Our summer intern, Katie Jenkins, was presented with the question of how art is priced. After talking about it with us, she did a little research of her own. Here’s what she has to say on the subject of pricing art:
A few recent comments about the pricing of many of the clay pieces currently at Migration, including a question from a gallery visitor regarding the "value" of one of Steve Mitchell’s ferric chloride pots, made me consider the undoubted flexibility of the art market. (The client wanted to know why the work, at $425, was so inexpensive and whether it would increase in price.) Laura came to my aid, loaning me Talking Prices: Symbolic Meaning of Prices on the Market for Contemporary Art by Olav Velthuis (2005, Princeton University Press) a book loaned to her by one of Migration’s artists, Randall Stoltzfus. (If you don’t have time to read the book, the extensive notes and tables are pretty interesting by themselves.)
After reading the ethnography, I got a strong sense that the art market is not a true capitalistic environment generally associated with the word "market" due to its ambivalence about the process of assigning value to its products. The ambivalence comes naturally from the fact the art dealers are part of the capitalist structure by necessity and part of our cultural life by choice. (With chapters titled "Exchanging Meaning", "Promoters versus Parasites" among others, you quickly begin to understand the strange and rarefied world inhabited by the art market.)
So then, how should we attempt to understand why the art market simply cannot function as a normal market does, especially when it comes to pricing?
I believe that the answer might lie in the symbolism within the art world. Everyone can interpret the symbolism within art itself, but there are also clues to the larger art world found in the way that people communicate within the market. There is significantly less explicit discussion about the dealing of the art than about the art itself. Velthuis’ observed a basic dichotomy in every gallery he entered that embodies the communication within the art world. The architecture of galleries- art in the front and business in the back- is the perfect example of how the art world operates. While the visual design of galleries generally emulates museums- crisp white walls, solid floors, and the art- the business operations of the gallery are all hidden. The complex intricacies of a billion dollar industry therefore are represented by a minimalist design, making it look "easy." There is as much artifice in the art market as there is art – and without it, people are suspicious. Straight dealing is perplexing.
But art does not just communicate visually, and neither does the market. The verbal communication between artists, their gallery representatives, and their clients is another symbol of how the art market operates. The poetic language used to describe any piece of art is often transferred into the methods of describing prices, sales, and business relationships so that numbers, ratios and other data on value are rarely discussed in economic terms. The stories told by the gallery owners that Velthuis interviewed used words like "humble" and "seductive" to describe certain prices of artworks.
As for advertising art, gallery owners wisely let the piece of art be the primary marketing tool for the gallery, receptions and the artist - just as they should let the art work explain its own value. Other dealers let factors outside of the individual piece symbolize its market value, especially who made it (the fame of the artist), who has it (a prominent collector or gallery), or who wants it (auction prices or museum acquisitions). These references unfortunately can have more of an impact on the value of a piece than the quality of the art itself.
Velthuis describes the art market as being a "communication market" as much as an art market and a "dense fabric of mutual gifts and favors"; and I think most people would agree. Regular quid pro quo transactions and numerous discounts to acquaintances encourage the flexible market. This equally beneficial relationship between buyers and sellers definitely is exclusive to the art market.
This brought to mind an exhibit I saw in NYC last fall: a series of photographs of gallery desks. You saw the occasional decorative flower on the counter, guest book, or even the top of the gallery attendant’s head, but other than that, every single image was pure white. While the artist Andy Freeberg described his exhibit "Sentry" as an attempt to examine the question "are we setting up barriers to the simple eye-to-eye contact that affirms our humanity", I think it is also relevant to the representation of the market within the galleries that supports a system that ultimately allows individuals to interpret and set a unique value to art, ideally with limited interference. While you can attempt to set a price of a piece of art based on the costs of production, the size of the piece, or the quantity produced, the real value undoubtedly lies in the essence of the art.
I think the best example of correct pricing methods was mentioned on page 136 of Talking Prices. When asked why he had priced one artist’s work lower than the expected $4,000 tag, one gallery owner claimed "it (the artwork) does not want that price yet".