Pricing your work, the never-ending story

I had a conversation with an artist friend today about two shows she has coming up in the same geographical area. One is a two-woman show in a gallery, and the other is a town-wide artist studio tour. She asked me a question about pricing, I thought it would be helpful to share what we discussed here:

Q1: Should my work be the same price at my studio as it is at the gallery?
Shouldn't I charge less if someone buys directly from me?

YES the work should be the same price in both venues, and NO you shouldn't charge less if someone buys directly from you. This idea comes from not fully understanding the artist/gallery relationship and the difference between an artist selling her work retail (direct to the consumer) and selling her work wholesale (indirectly to the consumer, through a gallery). They are two different paths in getting the work to market, but both paths require the same steps (and often many more than these):
1. Creation of the work
2. Presenting the work
3. Getting the word out about the work
4. Attracting collectors/buyers
5. Engaging the sale
6. Follow-up

When an artist sells retail (direct to collector), the artist does all the work for each of the steps.

When an artist sells wholesale (indirectly, through a gallery), the artist does the work for some of the steps (creating the work, presenting the work to the gallery) and the gallery does the work for the rest of the steps (presenting the work to the public, getting the word out, attracting collectors, etc.)

That is why galleries earn a commission - they become business partners with the artist and take on the lion's share of labor and costs associated with presenting and selling the work. That frees up the artist to spend more time creating new work, so they are spending their time creating and not selling.

The value (and therefore, price) of the work doesn't change based on who does the work to get the art sold. If the art is sold retail, the artist keeps the entire payment when a work sells. They need to cover their own labor and expenses, not just in creating the work, but also the labor and cost of showing, marketing, wooing collectors, sales, shipping the work, etc.

When artists sell work at a lower retail price than their gallery, they are:
1. Stealing from themselves  - by not paying themselves for the cost of their labor and sales when they do sell retail.
2. Stealing from the gallery - because they have just undercut cut the market. Why would anyone pay twice as much for a painting at a gallery when they could go to the artist's house and buy it at a discount?
3. Confusing your collectors - If a painting costs $2,000 when it is in a gallery, and $1,000 when it is at your studio, what is the art actually worth? Your pricing should always be consistent and make sense to the buyer, no matter where it is being sold.

Q2: Is it OK to discount work ever, then?

YES, but work with your gallery director to come up with a plan that makes sense for you both. For the most part, I think discounting work should be a rare occurrence (reserved for your biggest collectors) or if a discount on a large, expensive piece will make the difference in whether someone can purchase it or not. If you are going to discount work, give your gallery the latitude to do the same. Jason Horejs, of Xanadu Gallery in Scottsdale, Arizona, wrote an excellent blog post on the topic here.

What do you think? I would love to hear your thoughts on the topic of pricing and discounts.