Friday 4 February 2022

How Much?


One of the challenges facing the typical amateur or early-career artist who has managed to get a picture into a group or open exhibition is working out how much to sell it for, the so-called "catalogue price". Setting aside how much it has cost you in time, effort, and materials to produce the thing (as they say, nobody cares how hard you worked) you will already have paid an entry fee to have your work considered, spent money on framing and travel to deliver the artwork to the gallery (all in compliance with their often very fussy specifications) and, should you be lucky enough to make a sale, may even incur further costs for delivery to the buyer, if they can't simply pick it up from the gallery. Galleries are not shy about passing on costs.

The whole business of pricing is complicated by the fact that a gallery typically charges a commission of 30-50% on sales, and in the UK those that are registered for "Value Added Tax" will also add VAT, currently at 20%, to that commission; no doubt something similar happens in other countries [1]. So, working out a price-tag that will deliver the amount of money you need or want to earn from a sale involves taking account of all the overheads that are going to be or have already been subtracted from your asking price. I'm ignoring the question of whether you yourself are VAT registered, which is unlikely, unless you are selling more than the VAT threshold amount: £85,000 worth of work in a year (in which case I have no idea why you're reading this, other than to gloat...).

This "commission + VAT" element, in particular, is a tough sum to do for the typical "artist", who is often – let's get stereotypical – some semi-numerate dreamer who might think, naively, "Well, that's 30% for the gallery, plus 20% VAT from the buyer, so that leaves 70% for me, right?". Wrong, my paint-spattered friend... For a start, you will be paying the VAT on the gallery's commission, not the buyer. Getting this sum right is crucial if you need to know how much money you will actually make on a sale.

The first few times I did this myself I arrived at my catalogue prices by trial and error, trying out potential price tickets by choosing a likely-sounding figure, deducting my up-front costs, working out the "commission + VAT", and seeing what was left over, which was tedious. But then I realised that, let's say, a 30% commission plus 20% VAT represents 36% of the price, leaving a remainder of 64% (I know: duh!). Never mind the maths of that for now: we'll come to that later. So, if I wanted to make £100 from a sale, then that needed to be 64% of the asking price, with the result that, by a fairly simple calculation, the full catalogue price needed to be precisely £156.25. Call it £160. No, fuck it, call it £175. But even then that would still only earn me £112, and – now I came to think of it – I had paid £60 for the framing, and would be needing a £50 return rail fare to deliver it... Back to the calculator. Still confused? No worries: details of how to work this out for yourself are set out below.

It recently occurred to me, as a public service to the Innumerate Artist Community, that it would be useful to find a really simple formula that would help people to price their artwork. This being beyond my capacity, I thought I'd try the idea out on a number of my more numerate correspondents – some of whom are very numerate indeed – which I communicated in the form of a spoof exam question, as follows:

Turn over your papers NOW:

Time: As long as you like. Question 1 is mandatory; Question 2 is rhetorical.

Question 1:
If a gallery charges C% commission on picture sales plus V% VAT, derive a formula whereby an artist can determine a sale price S that will mean that they will receive amount X from the sale.
(Sample values: C=45%, V=20%, X=£100).

Question 2:
Why do galleries never provide such a formula?

Please do NOT show your working.
I thought this would be amusing, but it's easy to forget how, ah, serious the highly numerate can be, especially if you revive anxious memories of examination rooms buried long in the past. So the answers I got back were mixed. A couple were downright insulting, along the lines of, "Really? Can't you do percentages, then, fuckwit?" Well, yes I can, thank you very much, even without a calculator [2]. Most of them also initially missed the crucial point that the VAT is charged on the amount of the commission alone, and not the amount of the whole sale, and deducted from the sale price. Admittedly, this is not obvious to anyone who has never had dealings with a gallery – it does sound crazy, doesn't it? – but that, of course, is what makes the sum tricky, especially if you want to factor in variable commission rates for different galleries, not to mention future changes in the rate of VAT. So I sent out a follow-up note of clarification on behalf of the Board of Examiners.

Most of of the responses were excellent, but involved the sort of intimidating algebraic spell you might see chalked up on a blackboard, replete with symbols, brackets, and all the other mystifying maths-y stuff that terrifies the innumerate. Accurate, but not safe in the hands of the untrained operative. In the end, the best response was from old friend Andy a.k.a. Science Man, who packaged the whole thing up into a neat little spreadsheet, in effect an app that can calculate the sum in both directions. The formula for going from "payment to seller" to "sale price", for example, is pleasingly simple:

P = X /(1 - C/100 (1 + V/100))


