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As artists grapple with the task of pricing their works, their first – and toughest – negotiation may be with themselves. Since artwork has no Manufacturer’s Suggested Retail Price (MSRP), Book Value or systematically quantifiable price, how much is it worth?

Conventional wisdom says that something is worth whatever a buyer is willing to pay for it.  This means the artist should price the work within a realm that will attract an offer from a buyer in order to establish a negotiating range within which the two parties can attempt to reach agreement.  However, in trying to establish that price, other issues, such as emotional attachment, may cloud the artist’s ability to think rationally about the value of the item to a prospective buyer.  For example, perhaps this is the first work in a new series, or perhaps the work was inspired by a dream trip to Italy.

Research conducted by Daniel Kahneman, Jack Knetsch  and Richard Thaler, found that we value things higher once we own them – a phenomenon they call the Endowment Effect – and that giving these things up represents a loss to us.  For example, they found that people valued a specific coffee mug at a median price of $2.88 – $7.12, depending on whether they were buying or selling the mug.

In dealing with the emotional sense of loss that may accompany selling their work, artists must consider whether a work is truly sacred, in which case perhaps s/he does not really want to sell it, or whether it is, as Professor Max Bazerman (Harvard Business School) refers to it, only quasi-sacred, in which case the artist needs to take a more objective approach to valuing it.

After surveying the market for comps, reviewing recent selling prices and other due diligence, artists must set a price – sans emotional attachment – that will bring in offers.   Those offers are a starting point for negotiation.

Copyright © 2012 by Nancy J. Fox