HOW much is a painting really worth? We've all scoffed at the eight-figure sums that a Picasso fetches at auction but put us in front of a painting priced at £10,000 and we are impressed by the figure. It must be worth that amount, we think, because this is a gallery and that is art. And it must be better than that other painting over there which is priced at only £1000. Mind you, it is slightly smaller: should that make a difference?

Well, yes and no. In truth, the art market is a Gordian knot of complexities in which fashion and luck have as big a part to play as talent. When the Glasgow Art Fair opens later this month, these apparent paradoxes will come sharply into focus. To try to unravel some of them, and make sense of the forces at play in this most curious of marketplaces, let's rewind the years and examine the fortunes of a generation of Scottish artists who set out on their respective careers a quarter of a century ago.

It is June 1982 and the doors have just opened on a Glasgow School of Art degree show which features, simultaneously, the work of painters Ken Currie, Adrian Wiszniewski and Steven Campbell.

Alongside two more graduates of the School, Peter Howson and Stephen Conroy, this group will come to be known as the New Glasgow Boys. The moniker is a nod to the original Glasgow Boys, in whose ranks had stood the School of Art's designer, Charles Rennie Mackintosh.

But collectively they are more than just an echo of past glories: their bullish, vigorous figurative work and the hullaballoo that surrounds both them and it will push Glasgow School of Art into the spotlight as never before.

Today, paintings by Currie, Conroy, Campbell, Howson and Wiszniewski sell for thousands of pounds. An exhibition of Currie's latest work has just closed at the Flowers Central gallery in London's art thoroughfare, Cork Street. It was a series of small portraits in oil with price tags ranging from £4000 to £15,000. Currie's larger works sell for up to £40,000.

Next month, meanwhile, Sotheby's is holding a Scottish art sale in Edinburgh which includes one work by Currie and several by Howson. At 6' by 7'6'', Currie's painting is considerably bigger than the new work on show at Flowers Central but it has a guide price of between £8000 and £12,000. It could well go for much, much more.

Likewise the Howsons, which have guide prices of up to £8000. As a result of the constant publicity the artist has received over the years, these works could easily bring twice the Sotheby's estimate. It's a far cry from the days when ex-Herald art critic Clare Henry could pick up a Howson drawing for a fiver in an Ayrshire gallery.

Another new star of the auction circuit is Alison Watt, who graduated from Glasgow School of Art in 1988 and went on to win the BP Portrait Award. She is currently artist-in-residence at the National Gallery in London and a painting of hers was recently sold by Sotheby's for £43,200.

But what about the art school graduates who rubbed shoulders with these stellar names? What of Alison Harper, who shared a studio with Peter Howson and Ken Currie, and was one of a group of female artists dubbed the New Glasgow Girls by The Independent newspaper in 1987? What about Rosemary Beaton, another New Glasgow Girl, who won the BP Portrait Award, aged 20, a couple of years before Watt? What about Jacqueline Orr, who won The Armour Prize in the year she graduated, 1983? Or Lesley Burr, who relocated to Shetland to paint landscapes for 10 years?

Why isn't these artists' work as valuable when it is, by most accounts, just as good? What are the factors that affect the price they can command in galleries? What part has self-promotion played in their painting careers? What part prizes, luck, locale?

Alison Harper was three years above Alison Watt at Glasgow School of Art. She is a figurative painter whose work is sold in London through the Boundary Gallery, run by the energetic and passionate dealer Agi Katz. Katz also represents Beaton and Burr.

Harper, now an ordained Buddhist, had her first show there in 1987 and the work sold quickly. But the economic recession of the early 1990s hit all galleries hard and subsequent shows sold less well. Today, she lives and works in London and paints mostly in oils. She also uses mixed media, pastels and watercolours. A large work - say a five-foot square canvas - will sell for around £5000. Smaller works sell for around £3000, drawings for much less. It sounds a lot but, like most artists, she can lose up to 50% in commission to her gallery. In fact, she says, the prices she can charge have stayed static for some considerable time.

"It's hard to get above a ceiling of about £5000, particularly in Scotland and even more so in Glasgow than in Edinburgh," she explains. "If people have that sort of disposable income they'll want to spend it on a car or something. So I haven't put my prices up for quite a few years. Unless you're going to raise your profile through an agent who will really push your work and sell you as someone who is going to be an investment, it's hard to raise the price above a certain bar."

