In response to the previous post, Emily Johnson left a comment that deserves further attention. You are welcome to leave your comments as well, . . . but let's start with her questions.
"Locally my work sells at double wholesale. However, most of my out of state galleries do a 2.25, sometimes 2.5 markup on my work. I think that's too high."
"What is everyone's opinion on how to keep my prices consistent? Do I raise my prices to 2.25 to keep consistent, or do I ask my galleries to stick with 2 x markup? Knowing full well that they may not be too happy about that....."
Emily's questions bring up several issues that I was thinking about when composing the previous post. The point of the previous post was that the transparency and ease of price comparisons facilitated by the internet also creates an opportunity for artists and makers to control the price point for their work. Expanding on Emily's thoughts, I also think that some new approaches to price management with more strategic thinking are in order.
Let's Break Down the ISSUES.
What is the impact when galleries calculate their retail price at 2.25x or 2.50x the wholesale price while the artist/maker continues to maintain a lower retail price at twice wholesale?
- The galleries may be frustrated that artists are selling at a lower price.
- The galleries may consider that their retailing expenses justify a higher price point.
- If artists/makers are retailing work independent of the galleries, maybe artist/makers are not fully accounting for their retailing expenses. Have you thought about how much it costs you to stand at a retail show, or list your work online?
- If the galleries think the work can sell at a higher price point, why do you think that a 2.25 /2.5 markup is too high?
- Does a lower price lead to higher sales volume and more profit? Do you have evidence that more work will sell at a 2.0 markup? Is selling more work at a lower price your objective?
- What would be the impact on your bottom line if the gallery decided not to sell your work any longer because they didn't want to compete with your lower price point?
The future of selling:
While not every artist and maker sells directly online, it is definitely a growing trend. While craft shows continue a slow decline and brick & mortar locations struggle to maintain market share, the alternatives for selling online continue to expand and the barrier to entry is low.
The impact of selling online:
Posted prices are expected online -- and price comparisons are easily obtained within minutes.
Work on consignment is owned by the artist:
If the work is on consignment, I think artist should be able to dictate the retail price. You own the work, not the gallery. An artist/ maker can definitely specify a recommended retail price (which should be at least double wholesale to cover your retailing expenses).
Thinking strategically, here are other options:
Ask the consignment gallery to purchase your work outright (at your wholesale price) and they can mark up as much as they like when they own the work. You can also offer to stop selling the same work from your website or any other online marketplace in exchange for a minimum sales volume within a specified time frame. (See below for more on this point.)
Change the wholesale approach altogether. To avoid a direct price comparison between you and your gallery, sell a specific line of work at the gallery and sell a different series on your website.
Stores do this all the time. I discovered this marketing approach recently when shopping for carpet. After going to five different carpet stores I realized that all the stores sell well known brand names like "StainMaster" but the names for the same carpet grades and styles are different at each store. It was impossible for me (the consumer) to make a side by side comparison on price or quality even for the same brand name. Comparing carpet from different carpet companies was equally impossible and completely overwhelming.
Artists could adopt a similar strategy to avoid the appearance of direct price competition with their galleries. Galleries can sell a particular group of work and the artist can grant an exclusive on that style to eliminate side by side price point comparisons. Another approach is to simply change the name of the work or the series on your website, so it is harder for the consumer to make a side by side comparison. This tactic is what carpeting and mattress companies depend on for their marketing and pricing strategies.
Think about prices and value more strategically. The idea of selling to a small local market is quickly vaporizing. The world is your market. Every person is now competing with everyone else (including imported jewelry marketed as "handmade" and lifestyle purchases like a new phone). How can you create a perception of value for your work that has less to do with price? To compete your work must standout and be unique. Average is very hard to sell in a global marketplace. Define your market more specifically and help buyers choose your work based on factors beyond low prices alone.
- Rethink how to manage the marketing and pricing of your work.
- Consider selling different work at different venues (e.g. galleries and online).
- Avoid obvious comparisons between your website and your gallery prices.
- Market your work beyond local.
- Be more assertive in managing the prices of consignment work.
This post was updated on December 10th, 2021.