How Artists Use Psychology to Price a Painting
Why the most popular way to price a painting uses a simple size-based formula.
Posted Aug 27, 2018
A couple of years ago when a collector would ask “how is Drew’s artwork priced?” I didn’t have a good answer … Now when someone asks, I can confidently say “we charge $1.50 per square inch plus frame costs.” – Maria Brophy, art business consultant
Setting the price for any product is tricky. The seller must consider production costs and account for a reasonable profit. More importantly, the seller must evaluate the product’s value to the buyer and factor it into the price.
Before fixed prices and price tags, prices were fluid. You can experience this fluidity even today if you buy a carpet in Morocco. After a lengthy process that involves drinking mint tea and inspecting dozens of carpets, the seller talks up the chosen carpet (“museum quality”) and quotes an astronomical price. The buyer, if they’re savvy, counters with a much lower number. Through the bargaining process that follows, the product’s value is established at a final price. Such a process makes sense because each carpet’s value is unique to each buyer.
Size-based pricing is the most popular way to price paintings
Shouldn’t paintings be priced the same way? I can think of few products that are more individualized in their value to buyers than a painting. Yet, it turns out that the most popular pricing method in the art world is a completely standardized procedure. It uses the painting’s size as the main driver of its price. Artists employ two versions of size-based pricing: Square-inch pricing and linear-inch pricing.
Square-inch pricing takes the height (h) and width (w) of the painting and multiplies it by reputation factor (r). The formula is: h x w x r = price.
Linear-inch pricing adds the painting’s height and width and then multiples it with an appropriate reputation factor. In this case, the formula is: (h + w) x r = price.
The most obvious difference between the two methods is the role of the painting’s size. With the square-inch method, the price difference between a smaller and a larger painting is much greater than with the linear-inch method. Similarly, the reputation factor value is smaller if the same artist uses the square-inch method instead of the linear-inch method. Let’s use an example to illustrate these differences. In the table below, I set the artist's reputation factors so that the large painting’s price is the same using both methods.
The second important aspect of size-based pricing is the reputation factor. As should be clear, the reputation factor dictates the painting's final price. In theory, someone who uses r = 15 will price their artwork at ten times the amount than someone who uses r = 1.5. In practice, however, because artists look to each other for clues on what they should charge, the factor used can be rather homogeneous, especially when they use square-inch pricing.
How do artists determine their reputation factor? This is where subjectivity and peers come into play. Here are explanations given by four artists:
“Why $11? I’ll be honest, it just feels right to me at this point.” – Brad Blackman.
Within a few minutes of number crunching, I was able to deduce, "Oh, she's charging $1.5 per square inch." And then you can decide from there what your work can garnish comparatively. – Amira Rahim.
I price smaller paintings at $1 per square inch so as to be affordable… and larger paintings at $1.50 to $2 per square inch.. because they’ll appeal only to serious art collectors. – Cedar Lee, paraphrased.
I'm not a mathematician, I'm an artist. Therefore I price my works according to what I FEEL that I should charge. It's all about a mix of common sense (I know that good sense is not that common) and flip of the coin. – Jose, Wetcanvas.
What size-based pricing means for art buyers
The widespread use of size-based pricing means that buyers are likely to find a better value (strictly in dollar terms) in smaller-sized paintings. The value differential will be greater when artists use square-inch pricing.
Second, they are likely to find more homogeneous prices for paintings than they should expect, meaning that there will be many paintings available from different artists at prices of $200, $500, $900, and so on. This should make the selection process easier for art buyers by framing their purchase decision as “Which $500 painting should I buy?” instead of “Is this painting worth $500?”
And third, forget about haggling. Even though paintings are very much like carpets in their individualized value to buyers, they are priced very differently. Because of fixed prices, the buyer is likely to find something they adore for a steal or be shocked at the price of a painting they didn’t like. That doesn't mean you can't ask for a lower price, but that's a different blog post.
The consistency and communicability of prices
The process of setting painting prices provides an excellent lesson about the importance of consistency and communicability in pricing decisions. Even for something whose value is completely subjective and wildly divergent across consumer tastes, using a cookie-cutter pricing method with a dash of subjectivity is effective. We’ll let artist Amira Rahim have the last word on the virtues of size-based pricing for paintings:
“The most sound approach I've found has been to charge by size. This keeps it fairly consistent and makes the most sense to your customers. It also helps you ascertain the price of a painting pretty quickly and objectively, which is important as you start to produce more and more work.”
I would like to thank my ex-student Zachary Coffin for introducing me to this pricing method. Zach wrote a paper in my pricing class where he discussed the psychological aspects of how artists and art gallery owners make pricing decisions.