Harper has gone as high as she can in this particular circle of the art market, and to break through to a higher price bracket - £5000 to £8000 - requires a higher public profile, perhaps a sell-out show and, that most nebulous of commodities, a buzz around her name. "Everything is based on reputation," she says.

She tells me a story. It happened when she was still at art school and sharing a studio with Howson and Currie. One day Bob Geldof came into the studio to look at the work of these enfants terribles he had heard so much about. He wasn't interested in Harper's work but she asked him to look at it. To his credit he did. Then they all went to the pub. But even then it was obvious there was a gulf between the reputations.

Rosemary Beaton is still based in Scotland though her work sells through the Boundary Gallery where it commands prices which range between £800 and £4000. She agrees with Harper about the way reputation can affect a painter's future career, even while still at art school.

"We weren't as obvious," she says, comparing the New Glasgow Boys to their distaff equivalent. "We weren't as big or as brash. A lot of our work was expressive but it was" - she chooses the word carefully - "quiet. We've plodded along as opposed to bursting through. The New Glasgow Boys worked big."

Jacqueline Orr is equally familiar with the problem of reputation and public recognition. "I see paintings and prices as being a bit like the football league," she tells me. "You've got your premier division - your Howsons, your Curries - and you've got your first division and your second division. I'm not saying you're pigeonholed but it all depends on your price and the kind of market you're trying to reach. I'd have to say I'm somewhere between the second and the first division at the moment."

So why not just raise the prices and step up a grade? "I can go in and I can dictate prices to a gallery but the bottom line is that the gallery knows its market and they know what the market can take. So you do end up having to compromise. You can stick to your guns and put on a ridiculous price but the chances are the work isn't going to sell." Or you can change galleries, try to work your way up the artistic food chain.

Mind you, success can bring its own problems, says Peter Howson. "My work is with too many dealers at the moment and I'm trying to regain control of it," he tells me. To that end he has established a group of friends who are trying to buy his paintings as they come on to the market. One of the reasons for this glut is the many private sales he has undertaken over the years. He doesn't think this practice has affected the value of his work - "dealers are always complaining that selling privately runs the prices but it doesn't", he says - but he has decided to stop nevertheless. In that respect, he is taking a leaf out of Ken Currie's book: Currie has never sold privately, always preferring the controls in-built to the gallery system.

Fundamentally, all these artists say the same thing: prizes count, who you know counts, the buzz you create and which is created around you counts. You have to engage with the market and play it for all that it's worth. "The process of actually making art and engaging in that spiritual process is so different from dealing with the business side of things," says Lesley Burr. "There is part of me that actually recoils from it. But there's another part that realises it's necessary for survival if this is what I want to do with my life."

In other words you have to sell yourself as much as your work. "Showmanship is always important," admits Rosemary Beaton. "The artists who did graduate in the 1980s are all characters in their own right but they're maybe not as pushy or as flamboyant as, say, Steven Campbell or Peter Howson."

Noted Glasgow gallery owner Roger Billcliffe agrees. "Success these days in the market means that you've got to put yourself about, you've got to be part of the celebrity culture," he says. "You've got to be in the press, you've got to be getting coverage. Nobody in the media looks at the paintings any more."

Simon Toll still looks at paintings. He is an expert in Scottish Art at Sotheby's in London and it's his job is to deal with the top end of the market, the dozen or so living Scottish painters who have ascended to the auction-house circuit and whose work sells for well into five figures. He's familiar, then, with the big beasts: Jack Vettriano, whose most famous painting, The Singing Butler, sold for £744,800 in 2004; Edinburgh-born Peter Doig, whose painting The White Canoe was sold by Sotheby's for £5.7 million earlier this year; John Lowrie Morrison, the landscape artist who has launched 1000 copyists and whose works are collected by Sting (he owns two) and Madonna (six).

But Toll also has to keep that market fed with new names, drip-feeding them into each new sale so as not to swamp the market. It's a delicate balancing act. "It's a matter of going round galleries and agents and seeing who they are putting forward and seeing who they are having success with," he says. "If the galleries can sell to their clients, it's safe to assume we can too."

The accessibility of an artist's work is often the key to having a sell-out show which, if repeated often enough, brings the attention of the auction houses. Which is how John Lowrie Morrison - or JoLoMo to give him his brand name - has risen so fast through the ranks. Sounds simple enough. But what do you do if your work isn't accessible?

