The Power of Perceived Value
If you saw this bag in a store, what would you think the price is? Go ahead, think of a number. I’ll wait.
What did you come up with, $100, $300, $500? What if I told you this bag costs more than a entry level new car? This is a HERMES Birkin and it costs $23,950 and this one is on the cheap end of Birkin bags. This might be the most insane example of perceived value, but what can we learn from this? Is there something that makes this bag so special people are willing to sell an internal organ to buy one? No. What HERMES has done is create a product for a very small audience, create scarcity within that audience, and price it at a level that audience is willing to pay. This clear exploitation of their customer base is capitalism at its worst, but there are some things we can apply to our pricing strategies that feel less icky.
Minimum Effective Audience
Artists are at their best when they can push their artistic vision to its fullest. However, when this runs against what the majority of people might want to purchase it can be hard to make a living. So, how do we fulfill our creative vision and still afford to live?
We start from what I call a ‘minimum effective audience’ or the smallest number of people willing to invest enough money so you can afford to focus on making art. With the right strategy we can find our minimum effective audience and make the products they want to buy at a price they are willing to pay.
In my last article I talked about crafting an experience at your convention booth. This experience needs to extend to the items you’re selling. What types of items does your audience want to purchase? What type of materials make sense to print your work on? These are great questions to ask yourself to fulfill the wants of your audience and help yourself stand out even more. Most importantly we have to price effectively and offer a range of products to allow our audience to invest what they are willing to.
The Master Print
A traditional painter has a one-of-a-kind painting they can sell to a collector for a premium price, but digital artists don’t have an equivalent item. I struggled with this problem for years and an idea finally occurred to me when I was browsing a photographer's gallery in Hawaii. He was charging thousands of dollars for a large print of his work. If photographers could do it, why not digital artists? So a few years ago, I raised the price of my 24” x 32” centerpiece to $1000. At the same time I made a promise to my audience - I would only make one at that size for each of my pieces.
At first it was scary - was I crazy, would having one item priced so high scare people away? All my worries were unfounded. Having an item at this price point is a huge advantage. It makes a bold statement that you should be taken seriously as an artist and presents a single item that one person can invest a huge amount in to help you make more art. When I first raised the price I told myself, “Worst case scenario it doesn’t sell and I get to keep the piece to display at other shows." And then it sold.
The Master Print fulfills several roles at your booth. It’s a showcase piece that draws attention. It’s a price anchor that helps your audience see that your work has value. And it’s a way to let your audience invest in you.
What is a print worth?
A common misconception is that you have to charge what those around you are charging. If your goal is to create work that fulfills your own unique artistic vision, you’re not competing with the artists around you - only you can create work in your voice. So, how do we build a pricing structure to enable our minimum effective audience to invest what they are willing to?
I break my pricing into three tiers:
A high-quality open edition print
A premium item
One-of-a-kind premium item
I use this structure to allow my audience to choose how much they want to invest. If they want to spend more the option is there.
I see a lot of artists wanting to offer a product at a price point anyone can afford, like a button. In my opinion this is problematic for a couple of reasons. This sends a subconscious message to your audience that your art is cheap and it allows your minimum effective audience to spend very little to get your art, which makes it very hard to make enough money to live. The good argument that I have heard for this is that you get your art into the hands of anyone that is interested, so, when they have money, they can become a higher spending customer. My suggestion is to give away a business card with a clean image of your art on one side, like a mini print. This fulfills the purpose without lowering the perceived value of your work.
Like most convention vendors I offer a discount on my prints, if you buy two they are $30 each. However, this has always felt wrong to me. Discounts are counteractive to perceived value. This is why Apple never runs a sale (if you see an iPhone on sale it’s the store’s promotion, not Apple's). I’ve seen a few other discount ideas, like buy two get one free, but this is also problematic as you flood your niche audience with too many of your prints, lowering their want to purchase more in the future. I plan to try offering an additional item, not a print, if a customer buys two or more prints.
By each raising our perceived value not only do we allow our audience to invest in us, we also open the door for other artists to do the same. We can raise the bar of what Artist Alley is. This sends the message to attendees that Artist Alley is a place to find and directly support emerging artists. Together we can make Artist Alley a place for artists to develop prosperous careers creating original art, instead of chasing jobs that want the moon for peanuts.