The primary art market refers to when an artwork comes to the market for the first time at a gallery or any other art exhibition. This is the time when the price for the artwork is established for the first time.
In technical terms, similar to the maker of a design product, a sail boat, or jewelry, the gallery/dealer, in conjunction with the artist, establishes a selling price based on the cost of research and development/creation of the product. The age-old truism from the economic theory on “supply and demand” defines this pricing structure. When the demand grows for the works of a particular artist’s work, whether paintings, sculptures, photographs, or graphic prints, the value and the price of the art increases. Generally, speaking, the greater the demand, the higher the price the artwork would command on the primary market.
Once the artwork is purchased on the primary market and the purchaser, whether a collector, a business, a foundation or a dealer, decides to sell it, it enters the secondary market. For example, most artworks at an auction house form part of the secondary market, as the artwork has already been purchased once.