Good point Twickers.

At Gainsborough Folk Club we always pay the artist the fee they ask for but we also charge a low entrance fee (especially for our members) We subsidise the overall cost from our weekly raffles. We can only fit around 35 people in so we can't offer a percentage deal such as we might do in a concert venue.
However, having done both, I have to say that I have never found it necessary to charge more than £10 on the door and that was when the artists in question asked for that price.
Our local Arts Centre has priced itself out of the market and books so little live music now that it has slipped off the folk audience's radar.