How Much Should You Spend on Art? A Budgeting Guide

There is no correct answer to how much to spend on art, but there is a wrong way to decide: walking into a studio with no number in mind and letting the moment set it for you. This guide gives you a way to fix a budget before you start looking, so the decision is about the work rather than about the price tag.

Budget is one decision among several. Our pillar guide on how to start collecting art puts it in context, from first studio visit to first invoice.

Decide the number before you fall in love

Set your budget away from the art. Pick a figure you would be comfortable spending on something you cannot resell quickly and would not want to. Write it down. Then go look. The number is not a target to hit, it is a ceiling that keeps the decision honest, and it makes conversations with artists easier because you can say what you have to work with.

Do not treat it as an investment

The most common way people talk themselves into overspending is by calling it an investment. The research does not support that framing for most buyers.

A hedonic analysis of more than one million auction transactions of paintings and works on paper found that art appreciated by 3.97 percent per year in real US dollar terms between 1957 and 2007, a return comparable to corporate bonds but at much higher risk (Renneboog and Spaenjers, 2013, Management Science).

And even that figure is flattering, because works that are expected to sell badly often do not come back to auction at all. Correcting for that selection effect across 32,928 paintings that sold repeatedly between 1960 and 2013 cut average annual index returns from 8.7 percent to 6.3 percent and lowered the Sharpe ratio from 0.27 to 0.11 (Korteweg, Kräussl and Verwijmeren, 2016, Review of Financial Studies).

Those numbers describe the auction market for works that already have a resale history. They are not a forecast for a piece you buy from an emerging artist. The honest conclusion is the same either way: buy art because you want to live with it, and treat any future value as a bonus you did not count on.

A budget rule that holds up

If you want a starting point rather than a philosophy, this works for most people:

• Set an annual art budget, not a per piece budget. One number for the year makes it easier to say no to the first thing you see and yes to the third.
• Keep any single piece under a quarter of that budget in your first year. You will learn more from four decisions than from one.
• Add 20 percent on top for the costs around the work. Framing, shipping and hanging are real and they are usually forgotten.
• Never finance art with money you need. If paying for it changes anything else in your month, it is the wrong piece or the wrong month.

What you are actually paying for

When you buy directly from an artist, the price reflects materials, studio time, scale, and where the artist is in their career. It is not a random number and most artists will explain how they arrived at it if you ask. Smaller works, works on paper and studies are usually the accessible end of an artist’s practice, and they are a good way to start a relationship with someone whose larger work is out of range today.

One thing that changes the math significantly: buying directly means there is no gallery commission on top. Galleries commonly take a substantial share of the sale price, so the same work bought in the studio is often the same money to the artist at a lower price to you, or more money to the artist at the same price. Either way the middle layer is gone.

The costs people forget

• Framing. Works on paper usually need it. It can quietly cost as much as a small piece.
• Shipping or transport. Anything you cannot carry needs packing and a courier.
• Hanging hardware. Heavy work needs the right fixings and the right wall.
• Insurance. Worth checking your home policy once your collection passes a few thousand dollars.

If the piece is out of reach

Ask. Many artists will agree to payment in installments, especially for a larger work, and many have smaller pieces or studies that are not listed publicly. Asking politely whether a payment plan is possible is normal and it is not an insult. The worst answer is no.

How to compare two prices fairly

When two works are priced differently and you cannot see why, compare them on four things before you conclude one is overpriced. Surface area, since price rarely scales in a straight line with size. Medium and support, since oil on linen sits above acrylic on paper for good material reasons. Density of work, meaning how much time is visibly in the surface. And whether the piece is unique or one of an edition. If the two works still look mismatched after that, ask. The answer is usually career stage, and that is a legitimate part of a price.

Start smaller than you think

The most common regret among people a few years into collecting is not that they spent too little. It is that they spent their whole first year budget on one piece before they knew what they responded to. Four smaller purchases from four different artists will teach you more about your own taste than one significant work, and they leave you room to be wrong. The significant work will still be there next year, and by then you will know whether you want it.

When to walk away

Walk away when the price is at the very top of your range and you are already justifying it, when you are buying because you feel awkward leaving empty handed, or when you cannot say in one sentence what you like about the piece. None of these get better after payment. Artists understand this, and leaving a studio without buying is not a failed visit for either side.

Sources

• Renneboog, L., and Spaenjers, C. (2013). Buying beauty: on prices and returns in the art market. Management Science, 59(1), 36 to 53. doi:10.1287/mnsc.1120.1580
• Korteweg, A., Kräussl, R., and Verwijmeren, P. (2016). Does it pay to invest in art? A selection corrected returns perspective. The Review of Financial Studies, 29(4), 1007 to 1038. doi:10.1093/rfs/hhv062

Next steps

Once you have a number, the next question is what to spend it on. Our guide on how to choose art you will love covers that, and how to buy art walks through the purchase itself. When you are ready to look, browse artist studios near you and message the artists directly. Free to browse, free to message.