Ask Harriete

Auctions

 Dear Harriete,

How would you handle the following situation? You have donated your artwork to an auction benefiting a charitable organization (actually a picture of it that invites the winner to visit your studio and pick a similar item) and the director of the auction lowers your stipulated minimum bid without your consent and someone wins your work at that unauthorized price.
Signed,
Auction alienated

Dear Auctions alienated, 

First, let’s clarify a few terms used in your question and related to Fundraising Auctions

• A “minimum bid” is the starting point in the bidding of a “live” or “silent” auction.
• The “reserve price” is the lowest price at which the artwork will be sold.
• The “bid to own” is written at the bottom of the bidding sheet. It is usually full retail. If the bidder decides to place a “bid to own” early in the auction, no further bids are accepted. This is the winning bid.

Second, written documentation should accompany any work donated by an artist to a fundraising auction. The document should include information about the work including: artist name, contact information, your web site, title of the work, date and complete description. In addition, state the “minimum bid”, “reserve price” and the full retail price (which is usually used as the “bid to own”). If the fundraising auction doesn’t have formal paperwork, then submit your own paperwork.

In your case, it appears that you did state a “minimum bid” which was changed or ignored. At this point, after the auction, you have a few options depending on your relationship with the fundraising auction and your concern about your reputation. These options are listed below in order from easiest to most difficult.

Option 1.
The simplest option would be to make a note to yourself (in writing) that you will not donate work to this fundraising auction sponsor in the future. Take it as a lesson learned, so next time that you are asked to donate work, ask in advance if they will honor “minimum bids” and your “reserve price”. Make sure that it is clear that you will not donate work to any auction that does not have minimum bids and a reserve price below which the work can not be purchased. Put this in writing to be absolutely clear.

Option 2.
When the auction winner comes to your studio, you honor the donation and hope that the customer will actually buy additional work to offset your loss.

Option 3
You could write a letter to the fundraising sponsor to express your concerns in the most polite manner possible. I would suggest that at least two people proofread your letter to make sure that your concerns are communicated in a professional manner without creating hostility or misunderstanding. State that you participated in the auction with the expectation that the sponsor would honor your minimum bid (attach a copy of your documentation for the minimum bid). Explain that the minimum bid stipulated on the paperwork was changed without your consent and that the winning bid was below the authorized price. Perhaps you might try to work out a compromise.

Option 4
Similar to Option 3, a letter to the sponsor could state that you will honor the unauthorized price this time but you will not participate in their fundraising auction in the future.

Option 5
The most difficult or hard line option would be to send a letter stating that you can not honor the unauthorized bid price. You may offer an explanation that the unauthorized bid price is so low that it creates an unexpected financial hardship (to make your case more sympathetic).

If you do decide to adopt this option, know that it may create bad feelings with the fundraising sponsor – and other people may hear only one side of the story. People do talk and bad news seems to travel further than you think. Your potential customer who thought they had a “winning bid” will be very disappointed and you probably will loose this person as a customer.

RECOMMENDATION
While your donation was intended to be supportive of the fundraising auction sponsor, they allowed your work to be “won” at a bid that you did not authorized, whether consciously or inadvertently. Therefore, I would be inclined to at least tell the sponsor of the mistake as in Options 3 and 4.

If possible, I would honor the winning bid.

ADDITIONAL RECOMMENDATIONS
Read FUNDRAISING AUCTIONS: Issues and Checklist for Artists. This can be found in the Professional Guidelines at:http://www.harriete-estel-berman.info/profguidelines/profguide.html

This Professional Guidelines topic is intended to more fully inform artists about the impact of fundraising auctions on their work and careers, what questions need to be asked prior to and after donating work, and to recommend how artists can maximize the benefits when participating in auctions. Ultimately, we believe, the behavior of the artists can and should change the way fundraising auctions are conceived and conducted.

This is one of four Professional Guideline documents about Fundraising Auctions, each addressing a different perspective.

• Fundraising Auctions: Issues and Checklist for Artists
• Fundraising Auctions: Issues and Impact for Galleries
• Fundraising Auctions: Issues and Recommendations for Collectors
• Fundraising Auctions: Issues and Alternatives for Art Organizations 

Artists need to learn how to be better advocates for themselves and other artists.

Recommendations of the Professional Guidelines Committee

Reserve Price Policy
The Professional Guidelines Committee recommends that the reserve price for work in an auction be 80% of the retail price. The artists (and/or gallery) should be offered 40% of the retail price for the donation. The art organization will receive at least 40% of the retail price for fundraising and the collector has the possibility of receiving a 20% discount. If bidding for work does not reach the reserve price, the work should be returned to the donor.

ADDITIONAL ISSUES TO CONSIDER
As mentioned in the previous paragraph, the Professional Guidelines recommend that the artist receive 40% of the retail price when work is donated to a fundraising auction.

What we did not discuss in response to your question, was how much this particular auction sponsor was offering the artists that donated work.

