As mentioned in Part 1, the price of artwork should support an artist receiving a livable wage and can be accomplished by following the 50/50 rule: 50% of the price should cover all the costs of creating the work, and the second 50% will account for the efforts of advertising, overhead and selling it. By allocating a common percentage for sales, no matter who is selling the piece, the artist’s pricing will remain consistent. For instance, if an artist sells his or her own piece, they receive just compensation for the marketing and networking behind that sale. But if a gallery or other retail establishment handles the sale of a work, they will receive roughly half, and the artist will still receive what is needed to cover the creative costs with a profit. This will protect the artist from accidentally undercutting a gallery price, as well as assist in maintaining consistency amongst different pricing structures.
Consignment is a common pricing principal employed by galleries. Places that will consign work accept no risk in doing so; if the piece does not sell, the artist will get it back. If it does sell, the gallery will typically take between 45-55% of the price paid by the customer.
With Keystone pricing, the purchaser assumes all risk. They will purchase at wholesale prices, and will then typically double the price by marking it up 100%. The artist is usually paid within a month from delivery, and if the work does not sell, the artist does not get it back. This method is generally used within a retail context. Reed Prescott pointed out that “usually when you sell wholesale, it is in larger quantities than selling retail, so it helps to justify the discount.” He also noted during his May 5, lecture that the next step in pricing is to distributors. The distributor price is usually 50% of wholesale. Distributors sell to wholesalers and tend to order in very large quantities while also “assuming no return risk.”
The image to the right illustrates who receives what percentage of payment during a typical sale of artwork through the four different avenues detailed above.
Remember, the price for a work of art has little to do with selling it. Artists need to be able to, and have the right to make a living at what they do. It is very important to set your prices according to what you need to not just survive, but also to thrive. Many people see art as an investment. An artist can add value by adding to his or her body of work. The longevity and experience of an artist will elicit higher prices and higher returns of investments. Also, do not be afraid to seek out different markets to support sales of your work. Perhaps your neighbors cannot afford your work, but there are many others who can.
[tags] selling artwork, price structures, retail, wholesale, consignment, distributor pricing, body of work, livable wage[/tags]
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