A Quick, Irreverent Note on Art Prices

Working in an art space exposes one to a myriad of interesting characters and experience. Visitors love to quiz us (and we love to answer quizzes). Sometimes, we get challenging questions, such as this head-scratcher “Why does this cost $__?”

Like all difficult questions in life, there is an answer, but the road to that destination is long and winding. Here’s Liu Dao’s hastily-sketched road map to the bewildering jungle of art prices.

The first, and easiest, and most breathtakingly honest answer is readily supplied by L’Oréal – “Because you’re (I’m) worth it.” [i] Quite simply put, the gallery and artist have decided that the artwork is worth thismuch. That’s it. Pay up.

But quell those sharp inhalations of indignation. (It’s worth realising that the same question could be easily asked of any extravagantly-priced luxury item.) The capitalist juggernaut that shapes our societies makes the issue of pricing simultaneously simple and complex. Deciding on a price is a simple process internally, employing a quick subtraction between selling price and cost price. However, because art production involves factors such as cost of materials, labour, rental of studio space, insurance, utility bills and all those awful grown-up things, determining an accurate “cost price” can be a tricky issue. Still, it can be done. A precocious Grade 4 kid could make the calculations.

People pictured within NFS.

(For the purposes of this essay, we take the Machiavellian approach that the price of an artwork reflects its value. It’s a cop-out, of course, but that’s a separate rabbit hole that we cannot pursue if we intend to have a life. It isSaturday, you know.)

What is far more nebulous is the process of measuring worth externally. How does one assess the value of art? This may be one of the most perplexing, frustrating, endless, and fruitless of tasks. Beyond a loose connection with the rise and fall of economic cycles, art prices follow their own incomprehensible trajectories and can even directly contradict economic conditions, such as when a Sotheby’s 2008 auction of Chinese contemporary art in Hong Kong pulled in a whopping $51.7 million [ii] while the world economy was gasping for breath in the heart of a global financial crisis. Just as art-making is a human expression of emotion, perspectives, and experiences, art-buying – and by corollary, art prices – are just as easily swayed by unquantifiable factors.

Prices may be susceptible to events as large as the September 11 th attacks and as small as swift mentions in particular publications. Apart from the usual considerations of popularity, recent sales of comparable pieces, technical qualities and social relevance [iii], artists see their stars rise and fall with good reviews, bad press and even self-perpetuated antics [iv]. A legendary story relates a fight between the neo-Dadaist artist Robert Rauschenberg and art collector Robert Scull. Rauschenberg arrived at Scull’s auction drunk and yelled at him, “I’ve been working my ass off just for you to make that profit”, to which Scull replied, “It works for you too, Bob. Now I hope you’ll get even bigger prices.” Rauschenberg allegedly then punched Scull in the stomach and sulked off. After the story circulated, escalating prices for Rauschenberg’s pieces made both the artist and the art collector very wealthy [v].

The Great Leap: Worth at least 3 young milk cows

The Evening After: Worth perhaps 5 singing goats

Mouthful of Yellow: Yeah, you know what this is worth.

Of course, the secretive nature of galleries, as mentioned previously, may add to complexity of determining prices. Most galleries do not pay taxes, nor do they readily reveal data about their sales and profits. At opening parties and vernissages, it is not uncommon to see a group of gallerists smugly talking about how good business has been, whether true or not. Or, they may be equally likely to “despondently” lament the dry season while feverishly gulping champagne. Who knows?

Currently, art evaluators try to map the rise and fall of prices through a complicated system of historical price indexes and auction results. Indeed, auctions are a large and immediate indicator of an artist’s fortunes, and auction houses are important gatekeepers to perceived value. However, the art galleries, studios, art centers, and private dealers, who are at the frontline of daily sales, do not necessarily see their fortunes rise and fall with those of the large auction houses whose results permeate the market. And more importantly, they rarely share the details of their transactions with anyone else. Rarely does an artwork sell for its stated price. And even if it does, it is difficult to take into consideration the value of many “freebies” thrown in, like free delivery and installation, insurance coverage, etc. Using price indexes, therefore, is not without inaccuracies.

Why sooooooo confuuuuusing?

We don’t know. We can, though, offer up our two-cents’ worth – if you think they are really worth that much.

The thing about art is that it inhabits an uneasy space between a commodity and an experience. People who buy it do so for a myriad of reasons – aesthetic pleasure, investment, even bragging rights. Mercedes Benz, Louis Vuitton, Philippe Starck, and other purveyors or luxury goods of which art is a big part cannot tell anyone why anything is worth that particular amount. In fact, the best – and only – person who can answer the question “Why does this cost $__?” is you, dear customer. Do you like what you see? Are you willing to pay the stated price? If so, then that is why this costs that much.

[i] MSLGroup, ” L’Oréal: The Worth It Issue”, 16 Nov 2011,

http://www.slideshare.net/mslgroup/loral-10181456. Accessed 15 April 2012.

[ii] David Barboza, “Chinese Art Continues to Soar”, New York Times, 10 April 2008, http://www.nytimes.com/2008/04/10/arts/design/10auct.html. Acessed 17 April 2012.

[iii] C McAndrew-MLitt, “Art Prices – A Study of Picasso”, www.tcd.ie/Economics/SER/sql/download.php?Accessed 16 April 2012.

[iv] Schönfeld and Reinstaller, “The effects of gallery and artist reputation on prices in the primary market for art”, Working Paper, Department of Economics, Vienna University of Economics & B.A., May 2005, www.wu-wien.ac.at/inst/vw1/papers/wu-wp90.pdf. Accessed 17 April 2012

[v] James Panero, “The Art Market Explained”, New Criterion, Dec 2009, http://www.newcriterion.com/articles.cfm/The-art-market-explained-4337. Accessed 17 April 2012.