Often, there is considerable pressure on an artist to donate work outright – receiving no percentage of the winning bid. Only the most generous auction organizers offer a percentage of the selling price to the artists. Since the work offered at auction typically sells well below the retail price, even with a percentage, the artist only receives an amount far below the wholesale value.

Even if the artist is offered the full wholesale value for work donated to a fundraising auction, artwork sold at discounted prices in auctions may affect your retail values elsewhere. Every artist should maintain control over the selling prices of his or her work. Since auctioned artwork often sells far below the retail price, maintaining control of pricing is impossible. The result of this discounted selling price is that the value of an artist’s work and the ability of a local gallery to command full retail prices for the entire body of an artist’s work is adversely affected. (For more information about Discounts read the Discounts document in the Professional Guidelines.)

Signed,

Harriete Estel Berman
bermaid@harriete-estel-berman.info
www.harriete-estel-berman.info

Studio Mate Problems - What shall I do?

Dear Harriete,
I have a studio mate who's work has been looking a lot like mine recently. I know that mimicry is the highest form of flattery, but a couple of my studio mate’s pieces are almost identical to mine and she is pricing them much lower than mine! She and I are scheduled to do a number of craft shows together this summer and I am concerned about how this is going to affect my sales. How do I broach this issue with her and what do you suggest I say?

Signed,

Not So Flattered

Dear Not So Flattered,

 This sounds like a very difficult situation with no easy answers. Let’s start by breaking this into two issues.

The first and most complex issue is that your studio mate (“SM”) is making work very similar to yours.  To resolve this issue, you will have to have a heart-to-heart discussion with SM – but first, take some time to write down how SM’s work looks like yours; add photographs or sketches to support your examples. After you have itemized all or most of the examples, talk to some one you trust who knows both you and SM. Your confidante may provide additional perspective. Although your concerns are very likely well founded, it is possible that SM is unaware of the ethical sensitivities regarding design infringement and oblivious to your concern that her design “similarities” are too close for comfort. Ask your confidante how best to discuss this issue with SM.

Now ask SM for an appointment at a time and place where both of you can have an important conversation. Ask your confidante or a neutral third party to participate and serve as a mediator. This mediator should be a totally cool, calm and rational person capable of managing difficult situations. A neutral, public location such as a coffee house or restaurant might help avoid tears and screaming. Leave your emotions at the door and bring only your notes and drawings.

Begin the conversation carefully. Perhaps SM did not realize how closely she was influenced by the direction of your work. You’ll need to avoid overt accusations and sentences beginning with “You . . . .” Instead, use “I” language such as “I feel upset that . . . .” Start with the assumption that SM is not intentionally duplicating your work and see where the conversation leads. Hopefully, by raising her awareness of your concerns, she will stop that direction and both of you can move on and maintain an amicable relationship.

Despite the outcome of the meeting, it is likely that you will not feel comfortable showing your new work to SM in the future; and this is not conducive to a creative work environment. Therefore, be prepared to initiate a search for a new studio mate or moving out yourself. The best possible outcome is that you will remain friends or friendly.

Next problem to consider is the pricing issue. Pricing of artwork is a much broader topic since it involves business and economic variables. Trying to be objective, I am intrigued with your observation that SM is charging less for very similar work. In this objective mode, I would like to ask if SM is #1) making the work more efficiently (i.e. taking less time per piece or spending less time in creative development); #2) making the work with less investment in materials; or #3) simply not charging enough.

Perhaps all three apply to SM. In #1, production efficiency justifies a lower price but copying someone else’s designs unfairly avoids the expense of creative development. In business, designs are accounted for as intangible assets protected by copyrights, trademarks, and design licenses. Infringing on an intangible asset is just as damaging as stealing any other valuable asset. In #2, less expensive materials would justify lower prices but probably lower quality as well. Competition and market forces generally accept that higher quality justifies higher prices and vice versa. It is up to the seller to point out the differences to justify higher prices.

I suspect that #3 is the most likely scenario. In my experience, most artists do not charge enough for their work. They do not factor in the full cost of their overhead (rent, utilities, shop supplies, raw materials, and retailing expenses like booths, cases, fliers, etc.). Nor do they charge enough for their hourly wage. They are so focused on competing with the many “hobbyists” in the street fair markets that they don’t realize that such low prices make it impossible to make a living on their work. Ultimately, however, the buyers determine what they want and how much they will pay. Therefore, it is up to you, the artist / seller, to inform prospective buyers about the quality of your designs, materials, craftsmanship, and reputation, etc. so that the buyer agrees that your work is by far the best quality for the price.

If you overcome the design similarity issue with SM, you could then discuss the pricing issue. Consider helping her price her work with all the overhead expenses and labor integrated into the price. Maybe SM will have an “ah-ha” moment and be enlightened about the actual cost of producing the work. Maybe you should both increase your prices!

Signed,

Harriete Estel Berman
bermaid@harriete-estel-berman.info
www.harriete-estel-berman.info