to Price Your Art section)

    The intention was to make my research available to wider audience and reach those who hadn't read the original research and the blog posts in 2010.
    Plus reinforce the importance of mental price barriers / hurdle prices

    From The Price of Affordable Art

    Price Under and Not Over a Price Barrier
    It's also very important for artists to know where price barriers are located so that they price just under rather than just over. 
    I get so frustrated when I see an artist has painted a great piece of art - and then priced just over rather than just under a hurdle price / barrier. I KNOW they've instantly reduced their chances of selling it. Hence why I write these blog posts!!

    Art Sales Metrics: Charting actual sales and sales values

    I also now write regularly about how pricing related to sales success or otherwise in the art society exhibitions I reviewed every year. This is my way of indicating - as clearly as I can - 
    • what "the buying public" think is 'affordable art' today and 
    • how this changes as economic contexts change.
    I find charting and tabulating the sales to be a very efficient way of showing artists how price affects sales.

    It's also a very good way of monitoring how changes in economic context are having an impact or otherwise on sales - with different price ranges.

    This is an example from a very successful exhibition held by the Royal Society of British Galleries at the Mall Galleries in April 2023 (see RBA Annual Exhibition 2023: Analysis of art sales metrics & Recommendations about pricing artwork)

    This compares the art sold in the blue column to the art hung in the grey column.

    The percentage of artwork sold when compared to that hung in each price band has a very pronounced distribution.

    One third of sales were priced below £500.
    55% of sales were priced below £1,000
    From this, some obvious conclusions can be drawn:
    • the most popular price bands are all below £1,000 - with under £500 being the most popular (for what I commonly refer to as "impulse buys")
    • for the three price bands below £1,000 identified above the percentage of sales achieved for artworks hung is between 23-30% - which looks like a good result to me
    • by way of contrast over 90% of artworks in the top two price bands (above £2,000) failed to sell. (i.e. 7 sales out of 93 hung = 7.5%)
      • That's very expensive wall space for a very low return on the 90%
      • I have been saying - for a very long time - that the only people pricing above £2,000 in the Mall Galleries should be artists with an established track record in reputable art galleries for sales above this figure.
      • The artwork might be great - but if financial targets have to be met then pricing needs to be sensible and sensitive.

    The pattern of poll results back in 2010 continue to be pretty much reflected in actual sales 
    • in very popular national art society exhibitions 
    • where there is a mix of artists, artworks, and size of artwork for sale. 
    • Plus large numbers of visitors who are pretty represenatative of the buying public who like affordable art.
    It's an actual poll in terms of actual sales to real people!

    To me it's important that those artists wanting to sell need to think very carefully about:
    • how to price their art so that it's affordable - and subject to "impulse buys"
    • which art to exhibit in exhibitions in which they are not known. 
    • how to build a following - with a much smaller number of population of potential buyers - so that they can price above the popular affordable art price ranges in due course.

    TOMORROW I'm going to be talking about "The importance of the Minimum Price in Open Exhibitions...."

    No comments:

    Post a Comment

    COMMENTS HAVE BEEN CLOSED AGAIN because of too much spam.
    My blog posts are always posted to my Making A Mark Facebook Page and you can comment there if you wish.

    Note: only a member of this blog may post a comment.