When most people set foot in an art gallery, their focus is on the artwork – as it should be. The vast majority of art galleries are labors of love, and gallerists take great pains to make sure the art is the focal point. But artists tend to think about art galleries differently than the general public, begging the question – how do art galleries make money? What do their funding models look like? And, most importantly, how does that affect their relationships and interactions with artists and their communities?
Do Art Galleries Make Money?
Yes. Almost every art gallery – at least, every successful art gallery that’s able to stick around long-term – makes money in some way. Most art galleries aren’t in it for the money, but of course, they need some revenue in order to keep their doors open.
This revenue goes toward paying rent for the gallery space, employee salaries, marketing, etc. Every art gallery has a different way of making money to stay afloat. The specific approach of any specific gallery depends on its business model.
There are also state and government-funded galleries. For important artwork, a taxpayer-funded gallery can be an important part of national culture. It’s also a potential tourist attraction.
How Art Galleries Make Money
Government Funding and Grants
The simple truth is that some art galleries don’t bring in revenue. Instead, most of their funding comes from grants and government funding.
The famous Smithsonian galleries are a perfect example of this funding model. They operate based on a mixture of federal government funding, donations, fundraisers, and investments/endowments. Similar galleries may operate mainly on state funding.
This guide by Americans for the Arts shows how government funding pays a crucial role in keeping a lot of artistic activity going.
For most galleries, selling the artwork on display is their main source of funding. When someone buys a displayed piece, the gallery generally splits the sale price with the artist.
How much commission does a gallery take? While commission varies widely, 40-50% is a fairly standard cut for the gallery to take. This rewards the artist who created the work while helping the galleries keep the lights on.
Just like attending a concert or a trip to the zoo, going to an art gallery is a fun trip out for a lot of art lovers. People are willing to pay admission fees. This helps the gallery pay the bills while lessening some of the pressure to constantly sell big-ticket pieces.
The Metropolitan Museum of Art in New York City does this – which makes sense since their pieces aren’t for sale.
Some galleries charge artists a fee to display their art, essentially renting out space for artists to use. This is a way to minimize risk in case the pieces being shown in the gallery don’t sell well. Galleries that do this tend to take a smaller commission on sold pieces, or not take a commission at all.
It’s also common for art galleries to take more unconventional approaches to bring in extra revenue. These include running cafes, bars, or gift shops on the premises.
Gift shops often sell merchandise like prints of artwork on display so visitors can take home a piece of their visit with them. It’s also common to find arts and crafts, like jewelry made by local artists. These are generally seen as popular stops for tourists, but savvy gallerists can also stock their gift shops strategically to be an extension of the art gallery experience.
Onsite bars or cafes serve multiple purposes. Visitors can stop for a coffee or a quick bite on their way in and out. But eateries can also turn a gallery visit into more of an occasion. Sometimes, galleries host events in these spaces, so the gallery serves as a community center for frequent visitors and locals.
Events are also a method of increasing sales. Even if a gallery runs an event and doesn’t charge people to enter, it can boost their income significantly.
Keep in mind that most art galleries don’t just rely on a single source of income. Your favorite art gallery most likely uses a combination of these strategies to keep its doors open. The Met is a perfect example of this. They charge admission, but also have several cafes and a gift shop.
Do Galleries Pay Artists?
Most galleries compensate artists based on commission. When a piece sells, the gallery and artist split the sale price. This rewards artists who make art that visitors gravitate toward while paying the gallery for creating a space for art to be admired and purchased.
What Makes an Art Gallery Profitable or Successful?
There are a lot of ways to measure an art gallery’s success – longevity, cultivating and maintaining successful connections and relationships with artists, or serving a role in the community. And, of course, profitability plays a role in that. Like artists, most art gallerists aren’t in business for the money.
Money is necessary to keep a gallery up and running. But it’s not uncommon for galleries to struggle to turn a profit, even if they’re using multiple funding strategies like the ones mentioned above. So, what separates the profitable galleries from the ones struggling to make ends meet?
- Marketing and branding. It sounds cold, but art galleries still need to spend on marketing. If they don’t put work into setting themselves apart, visitor numbers decline.
- Keeping overhead costs like rent to a minimum can help. Art enthusiasts tend to be willing to go out of their way to find good art, so saving money on a more out-of-the-way location can pay off for some galleries.
- Catering to a broader clientele. When most people think of “art collectors,” they imagine the wealthy and privileged who own massive personal galleries. Galleries that position their offerings as accessible to customers outside that specific demographic tend to reap the benefits.
- Paying staff well enough to make them stay. One case study found that art galleries actually tend to perform better and become more profitable when gallerists prioritized paying their staff what they’re worth.
The guide below explains a lot about how galleries work and the important role they have in the art community.
Combining art and business doesn’t always feel right from a moral standpoint, but galleries are enjoyable and legitimate businesses. They play a very important role in keeping artists in work and continue to support the growth of the arts all around the world.
No matter what your role is in the art world, knowing a bit about how art galleries operate can go a long way in enhancing your experience. It can increase your appreciation for the sense of community and artistry you often find in galleries.
As artists, knowing how things work behind the scenes can help you meet people in the art world and help you eventually get your work into art galleries, if that’s your goal.