Some novice dealers have a standard percentage that they mark up items they've purchased. They may simply double or triple the amount they paid, resulting in inconsistent pricing of similar items. More experienced dealers know that the price they pay for an item is not the only factor in determining what to ask for it. Rather, value is based on the balance of four things: the quality of a piece, the condition it is in, how rare it is and the demand for the item.
Quality has to do with the talent of the designer, the type of materials used to produce the piece and the level of craftsmanship that went into making it. No matter how beautiful the design, the use of inferior raw materials lowers the quality of a piece. Likewise, no matter how brilliantly a piece is designed or how good the materials used, shoddy workmanship keeps the piece from being valuable, just as no amount of high quality materials and workmanship can make up for poor design.
While quality is determined at the time of design and production, condition has to do with how well a piece has been taken care of since then. Even the best design, manufactured from the best materials by the most exacting craftsmen, loses value if the piece has been mistreated over the years. Sometimes a piece has been so severely damaged that it has lost all its value. On the other hand, if a piece was of low quality to begin with, such as the borax furniture discussed in a recent post, keeping it in mint condition over the years does not increase its value.
A piece can be expertly designed and produced, and it can even be in pristine condition, but if it was produced in great numbers, then it is not rare. Therefore, it is not valuable as it would be if it were less common. Recently we were offered a desk by Sven Aage Madsen that had been produced in teak by the thousands. As a result, many still exist, and many dealers have it for sale. As a matter of fact, a quick search of 1stdibs turned up 18 items by Madsen, 8 of which were that same desk in teak. We declined to buy, politely explaining to the seller that we would have been happy to buy the desk if it had been the rarer rosewood version of the same design.
Finally, even if a piece is of high quality, is in good condition and is quite rare, it is obviously of no value if no one wants it, so demand is another aspect to be considered in pricing an item. Perhaps the economy is depressed, so there are no buyers. It might also be possible that the designer or the material used to produce the piece has developed a social or political stigma, making it less in demand in certain segments of the market, such as the use of some woods, leathers and ivory. There is also the possibility that a dealer has priced an item so high that there is no demand for it at that price, in which case, lowering the price might stimulate demand.
The more a dealer gets to know his product...the designers and the materials they used, the hallmarks of carefully crafted items, the number of similar items still available, the price point his market can support...the more accurately he can price his inventory. And the better buyers research vintage furniture, the more they will understand how experienced dealers arrive at the numbers on their price tags.
From worthpoint.com
From worthpoint.com
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| Madsen desk in teak, selling for approximately $2,500 1stdibs.com |
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| Madsen desk in rosewood, selling for approximately $6,000 1stdibs.com |
Very well put Dana! It annoys me so much when people dont go to the bother of researching an item and often sell either for well below its real value which often confuses potential buyer, or way above its value which really puts people off :)
ReplyDeleteRay, I agree. Arbitrary pricing is also confusing to potential sellers who inherited a piece from Aunt Martha and have no idea what to ask for it. I just exchanged emails the other day with a man who has a Nanna Ditzel chair for sale. He's seen it priced online from $1400 to $20,000 and is naturally confused. Of course, he hopes he has the $20,000 variety...but chances are that its retail value is at the other end of the scale, and a dealer is going to offer him considerably less than $1400. It's no wonder that he'll be insulted, because he's got $20,000 stars in his eyes.
DeleteHi Dana,
ReplyDeleteYou maybe forgot three very important factors: Location, Location and (er...what was the last one? Oh right..) Location. Selling that rosewood desk locally in Topeka KS? Good luck finding a buyer at $6000. In New York or LA? It probably wouldn't get snatched right up, but you wouldn't get snickered at either and you'd probably accept an offer not too far off that.
Know your market.
You're so right that you have to know your market, and that's part of the demand factor. If you've outpriced your market, there will be zero demand. If that's the case, you either lower your price or expand your market.
DeleteThat's why we sell on V&M and are moving to the Design District. :)
Very thoughtful post Dana, no wonder you and your family are so good at this.
ReplyDeleteMy SIL was a data analyst before he quit his 8-5 to open the store, so he's our numbers guy. He keeps up with the sales figures at all the major auction houses, as well as our own statistics. He can tell you tell you when most of our sales are made, right down to the day of the week and the hour of the day.
DeleteVery informative Dana. I've enjoyed reading about the Borax furniture too. Those mid-century desks are still a lot cheaper than what you pay here. Desks are soooo expensive. xx
ReplyDeleteMaybe we need to explore the Australian market more! :)
DeleteVery much appreciate this informative post, thanks. Now if only I can shut out those two STUNNING desks from my mind.
ReplyDeleteThey do sorta burn an imprint on your brain, don't they?
DeleteI really appreciate this particular post. As a dealer in a modestly priced market I have some customers flinch at the pricing on some of what I have available. They are priced that way for a reason and I have tons of stuff that is way more reasonably priced for just the same reason. Mass produced, not partucularly rare but still in good to excellent condition. All these factors I always take into account when priceing not matter what I had to pay or rehab them. I can't re-order these and in the store they are one of a kind unless I happen to stumble across another!
ReplyDeleteEven if you sell in a modestly priced market, if you find an extremely valuable piece, you can't be expected to give it away. For that reason, it pays to have a network of dealer friends you can work with to move high dollar pieces you probably can't sell to your customer base. When one of those comes along at a price you can't pass up, it's nice to know people who can help you turn them around quickly. The money is out there; having the ability to reach those customers is an entirely different thing.
DeleteHi Dana. I really appreciate pieces like this which you post. As you know I am always looking for good pieces and researching prices so it is helpful to get any bit of advice. I have appreciated that you and your SIL have been willing to help me from time to time too. When I was in Vegas during January I was stunned at what I felt were very reasonable prices compared to what I see in Southern Cal. The shop owners told me that they frequently get the opposite feedback! It is location, location, location for sure.
ReplyDelete