Art Market
The Strategies Art Dealers Use to Discount Artists’ Work
The art market is notoriously opaque when it comes to pricing. While some auction results are publicly available, prices for works on the primary market are rarely bandied about. To add to the opacity, these prices are often subject to negotiable discounts, meaning the asking price a gallerist provides may not be the market price for the work in question.
These discounts are sometimes axiomatic; per conventional wisdom, no one pays “sticker price.” Generally, collectors, even new collectors, can ask for a discount of 10% without insulting anyone. Institutions and museums, or private individuals who exhibit their collections to the public, can get as much as 20%. But dealers and collectors say discounts are not necessarily standard, and can be proffered, expanded, or ignored depending on the circumstances.
“The art world is based on relationships, and the discounts help to keep relationships, and keep people happy,” said Nicelle Beauchene of the eponymous Lower East Side gallery.
Beauchene said she tries not to exceed a 10% discount on her artists’ works. She also noted that discounts on works with high production costs will come off the profit, rather than off the total sticker price, so if work costs $20,000 to make and sells for $35,000, a discount would be applied to the $15,000 of potential profit. However, Beauchene said she will offer a bigger discount when someone is buying multiple pieces, or when the work is being purchased for an institution. She cited a recent case in which an institution bought five works by a single artist. In that case, she bumped up the discount offered to 25%, after ensuring the artist was comfortable with the deal.
“When a museum is really supporting an artist at that level, I want to support [the museum too],” Beauchene said.
In other words, discounts are less about pricing and more of a tool to be strategically deployed. Alex Mor of Paris’s Mor Charpentier said he is likely to offer a discount when it is in the best interest of the artist (who, along with the dealer, often takes a financial hit). Even when an artist is young, the prices are low, and the artist needs the money, a discount can make sense in the long-term.
“When you have a young artist, you want this young artist to be in a very good collection,” he said. “So if a major collector comes and the work is not very expensive, it’s not about what is going to get into our bank account.…If you can facilitate this connection, you can maybe accelerate the presence of an artist.”
At Galeria Nara Roesler, a Brazilian gallery with outposts in Rio de Janeiro, São Paulo, and New York, discounts are most common for mid-career artists, said Frederik Schampers, director of the New York gallery. He is less inclined to give discounts on emerging artists whose prices he believes are very fair, and he also tends not to reduce prices when there is competition between collectors for an established artist’s works.
“For the really famous ones, often you don’t have to give much of a discount, because there’s a lot of demand,” Schampers said. “It’s often in the middle where you have to give a lot of discounts.”
Whether or not a discount is offered can also depend on the venue. Don’t expect a large discount right at the beginning of a gallery show, Schampers advised, when there are still six or eight weeks to sell the work. At an art fair, by contrast, dealers may have slightly more incentive to reduce the asking price, though Schampers advised bargain-hunters at fairs to keep in mind how expensive it is for galleries to attend.
All three dealers cautioned against the expectation that a gallery will cut prices drastically on the last day of a fair. As Mor pointed out, his shipping container is likely already paid for, and the presence of an extra painting or two is not going to alter that sunk cost.
“It’s really funny and it gets on my nerves,” Mor said, “that on the last day of an art fair, people come and if you haven’t sold a work, they say: ‘You haven’t sold it, so why don’t you give me a 30% or 40% discount so you don’t have to travel back with the work?’”
Dealers said that this behavior is more common in Latin America and Asia than in more established collecting markets such as New York and London. Beauchene said she might consider a larger discount at the end of the fair if it will save her thousands of dollars in shipping costs, but in that case—or in other cases where she offers a larger-than-normal discount without consulting the artist whose work it is—she ensures that the discount comes out of her share of the sale’s proceeds.
Alain Servais, a Brussels-based collector, said the buyer can also try to request that the dealer bear the cost of the discount instead of the artist. He recalled an instance in which a gallery had provided poor service, and it was the artist who had spent the most time talking him through the work. He asked to pay $8,000 for a work priced at $10,000, and said he insisted the gallery eat the discount and net just $3,000 so that the artist could still receive half of the full sticker price. For works below $10,000, however, Servais recommended paying full price and thinking of the purchase as supporting not just the artist, but also the gallery.
“I know the circumstances of the gallery,” he said. “I know the hard work they’re doing defending artists who are not fashionable, and sometimes it’s my responsibility not only to buy from them, but not to request discounts.”
Servais added that knowing when to ask for a discount also requires a certain amount of connoisseurship.
“If someone offers you something for $30,000 and it’s trading for $50,000 at the auction houses, asking for a discount is not only rude, it’s stupid,” he said. “It shows a total non-understanding of what the market for this thing is.”
As a sometimes-collector as well as a dealer, Schampers said he tries to be respectful when he himself is buying art.
“I always ask: ‘What is the best price you can give me?’” he said. Then, as a dealer, “when I’m negotiating on a piece, I want to make sure that the gallery is happy, the artist is happy, and the client is happy,” he said.
Discounts aren’t the only tools dealers can use to keep clients happy or seal a deal, Schampers said. He’ll also offer to pay for a shipment, cover the installation of a work, or throw in a smaller work gratis, in lieu of a straightforward discount.
Mor said he also understands that not everyone can afford to splash out for full-price art works, and some people are working hard to be able to own the art they love. Those are the people he would love to see own the work he sells, since he knows they will be good custodians of it. To help them acquire it, he is happy to offer discounts and installment plans, the latter of which he thinks are still subject to “a big taboo.”
“Some of the clients don’t pay right away, they pay in two or three installments, and that is normal,” he said. “Some people, they work to buy a work of art, and we have to be honest about it, and use this facility to open up access to the works they want.”
At the end of the day, he said, “You have to be flexible.…You have to use these tools in an intelligent way.”
Anna Louie Sussman is Artsy’s Art Market Editor.