Alison Harper spent two years in India on a commonwealth scholarship, a commendable and marketable entry on her CV. But the resulting paintings dealt with some difficult political issues, such as the burning of women. The show in which they were exhibited was well reviewed but the paintings which picked up the most praise - and were also the most difficult - were the ones that didn't sell. In other words the collectors don't necessarily see merit where the critics do.

At this point it's appropriate to ask: what critics? Very few exhibitions of paintings are even reviewed in newspapers today. The safe summer blockbuster shows will be given acres of space but for the rest of the year the coverage will centre on public gallery spaces such as The Fruitmarket in Edinburgh, DCA in Dundee and CCA in Glasgow. Much of the work in these galleries tends to be conceptual art, or installations, or video. You can't hang it on the wall.

This is a point which isn't lost on Roger Billcliffe. "Art criticism and most art editorial is driven by Turner Prize standards," he says. "People are looking for cutting-edge material, they aren't prepared to look at established painters or people who are just getting on with it and doing really good work but who are not, if you like, fashionable or chasing fashion."

Not that there's always a correlation between good reviews and good sales, of course. Alison Watt is an artist who enjoys both, but Alison Harper points to the example of Scottish artist Gwen Hardie who went to New York to work, received rave reviews, but whose paintings still don't sell at the level they should. Conversely there is Jack Vettriano, who receives terrible reviews (when he is reviewed at all) but whose work now sells for six-figure sums.

Ironically, it's Vettriano's influence which has seen auction sales for work by living Scottish artists rise over the last few years. "In terms of living artists it was him that started it all off," says Simon Poll of Sotheby's. "He was someone we tested the market with about five years ago, with one canvas. He was an unknown quantity in terms of auctions and he did very well. So we started trying a couple of other artists who were new to auctions and just watched how they went."

Then again a well-received show or a group show with a well-established artist can add impetus to a career. Harper and Beaton have both shown with Paula Rego, the grand dame of British painting. And Burr has had work bought by public collections, among then the Smith Art Gallery and Museum in Stirling. "That helped because it was seen as kudos by the galleries and also by buyers," she says. "I suppose it's looked on as a sort of certificate of approval. Corporate clients are good as well."

Later this month the doors will open on the Glasgow Art Fair (GAF), a very different event from that Glasgow Art School degree show of a quarter of a century ago. Now in its 12th year, it has attracted more than 40 galleries and together they will present the work of some 1000 artists in a huge tent in George Square, though in keeping with the nature of the event - this is art we're talking about - it is referred to not as a tent but as a "pavilion".

In essence, though, it is a tent and this is a market. It is a place to sell and to buy and the only difference between here and the Barras is the aesthetic value put on the goods - and the subsequent asking price.

The organiser, or "producer, of the Glasgow Art Fair is Cristina Armstrong. The idea, she tells me, is "to create a space for people who wouldn't normally go into a gallery, where the barriers can come down a bit". If her own figures are to be believed it seems to be working. Attendance, total turnover and average sale price are all rising. The art market is becoming democratised, at least at the entry level. "We now have an average sale price of just over £1000 compared to around £300 just a few years ago," she says. "So there's a real appetite there for buying art."

Last year, prices ranged from £50 for an editioned piece - a postcard, say, or a print - up to £100,000. This year the highest-priced piece comes in at around £20,000 and there will be galleries represented from as far afield as Spain and Finland. Over the fair's four days, 18,000 people will troop through its tented galleries, Switch cards at the ready.

Hopefully some of them will buy work by Rosemary Beaton or Lesley Burr. Beaton's work is showing with the Glasgow-based Mansfield Park Gallery. They have five pieces ranging in price from £420 for a watercolour, to £1200 for a large canvas. They are all views of Lybster, a fishing village in Caithness. Burr has work showing with the Compass Gallery. One of the pieces is a small landscape in oil called Chance Meeting, yours for £450.

I ask Burr if she thinks she gets a fair price for her art. "No," she says. "Probably not." I put the same question to Jacqueline Orr, who isn't showing at the fair. "It's a real struggle but I'm keeping my head above water," she says. "I'm making a living. Just."

In that context the word "fair" seems somehow inappropriate where these and other artists like them are concerned. And the market that represents them seems a cruel and fickle place. But by tracing these artists' journeys and marking out their experiences on the trail it is possible to make some sense of it all, even if the only conclusion you can reach is this: talent counts for little, talk for a lot.

Glasgow Art Fair, George Square, April 19-22