Median and average price

What is the median price and what is the average price?

The average price is the sum of all prices divided by their number, whereas the median price is the middle value: the price of the work standing exactly in the middle of the ordered row. The average therefore counts every extreme, while the median notices what is typical. That is precisely why each tells a slightly different story about the market.

How are they calculated, and why do they give different figures?

A few exceptional records easily lift the average. One sale in the hundreds of millions is enough to send the figure flying, even though ordinary works are doing exactly as before. The median resists such swings, because it looks only at the middle value and extremes do not unsettle it. So when these two figures diverge, you know a few star names are pulling the market.

Why does it matter to a collector or investor?

Because the median reveals how a whole segment is doing, not merely its top. If the median price rises over the long term, that is good news for the market as a whole, not just for a handful of record-breakers. For anyone not buying works worth tens of millions it is therefore a considerably more honest guide.

Can you give a more concrete situation?

Imagine a market in which a single work is auctioned for a record sum in one year, while all the others sell as usual. The average price shoots up and claims the market is flourishing, yet the median stays almost untouched and shows the truth. For the ordinary collector nothing has changed. The difference between the two figures is the most interesting information here.

What should you watch out for?

Do not be misled by the average alone, especially when it is presented as proof of a growing market. Always ask whether a few record sales lifted it, and look for the median alongside it. Only a comparison of the two will tell you whether the whole market is growing, or only its narrow top.

— Anna Pulkertová, founder of Art Part Club