Supply and Demand: Thoughts on Pricing Artwork

From September 19, 2015

As I was scrolling through my Facebook feed I ran across a question about pricing from a fellow artist. They were asking for opinions regarding pricing their artwork. It made me think about the issue of price and reflect on the things I’ve learned in business and college over the years on this topic. At the end of the day price is still dependent upon two things; supply and demand.

We may have forgotten this if it isn’t something we regularly deal with. Digital downloads are an example of something everyone realizes there are an infinite supply of. When determining price the only factor that plays is demand. For example, there are a lot of pieces of software available to purchase on the internet and download to your computer. However, some pieces of software have higher demand than others and sell more downloads. What is demand? Simply put it is how bad someone wants what you’re selling. If they want it more than the money it takes to purchase it and they have the money – done deal!

What affects demand? Utility is one factor in determining demand. If it is something someone perceives as solving a need the demand increases. Popularity is another. If other people have created hype around this and you don’t want to be without one you might be influenced to get yours! This ties into another factor; celebrity endorsement. If we see someone we follow endorsing the product we may be influenced to get one so we will get the positive feelings of identifying with our heroes. Or sometimes someone just wants it! They can picture themselves having it and all the pleasure they would receive from using it so now they start debating with themselves on whether to pull the trigger and hook up. There are a lot of factors that increase demand.

Let’s apply this to artwork. Fine artists create one piece at a time where they hope to sell the individual piece. That helps with the supply side. They are one of a kind. The only question left is demand. How bad does the market want that piece? If it went up for auction would there be much interest? Would there be a bidding war? Why would customers want it? What type of people would want it? What are their personalities? Why do they like art? Where is it going to sit in their home? As we think through the answers to these types of questions it makes sense why some paintings sell where others collect dust.

What about selling prints? If there are going to be unlimited prints we know that affects supply and so do our customers. What about numbered prints? That helps increase price! If there are only going to be 100 and 1000 people want them then you’re in good shape! The only question in that scenario is how much will the market bear? Is it worth $25? $100? $500?

I’ve sat at street fairs hoping to sell artwork and barely made enough to cover the cost of being there. Other times I did very well. What was the difference? When I didn’t sell much the problem was demand compared to the price. Even if I dropped the price I’m not sure demand would have increased enough to make a difference. Simply put: the customers didn’t want what I was selling. That may have “appreciated” it. They didn’t LOVE it! Not enough to pull out their wallet. So what was the lesson? I brought the wrong stuff. That’s where we have to be willing to be honest with ourselves about why we are creating art. Is it a hobby or a business? Are we trying to make money or just have fun? If all we care about is having fun then it doesn’t really matter what we’re creating. We could do whatever we want. But if our hope is to sell art then we have to realize the customers aren’t just going to surrender their paychecks to us. We actually have to try to give them what they want. Especially if they are showing up in the first place. Why did they come? What were they hoping to find? Did they have a mental budget of what they were willing to spend that day? If so, why didn’t they spend money with us?

If our problem is selling artwork then the first thing we need to do is to look at it as a problem that can be solved. What is the solution? What have you sold? Why did you sell it? What were the factors? Here’s an example:

I was commissioned to make a painting of someone’s dog once. Why did they give me this commission? First, they liked me enough to do business with me. They believed in my skill level as an artist to do a good job with it. They had an emotional attachment to their dog which was the number one motivator. They had enough money to justify the purchase. In a nutshell it was something they wanted and had the money to pay for it.

I went to our state fair recently with my family. I paid attention to some of the vendors as well as to those who run the games. The games are interesting to me. The only reason someone plays the game if they are an adult is ego. They either want to feel better about themselves or impress someone else by “winning”. They could care less about the prize. They want the feeling of winning and will pay for it. The games might be fun if you got to play them for awhile, but the length of a game doesn’t last long. The vendors are more relevant to me. I watch some who do very well and others who seem to be desperate. The game here is marketing: price, place, product, and promotion. When those factors are all working well sales are fairly easy. When something is off they struggle.

So if we can figure out the supply and demand issue for our art and we implement a great plan for the “4 P’s” of marketing we will be off to a great start. Now, before I hit “publish” and end this post I want to say one thing. Money should not be the only motivator as to why we are doing something. The desire to be rich tempts a lot of people to do things that are not good for other people or even themselves. Selling ethically should be a “win-win” scenario that does no harm. Drug dealing seems like a “win-win”, because the seller makes a sale and the user gets high but the harm it does is obvious. I know that seems like an exaggerated example, but my point is that if we lose our soul in the process of catering to the public demand I don’t see that as being successful. If we want to be a financially successful artist who is able to have peace and joy in their work we need to seek the middle ground. That space where our interests line up with that of our customers, and we are doing work that does good.

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