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Pricing Art: Terminology & formulae

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
​

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 Design Trust - What price terminology to use with shops and galleries?  There are a couple of different prices that people refer to, and it is essential for your professionalism that you know exactly what terminology to use.
  • Visual Artists Ireland | The Science and Art of Pricing and Costing Your Work
    Introduction Costing and Pricing are two separate but inter-related processes. Many artists focus on finding the right "price" for their work but this can't be done in the absence of knowing how much it costs to make.
  • Arts Business Institute | Overcome Your Fear of Pricing
    This article tells how to calculating wholesale price, and average markups to retail. How to adjust pricing to enter new markets; increase perceived value of your work.



The problems with formulas for pricing art
​

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
Graphic Artist's Guild Handbook of Pricing and Ethical Guidelines - buy from Amazon.com

REFERENCE: Articles about Pricing Formulas
​

The Craft Business Perspective

Most of these articles are by crafts people - however they still contain useful information for artists.
  • Craft Pricing Formula and Downloadable Calculator | The Craft Business Guide A craft pricing formula is an excellent starting point to determine how much your items should sell for. Here's a free, downloadable pricing calculator to help you ensure you do not under-value your handmade items.
  • Pricing Your Craft is Actually Easy
    To sell handmade crafts as a home-based business to craft shows & fairs can be lucrative if you get your pricing right. LEARN HOW HERE.
  • THE ART OF CRAFT: Pricing Your Work - Art or Craft
    Pricing is a difficult issue for many artists and craftspeople. They tend to devalue their work and place lower than market prices on their work.
  • How to Successfully Price Your Crafts
    Your objective is to price your crafts so that you make a reasonable profit while not pricing yourself out of the market. It can be an art. Find out how variable and fixed costs plus perceived value factor into the equation.
  • Jewelry Pricing Formula — Jewelry Making Journal
    First, I use a calculation to determine a base price that ensures I won’t be selling the piece at a loss. Then, once I’ve determined that base price, I adjust the final retail price to more accurately reflect the value of the piece

  • Pricing Handmade Items: Formula
    Practical tips to help designers, artists and creative entrepreneurs with building a profitable business
  • What Is a Markup Formula?
    A markup formula is a math tool that gives businesses a way to figure out what they should sell something for while still making money and covering overhead expenses like materials.
  • The Art of Pricing: Three Helpful Pricing Exercises | The Etsy Blog
    These exercises are here to make you think about your pricing, hopefully they can help you create a formula that works for you
  • Art & Money: How much should I charge? | Kickass Creatives
    I do think these types of formulas should carry a warning notice for creative folk. You need to be aware that the same calculation is also used to calculate the cost of non-art products, like a box of nails for example.

BACK:  How to price your art
BACK:  How artists price their art
NEXT:  The price of affordable art
This website provides a compendium of resources about the art business for artists.

It helps artists learn how to do better at being business-like, marketing and selling art and looking after their financial security.

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  • Home
    • Art Business Information Index
  • NEWS
  • PRACTICE
    • Starting Out - Tips
    • Office Practices >
      • Data Protection for Art and Artists
      • How to back up image files
    • Learning Opportunities >
      • Best Art Business Books
      • Art Schools in the UK
      • Art Business Courses
  • MARKETING
    • How to write an Artist's Statement >
      • What is an Artist Statement?
      • Why you need an Artist's Statement
      • TIPS How to write an artist statement
      • The Language of an Artist's Statement
      • What an artist statement should contain
      • Examples of Artists Statements
    • How to write an Artist's Resume or CV >
      • Social Media summaries
      • CV for Artists
      • Resume for Artists
      • Biography for Artists
    • How to write a press release for an artist
    • The Private View Invitation
    • Publicity for Juried Exhibitions
    • Websites for Artists >
      • Why websites matter
      • Options for Websites
      • Web content for Artists
      • Web design for artists
      • Writing for the Web
    • Blogging for Artists
    • Image sizes for Social Media Sites
    • How to be mobile-friendly
  • SELL ART
    • A Guide to Art Dealers & Galleries
    • A Guide to Art Agents and Consultants
    • Art Fairs
    • Alternative Options for Exhibitions
    • The Vanity Gallery
    • Trading Standards for Artists
    • E-commerce for artists
    • Open Studios
    • Selling Art from Home
  • FRAME / SHIP ART
    • FRAME ART >
      • List of Recommended Picture Framers
      • Conservation Products
      • Framing for open exhibitions and art competitions
      • Framing Videos
      • How to hang a picture
    • SHIP ART >
      • How to pack artwork
      • Packaging materials
      • How to ship art to exhibitions
      • How to ship internationally
      • Post & Parcel Services
      • UK Art Movers & Couriers
      • USA Art Movers & Couriers
  • COPYRIGHT
    • Copyright and artists' rights
    • Copyright Infringement and Fair Use
    • How to protect artwork online
    • How to do a reverse image search
    • What to do about copyright infringement - for artists
    • Global Conventions on copyright >
      • Copyright in the UK
      • Copyright in the USA
      • Copyright in Canada
      • Copyright in Australia
  • MONEY & TAX
    • How to Price Your Art >
      • How important is price when buying art?
      • Options for Pricing Art
      • Terminology and Formulas for Pricing Art
      • Art Experts on Pricing Art
      • How artists price their art
      • The price of affordable art
    • How to create an Invoice
    • Insurance for Art and Artists
    • Tax Tips for Artists
    • VAT for Artists
    • Retirement and Pensions for Artists
    • The Art Legacy >
      • Estate Planning for Artists
      • Famous Artists Estates
      • Artwork Inventory
      • After the Death of an Artist
      • Copyright and Resale Rights after Death
      • Art and Inheritance Tax
      • Estate Planning for Art Collectors
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