How do galleries make money?
This post proved to be super popular, so I’ve expanded my answer and added in a bunch more useful details - you can read the longer version over at Medium.
A reader writes:
How do galleries make money? What sort of overheads would a gallery have?
Ooh, thanks for such interesting questions! It can be hard for artists who do all the work of creating the art to then have to sacrifice a portion of their sales to a gallery, but this is a case of viewing the arrangement like the partnership it is. A gallery offers an artist more sales opportunities than they might generate on their own, backed up with marketing and ready-made audiences and buyers, but in order to offer that service a gallery has a lot of expenses they have to cover.
These expenses include things like rent, utilities, insurance, advertising, event catering, wages, superannuation, GST, income tax and of course paying the artists themselves for works that sell.
There are quite a few ways a gallery can make money, and most commercial galleries uses a combination of the following methods:
Commission is the percentage of the sale price that a gallery keeps, and this can vary wildly from gallery to gallery. Around 30-50% is average, but I have seen commissions as low as 10% and as high as 70%. This can depend on what level of service the gallery offers, whether the artist is paying for other aspects of the exhibition (such as hire fees or sharing catering costs), and the reputation of both the artist and the gallery.
A big trend for galleries these days is to have artists pay hire fees and take a lower sales commission. Essentially this shifts the risk from the gallery to the artist, as by having an artist pay to exhibit, the success or otherwise of the exhibition is not as important as if the gallery were commission-only, and dependant upon sales.
Have you ever attended a book launch, concert or workshop in a gallery? Hiring out the space to others is a way for galleries to generate income, whether through workshop fees paid by the participants, or room hire fees paid by the event organiser.
A lot of galleries have a shop as part of the gallery, selling things like prints and cards from their exhibiting artists, or handmade objects such as ceramics and jewellery. When I was a uni student, art galleries were my favourite place to go book shopping, with their amazing range of art theory, artist biographies and how-to books (sadly these days I mostly read on my kindle, but I’m not adverse to bringing back the art gallery bookshop!)
There are many other ways galleries make money – from having a coffee shop inside the gallery, to offering home art installation services, to providing advice about art as investment.