In order to price your art realistically, you must understand and respect how the art business works and how collectors shop and buy. You must step back and objectively evaluate the significance and quality of your art in relation to all other art. You must also objectively assess your art world accomplishments and determine how they position you in relation to all other artists. These are difficult tasks and not necessarily pleasant, but they're absolutely essential to achieving the goals of making a go of it as an artist and of selling art.
Understanding common mistakes that artists make when setting prices is the first step in this process. Perhaps the most significant error is the tendency to focus too much attention on only that segment of the art world that pertains to you and too little attention on the rest, or even worse, dismissing the rest as irrelevant. If you let this happen, your asking prices may make sense to you and to your inner circle, but make little sense to the overall art community. The more aware you are of the big picture, of what other artists are creating, how it's being priced and marketed, and who's buying what for how much and why, the better prepared you are to price your art sensibly.
Many artists make the mistake of equating dollar values with psychological factors like how emotionally attached they are to their art or how much angst they experience during the creative process. They place special meanings and, therefore, special asking prices on certain pieces of their work that may make sense to them inwardly, but have little or no relation to the selling prices of the rest of their art or to art prices in general. Dealers and collectors see these prices as inconsistent or excessively high.
Avoid this pitfall by keeping any art off the market that you feel exceptionally close to or involved with. Keep it in your own personal collection. Any insights, enlightenments, sufferings, or inner pain you experience while creating art are your own business. Don't bill collectors for it. People in all professions have intense emotional experiences just like you, but you rarely see the prices of milk, plumbing, clothes, or other goods or services fluctuate wildly as a result.
The opposite of placing excessively high prices on works of art with high levels of personal meaning or emotional attachment is placing excessively low prices on works of art that lack those qualities. Experienced collectors who bargain hunt for art love when artists under-price art based on feelings rather than on more objective factors such as those that will be discussed below. Consistency in pricing is a cornerstone of successful selling.
Artists sometimes confuse subjective opinion with objective judgment when comparing the quality of their art to that of other artists. At the same time, they may also ignore outside factors that influence those artists' prices like who they show with, what their reputations are, how long they've been active, or how collectible they are. Once again, unrealistically high asking prices are often the result.
If you think your art is as good as that of Picasso or Matisse, for example, do you price it into the millions of dollars? Of course not. Your art may indeed by as good as that of a well-known or even famous artist who sells for lots of money, but many other factors must also compare favorably before your selling prices can approach those of that artist. Your personal opinion about how good your art is has little to do with that artist's prices or why collectors pay them. If it did, any artist could sell any work of art for any price at any time.
And don't make the mistake of thinking that your art is so unique that nothing else compares to it. All art is unique. Every artist is unique. Uniqueness, however, has never been and never will be the sole criterion for setting prices at any particular level.
Collectors rarely see themselves as having only one choice when selecting art, no matter how "unique" that art happens to be. Not only are they cost-conscious, but they almost always compare work from artist to artist and gallery to gallery before they buy. The more comparing they do, the better they get at collecting, assessing quality, determining fairness in selling prices, and getting the best bangs for their bucks. This is what good collecting is all about and what you're up against when it comes to pricing your art.
So how do you price sensibly and realistically? At the most fundamental level, you must be able to make a fact-based case for what your art is worth. You certainly know how to explain what it means from a personal standpoint, but if a collector asks, can you explain it equally well from a financial standpoint? Convincing people that your art is worth what it's priced and is therefore OK to own is an essential part of completing sales. This is especially true when buyers are on the fence, not familiar with your work, or just starting out as collectors.
In the world of selling, all reputable and established art galleries are fully prepared to explain their asking prices to anyone who asks. This is how the business end works. Dealers know that collectors are concerned about how they spend their money and, as a result, they have plenty of ammunition on hand when the focus of a presentation turns from art to dollars.
