Is The Price Right?

Copyright Ann Landi, contributing editor of ARTnews (This article appeared in the Oct '98 issue of ARTnews.)

Anyone who's ever glanced at a gallery price list-and been startled at the six-figure sums for, say, a Julian Schnabel or an Eric Fischl-might well wonder: how on earth is it decided what these artworks should bring in the marketplace?

The answer is often alchemy as strange and ineffable as your grandmother's recipe for spaghetti sauce. "It's an inexact science involving a finite commodity, and somehow we have to struggle to transmute that inexactitude into something concrete," says New York dealer Richard Feigen.

For the work of an emerging artist, the formula is simple: price it low, so that collectors will buy, and then gradually keep upping the cost in subsequent shows. "One of my artists, Sarah Leahy, had never shown and had no resume," says Kim Foster, who just moved her gallery from SoHo to Manhattan's Chelsea district. "So we priced her first works at $1,000 each. Six months later, I raised them to $1,500, and most recently they sold for $4,000 apiece. I saw there was a market for the work, so I increased rapidly. It's all about supply and demand."

But to the young artist just starting out, pricing strategies can be perplexing. "The first show is really quite a mystery," says Greg Kucera, who owns a gallery by the same name in Seattle. "There are some artists who just want to give their works away. And then there are others who take the view that, 'By God, I'm worth this much per hour for this work.' I think that's a common reaction with a first show-to think of it as, 'If I had a job, what would I be paid for this?'"

An artist's tendency to comparison shop can also sometimes lead to sticker shock. "It must be very difficult for them to go around and look and see what others are getting," says Jamie Lustberg, of the Bridgewater/Lustberg gallery in New York. "I've had my artists say, 'Well this is going for so much. My work is comparable. Why can't I get the same price?'"

That's where experience-documented by a resume that includes museum and solo gallery exhibitions, a list of published reviews and articles about the work, and the inclusion in public and private collections-comes into play. "You could make a mathematical formula having to do with a work's size, quality, desirability, and so on," says New York dealer Andre Emmerich, "but all these are secondary to the crucial factor, which is the level of reputation and recognition the artist currently enjoys."

The "buzz" that surrounds an artist, that unaccountable anticipation that can gather around an up-and-comer or a new body of work by an established name, often leads to rising prices. But, warns New York dealer Matthew Marks, gallery owners can get overexcited. "You can just miscalculate," he says. "The work's great, everyone loves it, and at the end of the show you've sold two things. Then you feel really guilty."

"An art dealer is like a surfboard rider," says Emmerich. "You have to know how to do two things: first, how to ride the board, and second, which wave to catch." When pricing mid-career or older artists, dealers take into account the exposure the artist is currently receiving-what museums have expressed interest or planned shows and where they are located. Someone who is exhibiting in major cities like New York, notes Kim Foster, is going to fetch higher sums than an artist who's been seen only in regional venues.

Still, most dealers say they like to consult with artists to try to establish numbers that are realistic. The cost of materials is taken into account, as are the size and number of works the artist has created per year. A big producer who churns out vast quantities may command less than the slow and painstaking painter or sculptor who labors over pieces for months, or even years. "Let's say an artist delivers six paintings to the gallery after four years of work and you sell the entire thing in three days," says Marks. "All of a sudden, you have this slightly sick feeling-Did you sell it for enough? Should you have waited? You can't get everyone in the gallery in three days. Should you have held back so that people from out of town could see the work? Should you have offered it to a museum, which is slower in making decisions? This has to be worked out constantly for each artist."

Availability certainly has an impact. "Finite quantities get factored into the price," says Emmerich. When the dealer first took on Morris Louis, in 1960, the artist's luminous stained canvases sold for around $1,800 to $3,000. When he died in 1962, he left behind only about 500 works of varying sizes. The paintings now sell for anywhere from the high five figures to about $1 million for the best examples.

Emmerich adds that he never settles on a price without first examining the works in his own space, whether he's acquired them out of the studio, at auction, or elsewhere. "Changing the context allows you to evaluate the quality, the scale, the beauty, the strengths."

Whatever number they come up with, most in the business say there's haggling room of about 10 percent. "There's no benefit to quoting a high price to come down with lots of negotiation," says Ann Freedman, director of Manhattan's Knoedler & Company. "I want to give collectors the assurance that what we're quoting is realistic, that it has some real foundation or basis. I don't want them to walk out of Knoedler and wonder, 'Did I argue hard enough? Did somebody else get it for less?' We want to build collectors' confidence so they can say we're fair and consistent." Nonetheless, special pricing considerations may be given to museums, their trustees, and prestigious collectors. New York dealer Holly Solomon recalls losing money on her percentage of a sale to Peter Ludwig, the late German chocolate baron who became renowned for his collection of contemporary art, because she wanted that artist's work seen among Ludwig's other holdings.

Surprisingly, dealers say they're not significantly affected by the sums that are realized at auction, but they admit psychology behind the bidding process often has an impact on their clients. "They're comfortable paying a higher price at auction," explains Freedman, "but in the gallery they need to negotiate. If we could turn to a collector and say, 'The bid's against you,' we'd be more apt to get a higher price."

This is exactly what happened to dealer Leo Castelli in 1970, when James Rosenquist was installing one of his huge paintings, Horse Blinders, in Castelli's gallery, then on New York's East 77th Street. According to the artist, Peter Ludwig walked in and was bowled over. "How much is it?" he immediately demanded. Castelli asked him to come back the next day for a quote. Following discussions with Rosenquist, the dealer settled on a sum of $70,000. When told the asking price, Ludwig, according to Rosenquist, responded, "Ach! Phooey!" A few minutes later the phone rang. It was Philip Johnson, who expressed interest in purchasing Horse Blinders for his own collection. As soon as the dealer let it be known that the architect was a contender for the work, Ludwig gave his trademark auction signal. "His arm came down, boom!" Rosenquist recalls, "and he shouted, 'It's mine!'"

Lucky is the artist who has a long career, building steadily in reputation and market value. More common, notes one dealer, is the plight of the artist who once attracted large sums and now can't sell at all. Look at any art magazine from the 1950s and '60s, the dealer suggests, and see which prominently featured artists you haven't heard about since.

So if the price seems too steep, and the economics are sometimes inscrutable, bear in mind that an artist's career may be as short-lived and brutal as an athlete's or a movie star's.