How the Price of Art Is Decided

A price is settled where the person who wants a thing and the person who wants to sell it agree. If supply is smaller than demand the price rises; if it is larger the price falls. Prices move with the wider economy, so value goes up and down.

Mercari makes it easy to understand. The seller sets the price. If it does not sell, the price has to come down. Keep lowering it and a buyer eventually appears.

A commodity is property that is the object of a sale — as a rule, movable property. People often say that art is a work, not a commodity. But while we are talking about price, let us set that view aside for a moment. The premise is that you take money and sell.

A sale is a contract, and it moves ownership. The seller passes the property right to the buyer, and the buyer pays. That is what completes the contract — the same mechanism as buying something at a convenience store. Ownership is the right of a person to control a thing directly.

Where something is bought with borrowed money, such as a loan, the lender holds the ownership.

The art market divides in two. This distinction is the foundation of everything that follows about price.

Primary market

Buying directly from a gallery or from the artist

Secondary market

Buying at auction

However high the price on the secondary market, none of it reaches the artist. The artist is paid only when the work sells on the primary market.

Gallery consignment

The work is left with a gallery, which sells it

Auction

The highest bidder buys it — the same system as Yahoo! Auctions

Direct sale

The artist sells it, and sets the price

The same one million yen means three completely different things.

• An unknown artist in Kochi¥1,000,000
• A well-known artist in Kochi¥1,000,000
• An artist known nationally¥1,000,000

The community changes the sheer number of people who buy art. The same work supports a different figure in New York than in Kochi. Price is not decided inside the work alone; a great deal of it is decided by where the work is sold.

People say an art bubble began around 2021. From Kochi, it was not something you could feel.

There are broadly two kinds of gallery. What the artist pays, and who sets the price, are different in each.

Commercial galleries have their own characters: the kind that backs an artist, the kind that develops an artist, and the kind that simply wants to earn. Some owners have money and want to lift the scene; others do not.

And commercial galleries are under pressure too. Rent, utilities, wages, advertising — the costs are real, and they have to turn a profit to live. Of course they want to sell high.

When a gallery picks an artist, it looks at things in a certain order.

Competition prizes

Exhibitions at museums and similar institutions

A record of works entering collections

Appearances in the media

The artist’s own character

1. Is this an artist who sells?
2. Is there a future in them?
3. Are they someone who will not stop making work?
4. Character
5. Compatibility

The gallery wants to sell high, and for that it wants material that will convince a buyer.

The gallery weighs these together and sets a figure by comparison with other artists.

This is the part that draws the strongest reaction in workshops. Both are things I was actually told; I do not identify the speakers.

I bought an early work by an artist decades ago for four hundred thousand yen. Sold at auction, it made forty million.

A living artist who sells well should stop making work.

More supply means a lower price. Supply and demand comes straight back at how an artist is supposed to live.

Attention leads to sales. Sales draw people. When people gather, a gallery contract follows. That is the order.

You can raise a price when the buyer has enough reason to want the work at that price. It is not decided by your own circumstances but by where you stand inside the community you work in.

Once you sell work and take money for it, you are a sole proprietor. If you make a profit, you have to declare it and pay tax.

The level at which that starts depends on whether this is your main work or a second job, and the thresholds are revised from time to time. Check the current figures with the National Tax Agency.