Author: Elaine Grogan Luttrull
Date: July 9, 2020
The “Tall Latte Index” coined by the Economist in 2004 illustrated the price differences of different lattes spread around the world. The reason why this index had been involved in a tad commodity was due to the decrease in prices of coffee beans during the Summer of 2020 with latte prices assumed to be going down due to this, but Starbucks actually going up instead. This is because Starbucks is selling more than just coffee, they are selling an experience–a work of art. Luttrull is proving a point for artists to allow themselves to price their works higher regardless of the raw materials used for their products, but the time they spent to set their skill to what they are at now. Clients are not paying simply paying for a cup of coffee, they are taking part in paying for the rent it costs for them to walk through Starbucks’ pleasant scented store. Similarly, artists should not only be charging for the product they are giving out, but also for the value and experience they are offering to the client that is keeping that work up on the wall (or other places depending on the medium of the art)
Pricing is based on four key factors:
- The cost to make your work
- Studio costs
- Living costs
- Material Costs
- What other arts are charging for similar works (“similar” can be taken in different ways)
- Who are your customers?
- Who do you want purchasing your artwork from exactly?
- Does your work express a social concern?
- Are you creating for a group that can afford a specific price range?
- Life experiences
- Personal experiences
- Point of view
Dissecting the value of money through financial literacy can be done not only by analyzing the output of the user’s money but also by the input from their work. For middle schoolers, it would be a difficult concept to comprehend the flow of money coming in from a corporation as many jobs require them to be above a certain age, but entrepreneurship can happen at any age. The process of putting a price on their personal work in itself can be a portal to numerous topics on managing personal finances. Even if it’s not opening their own personal business, hopping in familiar businesses’ shoes like Starbucks and understanding why their prices continue to stay high even with coffee bean prices going down is an effective first step in understanding the relationship between personal finances and the global economy.