An explanation of special words used for pricing art;
​terms used in art business contracts and the formulae for pricing art
As an artist you MUST know and understand:
  • the special business words used to describe different types of prices used for selling art - and what they actually mean. 
  • how the formulae work that define different prices.
This page covers:
  • Art Pricing - Terminology - the words that you will come across in articles and contracts related to pricing art - and what they mean
  • The problems with pricing formulas - links to explanations of different formulas and the pros and cons. (This section will be expanded in future)

Art Pricing - Terminology
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Find out the meaning of business terminology. Below you find out what the terms relating to each type of price actually mean.

THE COST PRICE
This is the artist's base price below you will not go in principle. This is because this is how much the work cost you to make. It includes all direct costs, an element for your labour and a proportion of your overheads.

THE LIST PRICE
This is your version of the "manufacturers recommended price". This is the price which you would like to sell your artwork. It's just a price and has nothing to do with value - remember the purchaser determines that by either buying or leaving it unsold.

THE RETAIL PRICE
This is the display price and the price that the public sees. This is the starting point when an item is to be sold via a retail outlet. It's not the same as the price it actually sells for. The retailer may end up having to discount this price to sell the art.

THE FAIR MARKET VALUE
If you want to sell and somebody wants to buy and you met up and haggled, this is the price at which you would both be agreeable is a fair price and the one you would sell your art for in a given market. This might vary depending on where you are selling your art.

THE WHOLESALE PRICE
This is the price you get when you sell to an art dealer who buys volume. They will expect a discount for buying in bulk. Typically the wholesale price is around 50% of what the item will retail for. That's not the same as your list price as the person who is going to retail might have a much better idea than you as to how much an item will sell for.

THE DISCOUNT PRICE FOR COLLECTORS
A regular collector might well expect to be given a discount because they are now buying in volume - but over time. You'd better be ready with an answer for when they ask. Do not offer discounts to people who have never bought your work before.

THE CONSIGNMENT PRICE
A consignment is a batch of artwork you ask a gallery to sell on your behalf. The consignment price is the price you agree with a gallery below which they will not go. In other words when you agree a gallery can sell your work, agree what you expect as an artist to be paid for the work. That then gives them some wiggle room around mark-up and discount on mark-up for retail purposes.
THE RESERVE PRICE
This is a term used by auctioneers (or artists) for a price below which they will not sell. Art for sale which does not reach the reserve price is usually with drawn from sale - whether the sale is on eBay or at Sotheby's. A reserve price is not always disclosed to the marketplace.

THE HAMMER PRICE
This is the winning bid for an artwork - payable by those who buy at auction. However in addition to this, a buyer must also pay any additional premiums and charges declared in the sale particulars. These can include a Buyer's Premium (charged by Auction houses), any applicable sales taxes, payment in respect of any artist resale rights (applicable only to secondary sales) and shipping and insurance of the artwork purchased to wherever the buyer wants it to go. 

THE PRICE ACCORDING TO YOUR FRIENDS OR FAMILY
This is wholly irrelevant to considerations about pricing. Unless they are seriously thinking of buying your work of art and paying real cash for it, their ideas are just that - ideas


References
These are articles which discuss different types of approaches to pricing in more detail

The problems with formulas for pricing art
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It's important to
  • develop a logical system for pricing which is consistent and easy to apply
  • have a formula which makes a sufficient and appropriate distinction between original art and reproductions

The problem with using formulas for pricing art is that they're often derived from manufacturing industries where high volumes of "widgets" being produced.
  • Costs of: labour + materials + selling overhead (fees, packaging etc) = wholesale price;
  • 2 x wholesale = retail price
Pricing formulas are much more appropriate to items which are reproduced - particularly with respect to lower cost high volume items - such as:
  • craft items (eg jewellery) which are repeat versions of a successful design not 'one-off' originals
  • digital reproductions of original art (where the original cost of material and the cost of the original labour and the added value of the creativity are spread across more than one unit).
Graphic Artist's Guild Handbook of Pricing and Ethical Guidelines - by Graphic Artist's Guild

Average Customer Review: 4.5 out of 5 stars based on 21 customer reviews

This book is really aimed at commercial artists who operate as freelancers delivering graphic art. However a number of the topics it covers are also of interest to other artists

REFERENCE: Articles about Pricing Formulas
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The Craft Business Perspective

Most of these articles are by crafts people - however they still contain useful information for artists.