The trading guilds need to bid on trading NPC's each week, so that players outside the guild can buy from the guild's store. That's where the money goes to. The winning bid money disappears from the game.
There are trading guilds without mandatory fees, like with 50/50 raffles and auctions, or that just rely on the small fee taken from every guild sale. But with less money they have to settle for traders in less desirable locations.
A trading NPC allows guilds to sell to all players through the guild store, not just guild members. More desirable locations mean better sales and more money for the guild members. For example, traders in population hubs like Wayrest, Rawl'ka, and other major cities tend to have more sales than ones out in the middle of nowhere, so they tend to be a lot more expensive and require more active fundraising from the guild.
Raffles and auctions work similarly to irl raffles and auctions.
For raffles you would deposit a certain amount in the guild bank for a 'ticket' and if you want additional tickets you deposit more. Once the time period is up (usually a week) whoever's name gets drawn gets a prize (in my guild it's usually gold, rare motifs/furnishing plans, or other stuff like that-- I think at one point the guild master's soul got listed as a joke). Any excess money after the prize is given out is put towards the trader
Auctions tend to rely on donated items (stuff put in the guild bank by members). The item is listed in the guild chat then people bid on it (most I've been in have a minimum 1k bid). The winner sends the auction runner the gold or puts it in the guild bank, and the runner sends the player the items.
Divine Knight of Đivination
Sergeant-at-Arms of the Pride of Daggerfall
There are many good trading guilds you do not have to pay anything as long as you sell stuff. They might have a 20k monthly sales requirement and if you do not sell anything or do not meet that threshold you pay an amount of buy raffle tickets for an amount.
That is to prevent dead beats hanging in the guild. Some guilds do require much more but there are many guilds in good locations that are well run that are more like what I described. Raffles are purely voluntary after one meets the minimum requirement. Some falsly suggest these GMs make bank off the trading guild but from what I have seen, knowing the GM of the one I am in, they tend to spend on keeping the guild going by donating items for the raffles and such. There tends to be a crew, including the GM that does the lions share of financially supporting the guild.
The money goes to bidding on the guild trader for the next week and smart guilds do have a nest egg for when there are bidding wars.
I’ve been playing eso for a long time now and I still haven’t figured out what a trading guild is really for and what I’ll get out of it and how the whole “I need to pay monthly” works.
There are good trading guilds out there that have no selling requirements, no mandatory dues, and voluntary raffles and auctions to get the gold to bid on a trader kiosk.
My trading guild has no requirements. The gm usually wins the bid for "our" trader. I happily buy raffle tickets and donate items for the auction when I can to support that. Selling mats/motifs/items on the trader has provided a nice profit that would be better if I actually sold stuff more often. Over two million gold at this point. The heavy trading guilds, as long as you have the items to sell, can do more, from what other posters have said.