Like Andy's club, Gainsborough Folk Club is run for the enjoyment and benefit of it's members. When we book a guest we expect to pay a reasonable fee which we cover by a modest door charge, made up from our funds from regular raffles. Where necessary, artists get a bed for the night (not a sofa or floor).
I also book artists to play at the school where I work. I have no budget but I do not have to pay to hire the premises. Artists who play here take 90% of the door takings (so it is partly up to them to draw in an audience). This seems to work very well - everyone has been happy with their cheque at the end of the night. The 10% we keep is spent on promotion and incidental expenses. This has helped us to attract bigger names and a wider community audience who would be frightened to go to the folk club. Through this concert series we have brought live music to a town where there would have otherwise been very little.
When we book artists for our folk festival, we pay what they ask, although we sometimes wonder why this is so much more than they ask for a club or concert booking (even though we do not exploit them to perform lots of sets during the day.) Perhaps that is a subject for another thread?

Andy's club is warm hearted and welcoming by the way - we go there when we can although it is a bit far for a school night!