The best way to justify your asking prices is to do exactly what the galleries do. Present documentation that you've been selling art consistently for dollar amounts comparable to what you're now charging. The more records you have of recent sales through dealers, galleries and agents or directly to collectors from your studio, the better. These records, of course, should be relevant to the situation at hand. In other words, if you've sold three paintings to your rich uncle for $3000 a piece, but have never sold to a collector for more than $500, quote prices in the hundreds to collectors, not the thousands. You might also think about giving your uncle a price break while you're at it.
When you don't have a record of consistent sales in a particular price range or sales have been erratic and you're not sure how much to charge, setting your prices the way that real estate agents do is one of your better options. They base home prices on "comparables" or what similar houses in the same neighborhoods sell for. In your case, this means basing prices on how much other artists charge who live in your geographical area, work in similar mediums, sell through similar venues, create similar art, and whose accomplishments, experience, and quality of work are comparable to your own.
If you're just starting out and have not sold very much, pricing your work based on time, labor, and cost of materials is often the best way to go. Set yourself a sensible hourly wage, add the cost of materials, and make that your asking price. If materials cost $50 and you take 20 hours to make the art at $15 per hour, then you price it at $350. Don't forget the comparables, though. You still want your final asking prices to be in line with what other artists with similar credentials to yours are charging for their work.
Whenever you set prices by comparison, compare to what sells, not to what doesn't. Supposing your "comparable" artist has a show with prices ranging from $2000-$25,000. Suppose it closes with only pieces in the $2000-4000 range selling. This result tells you that collectors balk at paying anything more than $4000 and can be interpreted as their verdict on the artist's high-end prices. You, consequently, would be advised to price your art from $2000-4000 and forget going much higher.
A similar situation can occur if you compare your prices to those of artists who primarily sell limited edition prints of their work. They price their art to sell their prints, not their originals. The more expensive the originals, the more they tend to elevate the collectibility of the prints in the eyes of collectors and stimulate sales.
Dealers use the expensive cost of the originals not to sell them, but rather to justify the print prices being as high as they are while at the same time, portraying those prices as bargains. "The original costs $100,000, but you can have the signed limited edition for only $600." It's just basic marketing, folks. Selling prints is what this tactic is all about and not selling originals. The prints, meanwhile, have nothing to do with the originals other than being photographic reproductions in one form or another and the idea of equating the two is absurd-- but don't get me started on that one.
No matter how you set your prices, be competitive. As distasteful and capitalistic as this may sound, you're in competition with other artists. Every time a collector buys a piece of art from you, that's one less piece that they're going to buy from someone else. Naturally, you want to maximize the number of pieces that collectors buy from you.
The best way to stay in the hunt is to make sure that you're always charging the same or even a little less than what you determine to be the "going rate" in any given selling circumstance. For example, if you're in a group show or exhibition, enter a piece that's priced competitively with those of the other artists. You don't want to have the most expensive piece in the show; you don't want the first impression that collectors have of your work to be sticker shock. You want it to stand out for art reasons, not money reasons.
Another issue that artists often wrestle with is when to raise prices. The best time is when you're experiencing a consistent degree of success and have established a proven track record of sales that's lasted for at least six months to a year and preferably longer. You should also be selling at least half of everything that you produce within a six month time period. As long as sales continue to be good and demand remains high, price increases of 10-25% per year are in order. As with any other price-setting circumstances, be able to justify all increases with facts. Never raise prices based on whimsy, personal feelings, or because you feel that they've remained the same for long enough.
Remember that today's collectors are more sophisticated than ever. The idea of falling in love with one piece of art and having to have it at any cost fell by the wayside years ago. Collectors now research and compare before they buy. The only ones who don't are new to the game. Just in case you get lucky and find one who's a little naive, by the way, resist the temptation to take advantage and overcharge. You risk the possibility of turning them off to continued collecting. We all know that we need all the art collectors we can get.
Lastly, have something for everyone. Offer art in all price ranges. People who like your work, but can't afford the big stuff should at least have the opportunity to come away with something. These are your biggest fans, your collector base, the people who will stand by you throughout your career. Do whatever you can to provide them with art. That's the best way to maximize your exposure, create good will, get yourself out there, jump start your sales, and become known and respected in the arts community.