How to structure your gallery fees: commission, margin and expenses

01The historical commission model: fifty-fifty and its variants

Revenue sharing between the gallery owner and the artist traditionally relies on a commission system. The most widespread model in the contemporary art market provides for an equal split of the sale price, the gallery owner retaining fifty per cent and the artist receiving the remaining fifty per cent. This split, sometimes called fifty-fifty, has established itself as the reference standard in primary market galleries worldwide. Galerie Marian Goodman, founded in New York in 1977 and now present in Paris and London, helped establish this norm in relations with the internationally renowned artists it represents.

However, this standard model has many variants. Some galleries apply a forty per cent commission, particularly when the artist is sufficiently established that their reputation attracts collectors without the gallery needing to deploy considerable commercial efforts. Conversely, galleries that invest heavily in promoting young artists still unknown to the market may negotiate a sixty per cent commission during the first years of representation, with a progressive reduction as the artist gains visibility and sales increase.

Galerie Chantal Crousel, recognised for the quality of its support for represented artists, illustrates an approach where commission is not reduced to a percentage but forms part of a suite of services the gallery provides to the artist: production of works, exhibition financing, catalogue cost sharing, introductions to institutions and collectors. This comprehensive model makes the commission percentage less decisive than the quality and breadth of support offered.

02The commercial margin: an alternative to the commission system

Some galleries, particularly those operating on the secondary market, function according to a commercial margin model rather than commission. In this scheme, the gallery owner purchases the work from the artist or a seller and resells it at a higher price, keeping the difference as remuneration. This model is that of classical commerce and differs from the commission system in that the gallery owner bears the risk of not reselling the work at the expected price.

Galerie Thaddaeus Ropac, which operates on both the primary and secondary markets, combines both models depending on the nature of transactions. For works by living artists represented by the gallery, the commission system generally applies. For works acquired on the secondary market from collectors or at public auction, the commercial margin model is preferred.

The choice between commission and margin has direct fiscal implications. The margin VAT regime, applicable to works acquired from sellers not subject to VAT, applies only to operations conducted under the margin model. Commission transactions, where the gallery owner acts as intermediary between artist and buyer, fall under the general VAT regime. This technical distinction requires the gallery owner to maintain accounting rigour and a fine understanding of the fiscal mechanisms applying to each transaction type.

03Recharged expenses: transparency and fairness

Beyond commission or margin, the gallery owner incurs specific costs for each exhibition, each fair participation and each transaction. The question of how these costs are shared between gallery owner and artist constitutes a frequent source of tension in the professional relationship. Practices vary considerably from one gallery to another, and the absence of a common standard makes negotiations all the more delicate.

Work production costs deserve particular attention. When an artist produces a complex installation, a monumental sculpture or a work requiring expensive materials, the question of who finances production arises acutely. Some galleries cover all production costs and deduct them from sales proceeds before the commission split. Others ask the artist to finance their own production, the gallery merely providing exhibition space and commercial effort. Galerie Continua, known for the ambitious projects it realises with its artists, has developed a model where the gallery invests substantially in production, enabling exhibitions of a scale beyond what the artist could finance alone.

Transport and insurance costs for works are generally shared between gallery owner and artist according to terms set out in the representation agreement. Transport to the gallery for an exhibition is typically borne by the gallery, while the return of unsold works to the artist's studio may be shared. Transport costs to an international fair are generally attributed to the gallery, since the decision to participate in a fair falls within the gallery owner's commercial strategy.

04The representation agreement: formalising what is too often verbal

Structuring gallery fees cannot be conceived without a written representation agreement between gallery owner and artist. This document, whose absence remains frequent in the French art market, sets the terms of collaboration: commission rate, geographic scope of representation, commitment duration, termination conditions, cost sharing, payment terms to the artist after a sale, gallery obligations regarding promotion and exhibition.

The Comite Professionnel des Galeries d'Art has published recommendations on this contract's content, and templates are available from professional organisations such as the Federation des Professionnels de l'Art Contemporain. Despite these resources, many gallery owners continue operating on the basis of verbal agreements, which exposes both parties to disputes in case of disagreement over the financial terms of a transaction. Galerie Nathalie Obadia, which represents an international artist programme, relies on formalised contracts that clarify the financial terms of each collaboration and prevent misunderstandings that can arise when amounts at stake increase with artist recognition.

05Adapting fees to gallery size and strategy

The fee structure must reflect the gallery's economic reality. A young gallery starting its activity in a modest space with a limited operating budget cannot apply the same conditions as a long-established gallery with multiple spaces, a substantial team and an international collector network. The fifty per cent commission, while constituting the market norm, is not an absolute rule and must be adapted to each gallery's specific context.

The gallery owner starting their activity can offer artists a reduced commission in exchange for a stronger commitment on their part to the commercial effort: presence at openings, participation in events, activation of their own collector network. As the gallery develops and services offered to artists expand, the commission can be progressively adjusted to reflect the growing added value provided by the gallery owner.

Galerie Perrotin, which began in a small space in the Marais before becoming a gallery present in several world cities, evolved its commercial conditions alongside its growth. This trajectory illustrates a fundamental truth of the gallery profession: the fee structure is not fixed but evolves with the gallery, its artists and the market.

06Transparency as the foundation of trust

Trust between gallery owner and artist rests on financial transparency. The artist who does not understand how the selling price of their works is determined, who does not know what expenses are deducted before calculating their share, or who does not receive a detailed statement after each sale, is an artist who will eventually leave the gallery. Financial disputes constitute the primary cause of breakdown between artist and gallery owner, and most of these disputes could be avoided through clear and regular communication about the financial conditions of the collaboration.

The gallery owner who sends artists a quarterly statement detailing sales achieved, expenses incurred and sums due strengthens artist trust and loyalty. This practice, which may seem burdensome, is in reality an investment in the stability of the commercial relationship and in the gallery's reputation within the artistic community.

Artedusa offers its partner galleries a tool that reinforces this transparency by enabling galleries to present their artists and works in a professional environment where prices are displayed clearly and sales conditions are accessible to collectors. This visibility contributes to professionalising the relationship between gallery owner, artist and collector, to the benefit of the entire art market.