Pricing Art, Making a Profit

Many artists and gallery owners find it difficult to make ends meet financially. According to Chicago gallery owner Peter Vale, the reason for this problem is simple: "craft is undervalued." Though Few would dispute Vale's assessment of the issue, it is difficult to find unanimity about a solution.

The one thing both artists and their galleries agree on, though, is that pricing is an important issue that begins with how much the artists can charge for their work. Ron Wilcocks says, “We are 100% supportive of the prices our artists set.” Wilcocks owns Earthwood Artisans and Earthwood Collections in Estes Park, Colorado, with his wife Ann.

How should an artist set prices? “There are so many aspects to that question,” answers Montrose, Colorado artist Nick Zappa, who has been making and selling stoneware pottery with his wife Joan for thirty years. “We try to get a price for our work that is reasonable for not only us but for the store owner as well,” he adds. “They need to be able to sell it and make a decent profit and we need to make a decent profit.”

That’s a worthwhile sentiment, but the first question that comes to mind is what is a “decent” profit? Profit, of course, is simply the difference between the cost of an item and the price at which it is sold. For a craft artist, costs include direct items like materials and labor as well as overhead expenses like fuel, studio rent, and insurance. Aside from setting a minimum, these factors have nothing to do with what an artist should charge.

What about the aesthetic value of a piece? What about the years of experience the artist has applied to producing an object of delight? What role does free market economics play? Veteran jewelry maker Nancy Daniels Hubert says, “I don’t go by materials and things like that. The less I want to part with a piece, the higher I charge.”

Customers set prices

Ultimately, the retail customer determines the price an artist can charge. Rather than start with what it costs to make a piece, the artist should look at what similar work is selling for in galleries around the country and work backwards, taking into account that most retailers use a keystone markup, which produces a gross profit margin of fifty percent of the retail price. The markup isn’t simply double the artist’s price, though, because there are other cost factors involved, particularly shipping. “We have to figure out our pricing depending on what it costs us to get the item in our store,” says Steve Fishman, who operates Stowe Craft Gallery in Stowe, Vermont.

Some gallery owners go beyond the keystone benchmark, however, which says something about whether prices in general are as high as the market will bear. Art is not a commodity, so there is little elasticity of demand in the marketplace. In other words, there may be a price so high the customer won’t pay it, but patrons seldom buy a piece of art just because it’s cheap.

There is also a big psychological aspect to prices, according to Vale, who operates the shop carrying his name in the heart of the River North gallery district in Chicago. “We have a range of customers from big-time collectors to the general public, and sometimes, the collectors think something isn’t good enough if it’s priced too low,” Vale points out.

Wilcocks agrees. They carry work from about 230 artists in their two galleries, and he says, “We’ve had to counsel artists in regard to under-pricing themselves. Some of it comes from emerging artists who are a little timid. They’re eager to please, so they hesitate to name what they consider a big price.”

“You need to know what the market is” for your work, recommends glass artist Tom Fuhrman. “Do some prototypes and do some test marketing.” Fuhrman, whose studio is in Woodbury, Tennessee, says, “People don’t really know a lot about their markets. We’re in a business that’s pretty unsophisticated.”

Consistency counts

According to every artist and gallery owner I talked to, another important factor is consistency of price from one distribution channel to another. “Lately, we’re becoming more sensitive to the issue of the internet and artists who sell direct,” Fishman says. “We always ask. It affects whether we want to do business with an artist. For us, it’s not a question of whether they sell directly to the public, it’s just, is their pricing going to be similar to ours?”

Vale adds another facet to that issue: “It’s really important for artists to be consistent if they’re showing similar work from one gallery to the next.” Hubert even goes a step further to protect the galleries who carry her work by generally not exhibiting at shows in the towns where they’re located.

Setting prices isn’t something many artists feel particularly comfortable doing, but it’s an essential skill to develop if they hope to have successful long-term careers. “The sad thing is, we’re not just artists anymore,” Fuhrman observes. “It’s more about marketing. It’s more about running a business. It sure as hell isn’t much fun, but that’s what you’ve got to put up with.”