How to Price Your Art to Sell Using Sales Psychology

Pricing your art can be one of the most challenging aspects of running an art business.

You want to price your work fairly, but you also need to make a profit.

Understanding the psychology behind pricing can help you set prices that not only reflect the value of your art but also encourage more sales.

One powerful concept from the sales psychology world is the "decoy effect."

Understanding the Decoy Effect

The decoy effect, or asymmetric dominance effect, (that's a mouthful) is a phenomenon where consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated. Wait... what? 🤔

This means the third option is priced in a way that makes one of the other two options more attractive.

And I would BET that you probably fell prey to the decoy effect at least once this week already! Let me explain, but first... We need some coffee. ☕

Lets go on a little field trip to our nearest Starbucks. I'm going to get a Caramel Ribbon Crunch Frappuccino® Blended Beverage.

When you approach the counter what do you see right there next to the cash register...

Three (at least) different sized cups. A Tall (12 oz), Grande (16 oz), and Venti (24 oz). There are others but those don't matter right now.

For my caramel coffee frap I can spend $5.95 on a Tall, $6.45 on a Grande, or $6.95 on a Venti.

Each size increases evenly by 50 cents as you move up in size. So whyyyyy is the price increase 50 cents for 4 more ounces when moving from the Tall to the Grande, and STILL only another 50 cents more when getting a Venti which is 8 ounces bigger than the Grande?!

This is because, psychological, we will see the Venti being a better value and then purchase that size EVEN when we only wanted the Grande or Tall. Starbucks (and many other companies) know this as well.

Spoiler alert, Starbucks WANTS you to buy the Venti. 

THIS is the decoy effect.

How to Use the Decoy Effect in Art Pricing

Here’s how you can apply this concept to your art pricing strategy:

Step 1: Identify Your Pricing Tiers

Start by identifying three tiers of your artwork:

• Low Price Option: This could be smaller prints or originals, less intricate pieces, or works made with more affordable materials.
• High Price Option: These are your premium pieces, such as large prints or original works, highly detailed pieces, prints with hand embellishments, or works made with expensive materials.
• Decoy Option: This is where the strategy comes in. You need to price this option strategically to drive sales to the option you want to promote. 

Your customer will lean towards buying the slightly higher priced item because it is only "slightly more" than the item next to it.

Step 2: Set Your Prices

• Low Price Option: Let's say this is $50.
• High Price Option: This could be $500.
• Decoy Option: Here’s where you have choices. If you price this at $150, closer to the low end, collectors are more likely to see it as a better deal (because it is just a little more than the lowest price) than the high price option, and it may become your best seller. Alternatively, if you price it at $400, closer to the high end, customers may perceive the high price option as a better value for just a bit more money, potentially increasing sales of your premium pieces.

Step 3: Monitor and Adjust

Once you’ve set your prices, keep an eye on your sales. Are customers gravitating towards the option you intended? If not, don’t be afraid to adjust your prices. Pricing is not a set-it-and-forget-it aspect of your business. It requires ongoing attention and tweaking.

Real-World Example

Consider a scenario where you have three print sizes:

• Small Print: $50
• Medium Print (Decoy): $150
• Large Print: $500

Instead of pricing the Medium print half way between the two price points, you can shift the price down towards the price of the small print. If the medium print is priced at $150, collectors might view it as a reasonable compromise between the two extremes and would feel that the value was worth buying the medium size fine art print.

However, if the medium print is priced at $400, customers may lean towards purchasing the the large print, seeing it as a better value for just $100 more.

Understanding and utilizing this decoy effect can significantly influence your art sales. By strategically pricing your pieces, you can guide customers towards the options that best meet your business goals.

Remember, the key is to create perceived value and to constantly review and adjust your pricing strategy based on customer behavior and feedback.