What Determines the Price of an Artwork?

The factors that determine the price of an artwork can confuse collectors of all stripes. From headline-grabbing seven-figure auction sales to opaquely priced gallery shows, understanding the whys and hows of artwork costs can be far from straightforward to those unfamiliar with the mechanics of the art market.

This is partly because the reasons behind artwork prices are determined by numerous densely interconnected factors that influence each piece’s financial value.

“No single factor should be considered in isolation or as more important than another,” said Chloe Waddington, partner at London-born gallery Timothy Taylor. “Valuing an artwork is a combination of many factors: institutional recognition, market demand, career stage of the artist, condition, authenticity, medium, et cetera.”

A good starting point is to know that the art market—like most markets—fundamentally boils down to the interplay between supply and demand. “If you have an artist that creates 20 pieces a year, then you will not have the same strategy as if you have an artist that produces 100 or 50 pieces a year,” explained Hadrien de Montferrand, founder of Beijing’s HdM Gallery.

Unlike most other industries, however, artworks are, for the most part, characterized by their uniqueness and limited supply. This means pricing individual pieces involves more than tallying costs; it requires a nuanced assessment of various elements that can hold different weights in different contexts. There is also the case of an artwork’s subjective value, which can influence the cost of any artwork, particularly at auction, where heightened tensions among would-be buyers can drive prices well beyond their expected market value.

“All these things—science, career studies, materials—there’s always also an emotional value [attached to the work], which comes with a certain price, [so] it’s difficult to define,” said Lars Bode, founder of Berlin-based gallery Bode.

Amid these dynamics, collectors looking to purchase a piece face a number of questions: What determines why one painting is more valuable than another? Why do the prices of artworks fluctuate? How do I know I’m getting a good deal?

Here, we speak to experts on the primary and secondary markets about what collectors need to know about the price of an artwork—so you can make the most informed decision.

The value of an artwork is dependent on who is selling it and where it’s being sold. The primary market features artworks sold for the first time, mostly directly from galleries or artists themselves. The secondary market, on the other hand, involves the resale of artworks through auctions or dealers. Both sides of the market have similar factors which influence their prices.

Primary-market sales mostly take place via galleries, which work with an artist to facilitate sales of their work.

Galleries play a critical role in representing the artist and helping to set prices for their works based on various factors, including reputation, education, market trends, and the quality of the work. They also set prices for artworks in a way that reflects the context of the artist and the artwork. Factors here can include the artist’s education, residencies, and previous shows, as well as a qualitative assessment of the material itself.

The medium of the artwork in question is also taken into account. A work on paper, for instance, is likely to be valued well below that of a painting. This is mostly because these works take less time to produce than paintings, are often in a smaller format, and many are studies made in preparation for paintings.

All of the factors that relate to prices on the primary market also affect the secondary market. But because the secondary market involves works that have been sold before, they are sensitive to several unique facets—especially when they are sold at auction and their prices are listed publicly.

Many of the leading secondary-market lots are priced according to their rarity. This can range from works by late artists with finite oeuvres, such as Egon Schiele and Francis Bacon, to historically important works coming to the market for the first time. For example, Schiele’s work on paper Liebespaar (Selbstdarstellung mit Wally) (Lovers – Self-Portrait with Wally) (1914–15) sold for £7.88 million ($12.12 million) at Sotheby’s in 2012, a considerably high price for a drawing due to its importance in the late artist’s oeuvre.

Provenance—a record of ownership—also plays a critical role; a well-documented history of an artwork, especially one that includes ownership by notable collectors or inclusion in prestigious exhibitions, can significantly increase its value. “Provenance is a great [factor] that really can affect value,” according to Emma Baker, senior specialist and head of evening sales at Sotheby’s in London, especially if a work is “fresh to the market and comes from an amazing collector because it has this great and well-known history of ownership.”

The nature of auctions—where would-be buyers bid on artworks—can also mean that prices can grow exponentially, unexpectedly. Battles between competing bidders can cause the price of an artwork to increase by large sums in mere minutes.

On both the primary and secondary sides of the art market, prices for artworks are influenced by the broader context of the artist and their position in the art market. Values fluctuate in response to changes in collector demand, general economic conditions, and the artist’s stature at the time.

For living artists, the value of an artwork changes as an artist’s career and standing in the art world develops. Milestones include major solo shows, biennial inclusions, institutional recognition, and the roster of collectors who have purchased their work before.

On the primary market, these accomplishments are tracked by the galleries that work with the artist and help to grow their career.

“Price making is critical on the primary market and should be handled carefully,” said Tristan van der Stegen, director of Paris gallery Xippas. “A gallery’s main objective is to assist the artist to build up their career. Lowering prices would demonstrate that we have lost confidence in the work. For this reason, I would advise reasonable price increases justified by the artist’s career development.”

It’s for this reason that price points can be much lower for works by emerging artists. Galleries often spend years building the recognition of an emerging name, whether by placing works with museums or mounting solo exhibitions. As their career develops, an emerging name will grow in popularity, and therefore, this parallels with their prices.

“As an artist achieves greater institutional and market recognition, I will suggest a moderate increase in price to that artist, usually in advance of their next solo exhibition,” said Waddington. “I’m a firm believer that any increase in prices must be measured and strike a balance between projecting confidence in an artist’s market and not outpacing their most ardent supporters.”

The growth of an artist’s stature is not just limited to living artists or the primary market. Several artists can receive significant increases in public recognition posthumously, such as Salvo. During the Italian painter’s life, he was little known outside of Italy. After the artist passed away in 2015, his profile in the art world grew extensively.

Increased recognition also comes with increased collector demand—perhaps the crucial factor for artwork pricing. During Salvo’s life, the artist’s work rarely sold for more than five-digit sums, but recently, prices for his works have skyrocketed on the primary and secondary markets. In 2023, his painting Il Mattino (The Morning) (1994) set a record for the artist when it sold for HK$8.7 million (US$1.1 million) at Christie’s Hong Kong.

And to return to the point about the art market being driven by unique works with limited supply, the most expensive works are those that fall in the crosshairs of being the most exclusive, important, and in-demand examples available.

Perhaps the most high-profile example is the most expensive artwork ever sold at auction: Leonardo da Vinci’s Salvator Mundi (ca. 1490–1500), which sold for $450.3 million at Christie’s New York in 2017. Salvator Mundi drew extraordinary interest because it is one of fewer than 20 known paintings attributed to Leonardo, making it an exceedingly rare opportunity for private ownership of work by the master.

Because their prices are public, auction results can provide the clearest signal of how demand is influencing the prices for artworks. Auction houses attempt an informed prediction of an artwork’s price with an estimate, which is a figure (usually a range) that puts a benchmark figure on the artwork’s value by analyzing its place in the context of the wider art market. Estimates made by the auction houses provide a starting point, but ultimately, the value is determined once the gavel drops. A high auction record can also influence prices for other works in the artist’s broader oeuvre and, if they are still working, new pieces sold in galleries and at art fairs.

“There exist reputational rankings and secondary-market rankings,” said Stegen. “The first one is more focused on exhibition history, catalogs, and participation in biennials. The second one is based on auction results. I find that the overlap between the two is the one dictating the artist’s rank in importance.”