There are a number of ways for art galleries to make money. These include commissions from artists, sales of art, and rent.
Let’s explore how they work. In the end, these revenue streams all help the galleries to sustain their operation.
In addition, the prices of the artworks sold at the galleries are often higher than the prices the artists would receive if they sold the art on their own.
This can change the arithmetic dramatically and lead to higher profits.
Prices of artworks
Art galleries make money by putting prices on artworks.
These prices are usually not visible on the wall, but many offer a price list or catalogue to their clients.
If you don’t see the price list, ask the gallery owner to share it with you.
This is 100% free and it will help you make an informed decision.
Artworks are considered an investment and, if priced correctly, can increase in value.
An example of a successful art investor is Robert Scull, a taxi tycoon from New York.
He bought a Robert Rauschenberg painting in 1958 for only $900. The piece later sold for $85,000.
Cost of Rent
If you’re considering opening an art gallery, you’ll need to budget for the cost of rent.
The cost of rent for a smaller gallery can be less than $4000 per month, while the price of space in the more famous Chelsea area can reach well over $30K per square foot. Prices
in large cities can be much higher, however. In SoMa, for instance, a gallery with an industrial feel can rent for $750 per hour, making it ideal for larger events.
In addition to the rental fee, many art galleries charge an event manager to help you organize your event.
An event manager can help ensure that everything runs smoothly, saving you both money and time.
These professionals will also have experience hosting events, making them more likely to know what to expect from them.
Most importantly, they’ll outline the rules of their business upfront.
They’ll also offer straightforward pricing and contracts, making the whole process a breeze.
Revenue from sales
Many art galleries charge commissions on artworks sold. Typically, this is half of the total selling price.
However, some galleries may offer a smaller discount for certain clients, like museums or corporate entities.
This is usually done with the artist’s permission. A gallery may also take other expenses, like office supplies, software and app fees, professional services, and studio rent.
The Met, for example, charges admission to its visitors and has several cafes, as well as a gift shop.
In addition, most galleries compensate artists based on commission, which is a portion of the price of the artwork sold.
This system not only rewards artists who create popular works but also compensates the gallery for creating a space that exhibits those works.
Commissions from artists
The profits of art galleries are linked to the price of the work sold by their artists.
This makes it essential for art galleries to negotiate a fair price for artists’ works.
Artists want to be compensated properly for their time and materials, so they expect to receive at least 50 percent of the sale price of their work.
In general, a gallery takes about half of the retail price of a work.
However, the artist can negotiate a discount of up to 10% if the price is lower than the original price.
Gallerists are experts in determining art values and can advise artists on pricing.
The markup can vary from artist to artist, depending on the type of art and its medium.
Additionally, the gallery may incur other costs, such as office supplies, software or app fees, professional services, and studio rent.
Government funding for art galleries provides important funding for running a successful business.
This money helps cover the costs of operating a gallery, including rent for the space, employee salaries, and marketing.
Art galleries are an important part of the national culture and may also attract tourists to a region.
However, some galleries are not profit-making businesses, meaning they are unable to generate a profit.
To understand whether “cultural” funding is good for cities and towns, it is necessary to consider how much the government will pay.
The basic conservative principle of government funding for the arts is that benefits must be equal to the costs.
This means that downtown restaurants and developers should be willing to contribute to the costs of the arts.
Alternatively, public funding for art should go to poorer people.