Dear Harriete:
Everyone is hurting in
this economy with high gas prices and sinking housing prices. I am being
pressured by a gallery that exhibits my work to accept "special"
customer discounts that bite into both the gallery's retail price and my
wholesale price even though our contract spells out that discounts are not
allowed, period. I strongly feel that discounting can be a slippery slope but
do not want to lose the sales or this gallery as an outlet. What's an artist to
do about discounts?
Hurting on the Bottom
Line
Dear Hurting on the Bottom Line,
You are right, discounts are a slippery slope. In my
opinion, the “On Sale/Discount” price reduction mentality of our consumer
society is becoming pervasive. Shoppers are conditioned to buy from “low price”
outlets with marked down prices. But it seems to me that a work of art should
not be put in the same category as the mass produced goods in K-Mart.
Discounts begin with pricing—and pricing artwork is not a
science. The artist and gallery agree on a “retail price.” Usually the
“artist’s price” or wholesale is 50% of retail. The wholesale price covers the
artist’s costs of production—primarily labor, materials, and overhead. The
gallery’s share of the retail price covers the gallery’s costs of doing business—rent,
promotion, salaries and insurance. It is the job of both the artist and the
gallery to communicate the value of the artist’s work (by virtue of its
uniqueness, craftsmanship, reputation and quality), and this value is reflected
in the retail price.
It has become increasingly common for galleries to offer
discounts from their retail prices. At one time, the practice of giving
discounts applied only to major works of art at very high prices (e.g. at tens
of thousands of dollars and higher). Discounts were rarely offered, except to
very important collectors. Requests for discounts have increased, and the
prices at which buyers request them have dropped. Discounts of up to 10% are
not unusual. It seems that increasingly, gallery retail prices are assumed to
be negotiable, and some galleries expect artists to share the financial impact.
Artwork selling at lower price points, under $250 retail, often has very little
profit for the artist. Common sense makes discounting inappropriate for less
expensive work.
Another consideration is the importance for an artist to
maintain consistent pricing wherever their work is shown: galleries, museums,
non-profit exhibition spaces, or even from their studios. Price consistency
assures all galleries and retail spaces that they won’t be undercut. Price
consistency establishes a predictable expectation of value for an artist’s
work. Many collectors travel extensively, and they look at art and craft
wherever they go. If collectors find different prices for similar pieces, they
may feel cheated, and come to mistrust the artist’s work or the gallery’s
prices.
Discounts can create disadvantages to both the artist and
the gallery. The “Discounts” document in the Professional Guidelines provides a
more thorough discussion. To find the document go to: http://www.harriete-estel-berman.info/profguidelines/profguide.html. SCROLL DOWN the page.
Here are two important points about discounts: 1) Discounts
create uncertainty about the VALUE of the artwork. Discounting gives the
message that the work was perhaps not worth its retail price and may diminish
what customers are willing to pay for all of the other work in the gallery or
from the artist. Thus, in the long run, discounting can erode value. By not
discounting, a consistent value is maintained for the work. 2) Discounting
creates the impression that art should be bargained for, like items sold by
resellers in a flea market. Many craftspeople find this highly undignified.
You stated in your question that your contract does not
allow discounts. If the gallery is offering discounts then I would recommend
the following steps. 1) Write a clear, very polite letter to the gallery that
clarifies the clause in the contract that specifies the no discount policy. Ask
why they are offering a discount. State that your prices are based on your
expenses plus a small profit and that you can not absorb a discount on the
wholesale price. Ask about their justification for not following the contract,
and why they needed to offer a discount. 2) Have more than one person read your
letter (before sending it) to assure that it sounds polite and professional.
Mail the letter. Follow up with a phone call.
At this point: 1) The gallery either agrees to honor the
contract that states no discount. 2) The artist decides to withdraw their work.
3) The gallery could decide to buy your work outright at full wholesale at
which point their decision to discount the work is outside of a consignment
contract because they own the work. 4) The artist and gallery decide on a
compromise agreement and write a new contract.
This reply is based upon the Professional Guidelines
document about “Discounts.”
Respectfully,
Harriete Estel Berman
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