Pricing of design - the case of art jewelry
Top image: jewelry by Yoshie Hattori
By Steven Forth
To really excel in pricing design it is important to look outside of B2B and see how things work in other parts of the world. We recently looked at the pricing of used books (which are often bought by the pound). Now let’s look at the art jewelry market.
Art jewelry, what is that? According to Wikipedia,
"Art jewelry is one of the names given to jewelry created by studio craftspeople. As the name suggests, art jewelry emphasizes creative expression and design, and is characterized by the use of a variety of materials, often commonplace or of low economic value. In this sense, it forms a counterbalance to the use of "precious materials" (such as gold, silver and gemstones) in conventional or fine jewelry, where the value of the object is tied to the value of the materials from which it is made.
From a pricing perspective there are a number of interesting points here.
Conventional jewelry is priced based on the value of the materials used plus brand. Some would argue that there is also value for the design, but in most cases the value of the design is subsumed into the value of the brand. Few people could differentiate between the design of something from Tiffany and Cartier. Of course the red Cartier boxes are worth more (have a higher brand value) than the light blue Tiffany boxes.
Art jewelry is altogether different. This work is quirky and unique. It is often made from cast off bits and pieces, the flotsam and jetsam of the modern world (bits of wire, broken ceramics, flakes of rock, melted plastic cups, industrial paper). It is formed into jewelry in many different ways. Sometimes traditional metallurgy techniques are used, but so are crocheting and knitting, moulding, assemblage and just about anything else that will cause different types of materials to stick together.
Jewelry by Yoshie Hattori
This sort of work is not of interest to everyone. But people who are interested, a focussed segment, tend to be passionate collectors. It is sold at stores like Velvet Da Vinci in San Francisco, Platina in Stockholm, Ra Gallery in Amsterdam or Collectiva in Porto (yes, this work is given more importance in Europe).
The fact that the value of the materials is often trivial and that the buyers are generally well informed collectors leads to a very different pricing dynamic than for conventional jewelry.
One calculates the price of a conventional piece of jewellery by adding the value of its materials, some gold or silver of various purities (measured in karats) and any jewels included. Then multiply that value by a factor (in practice this can be as low as .7X at a poorly run discounter (inviting opportunities for arbitrage) to as much as 5X for a brand that invests in its image and exclusivity.
Pricing art jewelry is much more like pricing art. One asks the following questions…
Who else is collecting this artist?
Is the work collected by any major galleries?
Is the design unique?
Is there a coherent story (or idea) behind the work
The top art jewelry can sell for thousands of times more than the value of the materials. In fact, many would say that if the materials are part of the value it is not really art jewelry.
Are there any lessons here for pricing other forms of design?
Perhaps the most important is that you have to understand the dynamics of the market and how it attributes value before you can know how to price. In some markets, price is determined by the value of the inputs. These markets inevitably trend towards commoditization. You can fight this by an investment in brand, but this will require large ongoing investments to sustain. If you are a designer, you probably want to avoid these industries as the price you get paid for your work has little to do with your effort or even its value.
Where should designers work? They will have the most pricing power where their work makes the largest contribution to differentiation value. Differentiation value is the value (economic, emotional and social) unique to your offer and not provided by the next best competitive alternative. Apple creates value through design and pays its designers well. The same is true of top fashion designers. Design, often referred to as User Experience (UX) is becoming more and more important in many industries, and organizations that are trying to differentiate on user experience and customer experience will pay well for these skills.
One question about conventional jewelry versus art jewelry is which will hold value over time? The brand advocates for conventional jewelry will tell you that ‘diamonds are forever.’ Are they? There a more and more sources of diamonds and synthetic diamonds are emerging as a separate market in their own right. Synthetic diamonds get a good part of their value from design. Art jewelry as a distinct market is relatively new. It remains to be seen how well these pieces will hold value over the generations. Tastes change. What was once popular falls into obscurity. At least with conventional jewelry there is the value of the gold. But there are works of art that have held their value and even become more valuable over time. The best art jewelry will probably fall into this category. And as the Internet makes is possible to connect and aggregate small markets, the art jewelry is likely to command higher prices over time.
Yoshie Hattori Biography
Yoshie Hattori is an artist from Japan. She trained as a textile artist at Tama Art University in Tokyo and Handarbetets Vänner in Stockholm. She had a textile design studio in Tokyo and taught weaving. After moving to Vancouver in 1988 she has worked in multimedia production. For the past decade she has focused on photography and making small objects and jewelry. She lives in Kitsilano, Vancouver.
Yoshie Hattori Artist’s Statement
Over the past decade my work has evolved in two directions. Using textile techniques I create small, wearable objects that combine industrial materials (wires, plastics, latex, etc.) with natural objects such as crystals, pearls and corals. Into this I insert scraps and bric a brac found here and there. Bringing together these materials with their different origins represents how we live our lives, dependent as we are on both the products of industrial society and on nature. We live in a society where there is much waste, and where much that is valuable can be found in waste. These objects evoke the potential for change of natural forms, the intimate gestures of the hand and an industrial energy. The textile arts are among the oldest human technologies and the way in which threads and wires combine are closely related to the laws governing natural forms. I think with my hands. Sometimes my hands think for me. But none of this would happen without the energy network I live in and rely on. I am also exploring hidden rhythms, patterns, and textures on my photo blog It Is. The relation of my photo work to my objects is tenuous but important. In both I am exploring and connecting patterns, often implicit and tangential patterns, but patterns that connect. In both these projects I try to find the playfulness and experimentation that are part of an evolving life.
