Pricing strategies for Art work
A very interesting topic came up for discussion during the lunch time today. There was a colleague of mine who is interested in art and normally visits art exhibitions to buy paintings. Last week, she happened to see an art piece (i think it is an oil painting), which comprised of 5 red color lines on a black/white background. The shocking part of the story is it had a price tag which was in 4 digits!

I was wondering how do they price an art piece/painting. For the artist, raw material costs include the canvas cost, paint and brushes cost. Lets say 2 artists work for 1000 hours and with same set of raw materials they come up with 2 paintings, how do they price the paintings differently? For that matter, take a painting drawn by Da-vinci and one by Pablo Picasso, how do they decide the Da-Vinci painting is x million dollars and Picasso painting is y million dollars? This still puzzles me. May be, this would make a very good B-school assignment for Managerial accounting/Marketing courses :)