Sceptic wrote:Do you determine the price tag of the art by the value of the labour embodied in the painting, or by estimations of optimal profit margins, determined by the collective marginal utility preferences of each customer?
Strictly cost-plus in my case, and for most 2d artists whom I have discussed pricing with. Trying to divine "optimal profit margins" is entirely an exercise in futility. The only realistic, practical approach is to figure out what it costs you to make, then tack on a margin to bring the price up to a price point you think customers won't balk at. I don't know any successful 2d artists who use a method other than that.
I'm not an artist but my father is: I also happen to be a musician. I don't think the value of any composition is objective.
I don't think music is really equivalent to physical artwork; no one buys music as part of a home renovation, for example, or as part of a way to increase the potential value of property. Lots of people buy wall art for specific rooms, though, and many do so with the goal of improving the perception that buyers might have. In this sense, physical artwork has an inherently more objective utility than music.
Or undervalue the market price of their labour?
No, I mean actually undervalue their labor. As in, they spend more to make art than they charge the customer for it. It's really, really easy to fall into that trap if you're not acutely aware of your marketing costs (including the value of one's own time)--which new artists rarely appreciate fully. Cost-plus pricing and a labor-theory approach makes it much easier to avoid this problem.
Also, from the perspective of a musician, I would always start out cheap, if not free before I am fully recognised and more experienced to sell something that will, generally speaking, be valued more highly.
Which is a pretty bad approach for 2d artists--the artwork is perceived as much by its price as by its subjective qualities. If you sell cheap artwork, that's typically all you'll ever end up selling. Some people can make a living at that, but it's better to focus your efforts on creating products that people will pay substantial amounts of money for. Selling artwork is a very strange experience, and rarely operates according to a rational basis. I highly encourage every economist to give it a try. They'll learn a lot about why their models are wrong. For example; it's entirely possible that your volume of sales will decrease when you drop your prices. I strongly attribute this to my own theory that people take hints about the quality of artwork from the price charged for it; that if someone is undervaluing their artwork, potential customers will wonder why, and if they are not critics of art in their own right, they may well come to the opinion that it is bad on that basis alone. It was quite strange to note that increasing my prices increased my sales volume. Very counter-intuitive from an economics standpoint.
That's a misunderstanding of marginal utility.
That's not a theoretical statement about marginal utility; that's a statement of fact relating to my own experience doing this. If people don't like your art, it doesn't matter how low you drop the price. If people do like the art, they will buy it if your price falls within the limits they've set for spending. They are not likely to buy more if your prices are lower; nor will halving the price encourage them to buy two of the same piece. It's a surprisingly binary response.
For example, I value apples more than £1 but less than £1.01, hence I would be willing to part with no more than £1.
The producer values apples less than 50p but more than 49 p, hence he would be willing to part with his apple for no less than 50p.
Yeah, that's originally how I viewed it too. In real life, art pricing doesn't work like that. You can pretty much set whatever prices you want. It doesn't really matter if your prices are twice what the pieces next to yours costs; you are no less likely to make the sale. In fact, I would go so far as to suggest that you are
more likely to sell the most expensive piece as you are the least expensive. I would propose that this is the case because most art buyers don't really know what they're looking for or how to value the work they're looking at; and they therefore take their cues about desirability from the price the artist or gallery sets. In other words, the art market may simply be subject to an extreme informational symmetry between the artist and the buyer. To put it more simply, apples are not artwork, and comparing the two is utterly pointless. So is repeating economics 101 theory to someone who's taken the course and has observed first hand that it doesn't work that way in this particular case.
If a person is willing to set down $500 on a painting, they're almost always just as willing to pay $700 or $800. It's not at all a rational response like economists would predict. Like I said, economists really ought to give it a try for a year. It's extremely informative about the limits and failings of conventional economic thought.
The introduction of other producers and consumers complicates matters, because then you have competition between producers and consumers, and this distorts the pricing mechanism. However the principle is still roughly the same, I can illustrate this if needed.
I would point out that the competition mechanism makes very little sense when it comes to 2d art. If someone likes my style, but not the style of another artist in the same show, we are not competing with each other for that customer. In this sense, art is unlike almost anything else because each artist typically has a very unique approach to their work... which will appeal to some buyers but not others, and hence there is no (or rather, very little) competition between them.
I believe Daktoria is referring to the fact that left-libertarians would put an 'objective' tag on everything based on LTV and this would not account for the individual preferences of buyers and consumers alike. In a way, you would be objectifying the diversity of values, something that is essentially human.
I don't think it really makes much sense to price things according to the preferences of buyers. The whole purpose of paying for goods is to convince the producer/seller to bother to produce or sell the goods. Hence the producer/seller's preferences should be paramount. While certainly the producer might revise downward his expectations if no one agrees with him, it should still be his own preference that matters most.
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