Pricing is the least understood facet of any business, but it’s one that can easily be fixed — without a negative impact. Most of the artists I know are underselling their art, struggling, having to paint too many paintings to keep their heads above water. They are on an exhausting treadmill because their prices are too low.
How would your life change if your prices were higher? If your immediate reaction is that you would sell less work, we need to work on your pricing strategy.
Most people in business get into business because they want to provide a good, quality service at a good price. They want to offer what they would want. Yet the number one reason for business failure is that profit margins are too low because of low prices.
Of course, low prices are necessary in some businesses because that’s their business model. Think Walmart. Yet the perception of Walmart’s prices and the reality are often two different things. Some companies promote low prices on high-volume items to get people into stores, yet other items may not be priced than you can find them elsewhere.
But as an artist, you’re not in the commodity business where, you produce lots of low-cost items. What you produce is a single, unique, handmade item by a well trained craftsperson — you. But do you think of yourself that way?
I can buy a chair for $20. I can buy a chair for $200. Or I can go into a craft gallery and buy a beautiful hand-crafted wooden chair for $1,500, knowing it's one of a kind. That chair won’t be for the person who buys chairs at Walmart, but there is a market, and there is a special person who will buy it.
You Are Not Your Customer
One of the hardest things to overcome for anyone in business, including artists, is understanding your market and understanding that you are not your market. An artist once said to me, “I want to sell my paintings cheap so that people like me can afford to own them.” Though that's admirable, people like him are not likely to want to own them. A painting is a luxury item, and the people who treat themselves to luxury items are not the average Joe. When I asked this painter how his sales were going, he told me they weren’t going well. He couldn’t understand it, because, as he said, “My prices are much lower than everyone else's.”
Tip #1: Low-priced luxury items typically don’t sell to luxury buyers.
Let's look for a moment at the typical art gallery visitor. Perhaps it’s a couple, and both are lawyers making a half million a year. Instead of owning a Jaguar and a Lexus, they could afford to own four or five Kias. Why don’t they buy them and save their money? That takes us to tip #2.
Tip #2: Price is a signal of perceived quality.
In my art marketing seminar, a man told the story of being at an art show. A woman asked, “How much is this painting?” He responded that it was $4,000, and she said she would “take it." She handed him a check for $40,000. When he told her she had made a mistake and added an extra zero, she ripped up the check and said, “I don’t want it, then. It can’t be very good if it’s only $4,000.”
Tip #3: Certain people always want the best.
There is always an element of society who perceive themselves as needing the very best, and if it’s not the best — often signaled by the price — they won’t buy it. They don’t need bargains.
One of my mentors, Dan Kennedy, says that rich people have quirks. They will be cheap in one area and extravagant in others. For instance, he paid a million dollars to own a classic collectable car that had been owned by his favorite celebrity. He had no price resistance when told how much it cost — he didn't even negotiate. He simply wrote a check. Yet he also said, “When I buy shirts, I hate the idea of paying more than $30, so I always buy my shirts at Walmart.”
So how do you get your prices up?
I have two theories.
Tip #4: Build a luxury image and brand, and reinforce it constantly with everything you do.
First, luxury selling is all about perception. A Louis Vuitton bag is not a purse, it’s a handbag. A large coffee at Starbucks is a venti, and it’s not served by a clerk, but a barista. These and other companies focus on selling image. My favorite Louis Vuitton ad (at the top of this blog post) doesn’t mention the company name. It’s all image. People buy image, and people want to reinforce self-image. People want others to see what they own. That’s why, when I visit some collectors, they’ll say, “Do you want to see my Mundy? Or my Schmid?” or their “Warhol or Hockney” or their “Sergeant or Zorn.”
Building your brand matters. Giving meaning to your name, ensuring your paintings are perceived as the best, is a critically important process. People will pay more for it.
Even in the lower price ranges, the person who buys a $1,500 painting is just as likely to buy a $3,000 painting. So if you’re in a gallery, giving up half your profit means doing without either $750 or $1,500. Which is better?
Let’s do the math.
Let’s say you sell 10 paintings a year at $1,500 each. Your total sales are $15,000, and your profit is $7,500.
Now, let’s say you raise your price to $3,000 and you lose 20% of your buyers, so you sell only eight paintings a year. Your total sales are $24,000 and your profit is $12,000. Which is better?
Let’s take it further. Raise your price to $4,000 and lose 30% of your buyers. Now you sell seven paintings a year, for a total of $28,000 and $14,000 in profit. You made double the profit of selling at the $1,500 price and you only had to paint seven paintings instead of 10.
The snowball effect also kicks in. First, your paintings get better because you can spend more time on them. Second, the gallery is making more money on you, so they push your paintings more. Third, because your prices are higher, you are perceived by the buyer as more valuable. Fourth, by painting less, you create scarcity, which actually boosts sales and prices. “Jane only paints seven paintings a year. You can own one of the seven” is a powerful statement, the kind galleries love to make.
Have Some Guts
I had dinner this year with a very famous artist who produces about four paintings a year and makes close to a quarter million a year from them. I asked how he got his prices up, and he told me that he had no idea what he should be charging for his paintings, so he just picked a number out of the air. He sold his first painting for $40,000 because he didn't know he couldn’t. It only went up from there.
Most price resistance is in your head because you can't afford to spend a lot of money on a painting. Your customer can. I have readers of Fine Art Connoisseur who don’t think twice about dropping 100 grand on a painting.
Tip #5: Go for it. Raise your prices. Be bold.
The way to get your prices up is to have some guts. And if you’re not raising your prices every year, you’re losing money because of inflation. Have you noticed how much more groceries cost?
Some galleries will give you resistance, and it's the kiss of death if you have low prices at one gallery and high prices at another. So you have to notify your gallery of your universal price increase. If the gallery does not support you or believe they can get that price, it's time to leave and find someone who thinks your new price is perfect. People cannot sell what they don’t believe in. Find believers.
Lipstick on a Pig?
I’ll end with a story a dealer once told me. He said he had a beautiful painting that sat in the gallery for a year, priced at $1,400. He could not understand why it was not selling, so he took it off the wall, put a $1,500 frame on it and raised the price to $14,000. It sold within a week. Same painting. Was it the frame or the price? I suspect it was both.
A painting in a cheap frame won’t be perceived as being worth much, but an elegant frame sends a signal. Who would you rather do business with? A financial adviser who drives up in a Hyundai, or one who drives up in a Bentley? It probably depends on your value system, but I’d pick the adviser who appears more successful. For people who use their cars in business, cars are like picture frames. If I’m selling a $10 million house, I want the agent in the most expensive car.
Price also impacted that sale. A painting is better if it’s more expensive — that is the perception of luxury buyers. The combination of great frame and great price cemented that deal.
Tip #6: Framing sends a signal to support your prices. Expensive frames allow you to increase even more.
In summary: You will lose some customers at a higher price, but you’ll make more money and work less. Build the importance of your brand with constant repetition over years and a luxury appearance. (A great trick is to put your high price in your ads, which instantly packages you as a more expensive artist. Again, this takes guts.)
I believe most artists could double their prices and not lose any customers. Your prices will rise. But it all starts with your understanding of pricing — and having the guts to do it.