How the art market actually works — a plain guide for newcomers

The art market is simpler than it looks: it is just the buying and selling of art, organised into two layers. The first is the primary market, where galleries sell new work on behalf of the artists they represent. The second is the secondary market, where work that has already sold once changes hands again, through dealers, private sales or auction houses. Almost everything confusing about prices, commissions and reputation makes sense once you know which layer you are standing in.

What is the primary market?

The primary market is the first time a work is ever sold, and for living artists it almost always runs through a commercial gallery. The gallery represents the artist, shows the work, and handles the sale. In return it usually takes a commission of around half the price, with the rest going to the artist. That split sounds steep until you see what it pays for: the rent on the space, the staff, the framing and shipping, the photography, the art fairs and the slow, unglamorous work of building an audience for someone over years. A gallery such as Alon Zakaim Fine Art on Cork Street, or any of the represented-artist spaces you will find through this directory, is essentially betting its own resources on an artist’s future.

This is where most newcomers actually enter the market, often without realising it. Buy a print, a small painting or a work on paper directly from a gallery show and you have taken part in the primary market.

What is the secondary market?

The secondary market is everything that happens after that first sale. When a collector decides to sell a work they own, it re-enters circulation, and the artist who made it typically sees none of that resale money. This is the world of auction houses, resale dealers and private deals, and it is the part of the market that generates the eye-watering headlines. A specialist dealer like Bernard Jacobson Gallery in St James’s, for instance, works substantially with established names whose work already has a price history.

The secondary market matters to newcomers mainly as context. The million-pound auction result you read about tells you almost nothing about what it costs to buy a good piece by a living artist this weekend. They are two different economies that happen to share a name.

How are prices actually set?

Prices on the primary market are set by the gallery and artist together, and they are far less mysterious than they seem. The main factors are the artist’s track record, the size and medium of the work, the time and materials involved, and what comparable pieces have sold for recently. Galleries try to raise an artist’s prices slowly and consistently, because a price that jumps and then collapses damages everyone. Stability is the goal.

A sensible gallery would rather sell a work to someone who loves it than squeeze the last few per cent out of a stranger.

Yes, you can usually ask about a discount, and a modest one is a normal part of the conversation. What you should not expect is haggling as a sport. Ask once, politely, and accept the answer gracefully.

Where do auction houses fit in?

Auction houses operate almost entirely in the secondary market, selling work that already exists and has often been owned before. Prices there are set by competition in the room rather than by a gallery, which is why results swing so wildly and make such good news stories. An auction estimate is a guide, not a guarantee, and the final “hammer price” usually has fees added on top before the buyer pays.

For someone starting out, auctions are worth watching to learn how the wider market values certain names, but they are rarely the easiest place to begin. The gallery floor is gentler, and the people there are paid to explain things.

How does trust hold the market together?

Trust is the quiet engine of the whole thing, because art has no fixed objective value. A work is worth what a credible chain of people agree it is worth: the gallery that represents the artist, the collectors who already own pieces, the critics and curators who write and exhibit, and the institutions that acquire work. This is why provenance, a documented history of who has owned a piece, matters so much, and why galleries care about placing work in good collections rather than simply selling fast.

For a newcomer, the practical lesson is reassuring. You do not need to crack a secret code. Buy from reputable galleries, keep your receipts and any certificate of authenticity, and ask questions freely. The market rewards patience and genuine interest far more than it rewards money spent in a hurry.

Where should a newcomer start?

Start on the primary market, in real spaces, looking at work by living artists you can actually afford. Visit a few galleries, talk to the staff, and notice which work keeps pulling you back. The art market is not a single intimidating institution; it is thousands of ordinary conversations between people who make, sell and love art. The sooner you join one of those conversations, the less mysterious all of it becomes.