There is nothing wrong with wanting to be paid for your efforts.
And “Exposure” won’t buy groceries. And as you mentioned, musical gear and supplies cost money. Plus you need to factor in the countless hours you spent learning and practicing your instrument. Your skill.
Small venues are simply trying to get something that will attract people (who spend money) for nothing. Do wedding bands play weddings for free? No chance (unless a band member is getting married.) And no one expects them too.
I think there are only three good reasons to play for free. One, to “audition” for a venue. If they like you and want you back, you should get paid after that initial gig.
Two, if it is a charity gig.
Three, if you want to (playing is a hobby, for fun, for friends, jam session, etc.)
It’s a sad reality. Which is why I teach guitar for a living and play in bands for the love of it (and a little extra money.)