Art, value and prices

In this thesis, I examine the difficult issue of art prices and pricing artworks. In today’s economic climate and changing art policy this is a very up-to-date topic. While the relationship between art and money has traditionally been difficult, it is still important for artists, intermediaries and buyers to consider the economic aspects of art. In the end, art, like any other product, is sold and bought in a market. Pricing artworks is a complicated process in which many factors are involved. These factors are a consequence of the art market structure as well as the way art is valued. These concepts are explored first in order to eventually propose a table of factors that aims to capture as many price determinants of artworks as possible. These factors are divided in four categories, three of which represent external price determinants and one category that represents price determinants within the artwork. The factors that influence the price of an artwork are a result from the use of so-called ‘pricing scripts’. Art dealers who set the price for an artwork follow these unwritten procedures consciously or unconsciously. Eventually, the theoretical research thus produces a theory on price determination as well as pricing processes. In order to verify the significance of the price determinants as proposed, the empirical research consists of a survey among artists who point out what they think determines the price of their artworks. In addition, the survey measures the weight of the different factors in the scheme. It turns out that, for the factors that lie within the artwork, the respondents largely agree with the theoretical research. Size is a major determinant in pricing an artwork, but also the technique is of great importance. These findings clearly confirm the theories in the literature. Concerning the weight of the different factors, the empirical research shows that external factors matter less than intrinsic characteristics of the artwork. The artists that participated in the survey all work independently, representing a trend in the art world that indicates a process of disintermediation. However, as the literature indicates, intermediaries do not become obsolete due to this development. Even more so, they appear to have an even stronger position as experts, even though artists can sell their art without their use. Potential buyers look up to the intermediaries and trust their judgement. They need this trust as a reassurance in order to proceed with buying art.