Art, Discounts & Ethics: How We Price Our Wall-Art | ArtSocket Gallery Magazine

Art, Discounts & Ethics

By Header image credit: ArtSocket

I believe that art really does make a very significant impact on our lives. Whether it is Rembrandt or Justin Bieber it deeply affects us on emotional, social and even physiological levels. During the past few years my beliefs, opportunity and my personal skill set brought me to the point of starting this art-related business.

How much money do we make of each poster sale?

  • $27 Printing expenses
  • $35   Artist royalties
  • $16 ArtSocket margin
  • $11 Shipping subsidies
All posters on ArtSocket are sold at variable profit margins with artist royalties being the only thing kept constant. Print costs depend on the size of a print being sold. We also subsidise shipping for all of our customers to keep the prices at bay. Our profits however could change wildly, sometimes being as much as 20% or as little as -50% when we are discounting the prints heavily. The reason for this kind of pricing model is to keep things simple and affordable for the customers and ensure steady, safe stream of income for the artists.
Note that in this graph all values have been rounded to the nearest dollar.

While not being a genius marketer (mediocre, at best) I always knew that generating income from art is an important step towards becoming a better artist. Being able to earn money from print sales, for example, would mean that I would need to devote all my free time towards getting better at it. And all I really want is just more time for practice [that] makes perfect.

A few years into this venture and I am convinced that business is really, really hard. Especially if it is being conducted online.

Security concerns, difficult returns and flat, small screens. But that's not all: buying anything online is often associated with deep discounts. It's not a surprise that internet shopping has got a lot of its momentum because we can get better deals on, say, Amazon than at a local store - consistently. So how does that even work?

Pricing is not easy. Things that affect the tag could be as obscure as the cost of minerals required to produce a component. There are so many processes involved in making even the simplest things that we are unable to manufacture most of them on our own. Take this TED talk where Thomas Thwaites attempts to create a toaster on his own - and fails. Miserably. Now imagine all of this complexity wrapped in economics of squeezing every little penny during each step to pass the savings on to us.

So why the price wars then? And are they all bad?

Competition promotes innovation and reduction of wasted energy and materials - which is excellent for our environment. Pricing things cheaper means that we can now allow the customers that could not previously afford a certain necessity or even luxury to finally get it. But of course this creates a huge opening for abuse. Undercutting employee wages, environment pollution due to production shortcuts and even slavery can result from bad business practices. This is not the world any of us want to live in.

But if sales are a big part of the retail tactics (this post is being written just before a huge Black Friday yearly blow out sale) there needs to be a sustainable way of doing them. And there are a few ways or performing just that.

The first "way" I am about to list is not entirely honest. It has never and will never be done at ArtSocket.

Marking up before dropping the price is a shady (but seemingly common) tactic which involves pretty much lying to the customers about the true value of an item. Imagine this: I tell you that the coat you are about to buy is now $100 after being marked down by 50% from its original price. While the truth is that its non-sale price has been inflated specifically to give you the perception of a great value. The reality being that the price of the coat is $50, I marked it up 400% at $200 and sold you for $100 making you think that this is a great deal while I pocket a huge profit. The nasty bit of this whole ordeal is that I am practically forcing you to buy something that you may not otherwise need - through social and cultural pressures of deal-hunting - be it Black Friday, Cyber Monday, Boxing Day or whatever.

The other (and what I believe is better) way to provide discounts is by thinking ahead of the curve. From a point of view of a customer it is actually a great deal with a wonderful value attached to it. But as a retailer I loose money. Hopefully, it's only in a short run. So why would I, or any other retailer even consider doing this to myself and my business? And why "hopefully"?

I got in to art business to make money so that I could make more art. Maybe even change a few things at the scene to make it better for everyone. It was never about a quick gig to make some cash. My dream is to make this art boutique sustainable, profitable and good for everyone involved. But I am a little guy, competing with giants like Art Finder, Art Dot Com and Fine Art America. For me, growing my customer base (finding more people who would love ArtSocket prints) is everything. It's not just about selling to whoever would agree to buy. I must prove that the business has a potential to sustainably grow into something larger, giving it a chance to truly bring some positive advances.

Two things come into play: customer acquisition and retention. The latter means that I have to keep my customers coming back. That's at the core of ArtSocket's (and many other good businesses') model:

  • Make awesome things
  • Make people happy
  • Give value
Discount Wall-Art offer
One of the ads we were running for the Black Friday sale. This particular image is called "Bovinae". At the time it was discounted at 20%, eating all of our profit margins. In fact, it would cost us about $20 to ship this order (as in we'd loose $20 on this sale), not to count the amount of money spent on advertising. Yet this is still not as much as some other tech companies might spend per qualified lead - up to one thousand dollars!

Nobody is perfect and there is always room for improvement. But so far I've never received a single negative review for any of the wall-art being sold here. So let's say that it's good enough for now. But customer acquisition is really hard and expensive for small businesses like this tiny online wall-art store. Let me give you an example:

When Facebook bought Instagram, they paid roughly $92 per user!

Remember, Instagram is free; there aren't even any ads there! Just to make sure that you are still with me: customers are very expensive (even if they haven't bought anything). The payback could be huge though if the things being sold to the right people would keep them coming back (retention, quality products - remember?) All the biggest, most successful companies did it this way.

So coming back to the discount game it is all very simple. I, and many other business are giving away a portion or all of their profit. Sometimes even taking losses. It is a form of paying for customers, giving away a free sample for people to try and hopefully spread to their friends and colleagues. And if things go according to the plan, the business should grow as a result. The reason I say should is because there is no certainty. Nobody can be sure of anything and the only way to really know is to test and try. That's what this incredibly TED talk is about. Risk is inherit to all and any kind of business. ArtSocket is the risk I took to build a business that would sell things that I believe matter and make the world a little better of a place. I could make a lot more money working my full-time job as a developer back home. But this is not who I am.

And what about selling overstock at lower prices? Isn't that's what "boxing day" is all about, cutting losses by getting rid of unsold merchandise? - Yes, for some retailers. But not here, not at ArtSocket - every print is made on demand just for you :)