Pricing Case Study: How An Artist Utilized a Powerful Price Point to Sell Paintings
In a category where customer value is almost entirely ignored in pricing, artist Jean Smith uses a price point-based approach centered around customer value.
Most contemporary artwork is priced in a fascinating and counterintuitive way. You’d think that because the value is so subjective, artwork-specific, and personal, prices of paintings would be driven almost entirely by customer value, with auctions being the most common way to determine their prices. If you leave out the most famous painters and their paintings, this is not the case.
Customer value hardly figures at all in pricing paintings. Instead, artists use a standardized procedure to set prices, which can best be described as “size-based pricing.”
Size-based pricing typically uses one of two formulas, depending on the artist’s preference:
Square-inch pricing takes the height (h) and width (w) of the painting and multiplies it by the artist’s reputation factor (r). Artwork price = (h x w) x r.
Linear-inch pricing adds the painting’s height (h) and width (w) and multiples it with the artist’s reputation factor (r). Artwork price = (h + w) x r.
In theory, the reputation factor in the formula is supposed to capture customer value perceptions. In practice, most artists choose their reputation factor quite arbitrarily, without any customer input. Choosing the same reputation factor as peers or friends is quite common. Because size-driven pricing is widely used, painting prices tend to be homogeneous and mostly ignore the inclinations or willingness-to-pay of art buyers. As gallery owner Jerry Lynn Ing points out:
“I own a small gallery and it is not always easy to inspire or suggest to artists that a wider range of sizes (prices) in their work would do wonders for their sales... so that each customer can afford to take home a piece of art from their favourite artist.”
Against this rather disappointing backdrop (from a smart pricing perspective), imagine my excitement when I read a New York Times story titled, “The Painter Subverting Art-World Economics, $100 at a Time.” It’s a case study about adopting smart pricing approach successfully. The story is about Canadian artist Jean Smith who paints these amazing portraits of women:
As you can see, Jean Smith’s paintings (acrylic on canvas, 11 x 14 inches) are mesmerizing. In the words of New York Times’ Nick Marino:
“A majority were somehow transgressive — they looked sad or high or embalmed or deranged, or appeared to have been caught in a thunderstorm. They had raccoon eyes and buck teeth, or trapezoidal faces…. Unlike most portraits, especially the ones men tend to paint of women, these were not made to be looked upon. The subjects were equal partners in the looking. You stared at them and they stared back.”
What’s almost equally impressive about Jean Smith’s paintings is her nonnormative pricing strategy. Dropping the size-based approach, she started selling her paintings using a price point that made sense for her customers (What is a reasonable price for a painting?) and for herself. She settled on $100 as an appealing price point at the outset and has maintained it for four years.
Much like the Subway $5 foot-long sandwich story, it seems that Jean Smith stumbled on the $100 price point for paintings by chance. When she listed her first painting on sale for Facebook for $100 in 2016, it sold within minutes. Since then, she has sold over 1,500 paintings at $100 apiece, usually within minutes of listing them. She paints and sells her work every day on Facebook and through her website. Is this a “ludicrously low” price as some observers suggest, or is this a price that people want to pay for a painting that they can hang in their home and enjoy?
As she gathered a devoted base of buyers and collectors, again taking a page out of the smart pricing strategy playbook, she introduced a $600 “best” painting version to complement the $100 bread-and-butter “good” version. These more expensive paintings are just as popular. The media exposure is only going to solidify the success of the $100 price point.
One final question that those reading this post should be asking (I certainly thought about it): What if the $100 price point is too low? These paintings could easily sell for more. Shouldn’t she raise prices and test the market?
Here’s Jean Smith’s explanation for why she hasn’t tried deviating (up) from the $100 price:
"It's a continuation of Fugazi shows being $5, or Beat Happening always playing all-ages shows. And those were things to ponder: Why would they do that? Why wouldn't they put their prices up? Why wouldn't they want a bigger audience and play for other people? Well, those are political decisions to create art for the accessibility aspect. It energizes the whole project. I get to paint every day."
For the artist, having a say over who owns their creations and how much enjoyment they derive from the art, is a big part of the pricing equation.
Lessons for pricing strategists
So what lessons can we learn from Jean Smith’s success story? I can think of four solid lessons for every manager (and a fifth one specifically for entrepreneurs and startup founders).
It pays to bring customer value into the pricing equation even when tradition and industry norms dictate ignoring it completely.
Price points are powerful! I think of a price point as a specific price that customers find to be psychologically attractive, the price that “just feels right” so to speak. If you discover a price point in your market that competitors have ignored, it’s like striking gold!
Price points may require unconventional (read, low-cost) marketing and distribution methods. The $100 price point is working for Jean Smith because she sells her art on her Facebook page. It wouldn’t be economically tenable if she tried to sell her paintings through a gallery.
Once you have an established product (the $100 painting in this case), you should always be thinking about how to stretch your line upwards (by introducing the $600 painting). Extending this idea, Jean Smith’s next logical step should be to introduce even rarer more expensive paintings, priced at, say, $2,500.
(For entrepreneurs and startup founders). Consider breaking away from your category’s norms when launching a new product. This is the best time to try new creative pricing strategies that give weight to customer value (over costs).
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