However, spreadsheets are probably as alien to the aforementioned maths-shy dreamers as is calculus (or even long division, let's be honest) and, besides, it does no-one any harm to understand how to get from A to B without the aid of Sat Nav. All things considered
, my own method – wordy and condescending, perhaps, but which does deliver the truth of the matter in plain terms – seemed preferable. So, for the benefit of all you artists out there who struggle with numbers – you know who you are – let me run through my procedure step by step, in the hope this will save you from making disastrous miscalculations in future:
  1. Establish the gallery's commission percentage, whether VAT will be charged, and what the VAT rate is. Let's say 30%; yes; and 20%.
  2. Establish how much money you hope to make from a sale, not forgetting to cover your related costs like framing, travel, etc. Let's say £250.
  3. For the sake of ease of calculation, pretend the price tag is going to be £100. So, easy one: 30% of 100 is 30.
  4. Now the VAT. Get your calculator (yes you do, there's one on your phone) and enter 30, press the x button, enter 20, then press the % button, and then the = button. Answer: 6.
  5. Add 30 + 6. Answer: 36. That's the gallery's percentage. Yours is 100 minus 36, i.e. 64. So your percentage of the full catalogue price paid by the buyer is 64%.
  6. Now the complicated bit: divide your desired profit of 250 by 64 (calculator again – answer: 3.90625). Now multiply that by 100. Answer: 390.625. That's your price tag! Call it £390.60, or why not a nice round £395? 
As it turns out, this year the Royal Academy have actually anticipated my rhetorical Question 2 above, and have now offered the helpful hint that their "30% + 20% VAT" commission on Summer Show sales is really best imagined as the 36% of the catalogue price which you will never receive. Finally! Mind you, steps 5 and 6 above are still essential, nonetheless.

Now, one problem is that you might feel that the resulting amount is rather more than anyone is likely to pay for your work; you were just about happy with £250, but £395? It is quite a lot, really, isn't it? Another problem is that you might well be right about that. So the real question is: do you really want to make a profit on your sale, or are you happy merely to cover your costs and break even? Or, ultimately, can you afford to make a substantial loss, simply for the "exposure", and the chance to add a prestigious item to your CV?

But – and this is the Big But – you need to set against those questions the overwhelming reality that, sure, you got into the exhibition – congratulations! – but the chances are you won't be selling anything, anyway; most people don't. No, really: most people don't sell work from exhibitions, even competitively-priced and clearly outstanding works of genius like my own offerings (you can read about my Excellent Adventures in trying to sell art here). So the chances are that, far from making a profit or breaking even, you're going to have to pay for another return journey, just to go and collect your unsold work. You are now deep into deficit territory.

Consider this: how much time, money, and disappointment would you have saved yourself by offering your work at a giveaway price, perhaps thinking of it as a "loss leader", a low-cost gateway to better things? Or might the best thing be to just give the bloody thing away? But that is to assume that anyone would want it, even then: framed, free of charge, delivery included. Which, I'm afraid, is the real question we all need to be asking ourselves. Who really needs all this art? Is it surprising so much goes unsold? In the end, isn't it just a superior form of busywork? If you've ever visited a typical "open" exhibition, you may, like me, have come away with the impression that too much "art" is incompetent, feebly decorative or derivative, and rather too much like the experience of listening to someone's else's account of the "amazing" dream they had last night. I don't except myself from this observation, of course.

So, for a different perspective, let me point you at an amusing but thought-provoking book project from blogger Andrew Molitor, called Vigilante; subtitle: "not everything needs to be in a gallery". It's very good, inexpensive, and – now here's an outrageous thought – you might even want to consider accumulating some sales karma for yourself by actually buying a copy. You don't even have to hang it on your wall, and Andrew won't mind if you leave it lying around somewhere for someone else to enjoy when you've finished with it. In fact, he'd encourage that, I'm pretty sure. Not everything needs to be in a gallery.

Did I tell you about my dream last night?

1. How this works in practice varies. For example, the Royal Academy deducts 30% + VAT from the catalogue price, and then leaves the payment and collection of the remainder as a private transaction between the buyer and the artist. The pursuit of which consumed the entire summer of 2017 for me. The Royal West of England Academy deducts 35% + VAT, but collects the entire sum, and passes the remainder on to the artist.
2. I have spent a large part of my working life dealing with figures, so have of necessity become very competent with basic calculations and statistics. However, mathematics and I have had a troubled relationship, as you might expect. As members of a grammar school "A" stream class, we all took our Maths O-level exam a year early, primarily so that – for the benefit of the future scientists among us – we could spend a year grappling with O-level "Additional Maths" (essentially calculus and differentiation). This was poorly taught and entirely beyond my grasp, and it was the only exam I have ever failed in my entire life.

2 comments:

amolitor said...

I was reading and reading and thinking "this is all great" and then you said my book was "very good" so that's all I can remember.

Thank you for the compliment!

Mike C. said...

amolitor,

Well, it's actually better than "very good", but I know you drop by, so I wouldn't want to embarrass you... In my view ((hilarious + thought-provoking) / (visual + short)) = excellent.

Mike