No-one ever comes out and asks me directly how (or whether)
my gallery makes money, but ‘how do galleries make money’ is the number one
search term by far on my website Ask A Curator, where I answer artists’
questions about life and work as an artist. There are five times more people
searching for how galleries make money than searching for how artists make
money. So, either there’s a great deal of budding gallery owners out there desperate
for information, or people are just curious, and too polite to ask me in
person.
My gallery is in a little cluster of four galleries, and we
get together regularly to share business information, woes and successes. Most
recently we’re begun working on a collaborative marketing campaign, to market
this little part of town as the gallery precinct to locals and tourists alike.
It’s a lot of work, but having fellow gallery owners to talk to, who understand
what a hard business this is, helps lessen the load. I’m a big believer in
sharing, being transparent and collaborating with other businesses whenever it
makes sense to, and so I’m going to share some of that same information with
you here.
Whether you’re thinking about opening a gallery, you’re an
artist wondering why the hell galleries take so much commission, or you’re just
curious, here’s some insight into how art galleries make (or don’t make) money.
The most important thing is to have a diversity of income streams, which
include both fixed and variable income. For me, this is sales commissions from
my gallery and shop, exhibition fees, the occasional workshop and my consulting
work. For you this could be different, which is fine, as long as you don’t have
all your eggs in one basket.
Sales commission
This is the main form of income for most galleries.
Commission is the percentage of the art sale price that a gallery keeps, with
the remainder being paid to the artist. It can vary wildly from gallery to
gallery, but around 40–50% is average, although I have seen commission as low
as 10%, and heard about commission as high as 70%. Commission is variable
depending on the gallery’s expenses, what level of service the gallery offers,
and the reputation of both the artist and the gallery. For example, some galleries
charge artists an exhibition fee, and thus take a lower commission, while
others charge no upfront costs but have a higher commission structure. Some
galleries cover costs like marketing and opening night catering, while other
galleries split those costs with the artist, or the artist covers the whole
thing. Some galleries have bigger lists of buyers and collectors than others,
so artists might be better off going with a higher commission gallery in order
to have a better chance of making sales.
Exhibition fees
I mentioned fees above, and this is a growing trend for
galleries. For the last two years I have been the only gallery owner in my
local area to not charge exhibition fees, but I have just changed my business
model to bring it more in line with the other galleries, meaning I now charge
artists an upfront fee, but take less commission than I was previously.
Essentially this shares the risk and costs across both artist and gallery,
rather than the gallery taking all the risk, as I was previously doing. When a
gallery is solely dependent on sales, and has no form of fixed income, it can
be highly precarious, particularly if you have a couple of exhibitions in a row
that don’t sell well.
If you are thinking about starting a gallery, this is
definitely something to consider when you are designing your business model — a
mix of fixed and variable income is essential for long term sustainability. If
you are an artist, you should be wary of galleries that charge a lot upfront,
and very low or no commission, as it means the gallery has less incentive to
sell. If you are charging or paying exhibition fees that are in line with the
rest of the market in your local area, you should probably be looking at a
commission of around 20–30%. Also if you are an artist who is paying exhibition
fees, make sure you know about any additional costs the gallery intends to
charge you, such as marketing or catering, before you sign your contract.
Events
Have you ever attended a book launch, concert or workshop in
a gallery? Or do you know an artist who has a studio above or behind a gallery?
Hiring out 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. Free events can also be part of a gallery’s marketing
strategy, by bringing new audiences into the gallery that might otherwise not
have come. My gallery has a mix of free and participant-pays events, including
a monthly feminist book club, author talks and artist-run workshops, and for me
it’s much more about supporting the community than being a source of revenue,
but for other galleries event hire can be a significant part of their income
strategy.
Gallery shop and café
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, or they have a café so you can enjoy
lunch or coffee after your browse in the gallery. 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!) In my gallery I have a shop that sells handmade jewellery and
textiles from local artists, and the shop currently accounts for 50% of my
sales, with art making up the rest.
Services
Galleries can offer a range of services, such as home
installation services, providing advice about art as investment, providing
advice to help you choose art for your home or office, and buying and selling
in the secondary art market. For some galleries this can make up a significant
proportion of their income.
Expenses
Finally, we can’t have a discussion about how galleries make
money without talking about what their expenses are. Paying artists and
suppliers for sales is often the largest expense, depending on what level of
commission a gallery takes. If a gallery takes 50% commission, that means 50% of
all sales revenue goes back out to the artist, and the remaining 50% is what a
gallery has left to pay its expenses. These include rent, staff wages and other
benefits, insurance, shipping, marketing, utilities and tax. Unless you own the
building, rent is likely to be a gallery’s next biggest expense, and this can
vary wildly from location to location.
A year ago I was forced to relocate my gallery because of
unfixable building issues, and the cost of moving, combined with the higher
rent I now pay, has been really hard on my business. It pays to take your time
in finding the right spot for your gallery, from looking at foot traffic and
visibility, to rent and outgoings. Rent is a fixed expense, and I have learnt
the hard way that you really need a fixed income to cover it. Commission is of
course a variable expense, and how much you pay your artists depends on how
much you sell.
Wages are likely your next biggest expense. If you’re
designing your gallery business model, have a think about how much time you plan
to spend there, versus having staff. The part of my job that I love is visiting
artist studios, installing exhibitions and hosting opening night soirees. I
even quite like the administration, marketing and book keeping side of things.
What I don’t like is being in the gallery five days a week, where my day-to-day
looks a lot like being a retail assistant, if not a high end one. This is not
where I shine, and it shows. However, my business is not at the point yet where
I can have staff there every day, or even most days. I currently have staff
only on Saturdays, so I can spend the day with my wife who works a normal
Monday-Friday job, otherwise we would never see each other. If you’re thinking
about opening a gallery, really think about what your day-to-day will look
like, and if that’s for you.
Then you have tax, marketing, insurance, utilities and all
the other little things that can add up. All these gallery expenses leave very
little left over, if anything at all.
This tends to suggest that owning a gallery is not a
profit-making business. Most gallery owners I know consider themselves lucky to
break even, although of course there are always exceptions. If you’re thinking
about opening a gallery to make money, my advice would be: don’t. However, if you’re
thinking about opening a gallery because you love art, love working with
artists, and have another source of reliable income, my advice would be: maybe,
after you sit down and really look at the figures. Running a gallery is not for
the feint-hearted, but on the other hand, it can be nourishing soul work and
highly rewarding in other ways, from knowing you’re supporting artists, to
promoting issues you care about, to building a lovely community.
It’s a big risk, and as we know, most small businesses fail
within the first five years. I’m just about to hit the two-year mark, and I’ve
already had several pivots in my business model and strategy, in order to keep
going. But if you can find a way to make it work, it can be a satisfying thing
to do. Galleries can and do make money, but there are also much easier ways out
there to make money if that’s your main concern.
https://blog.usejournal.com/how-art-galleries-make-money-a9c39546f8f6
