Independent contractors get to decide what price they will accept for their work. Independent contractors include self-employed artists and arts workers such as freelancers and independent artists. Learn more about independent contractors.

Organisations and businesses can offer an amount for work, but independent contractors are free to negotiate on what price they will set for their work, or reject any offer that is less than they are willing to accept. Learn more about negotiating contracts.

This page sets out some of the things independent contractors should consider when working out a price for their work – but this in no way limits what they can or should ask for or accept.

Different fee and payment structures

There are different ways independent contractors can agree to be paid. The most common ways include: 

• a set fee — a fixed amount, regardless of how long the work takes them
• a time-based rate — for example, an hourly, daily or weekly rate for as long as the work takes or a set number of hours
• a percentage-based rate —for example, a share of sale price, profit or ticket sales, commissions, consignment fees or royalties
• sale price
• a combination of ways — for example, a playwright might be paid a fixed price for writing a script and receive royalties based on a percentage of ticket sales.

How fees and payments are structured is important. The timing of when an independent contractor receives their fee may influence whether they can accept the work.

For example:

• an author may receive an advance payment to provide them with income for the time it takes to write a book
• an installation artist may receive a deposit before incurring costs in the manufacturing process for parts that are needed for the artwork.

The right payment structure for an independent contractor will depend on the level of financial risk they are prepared to, or can, take.

Pricing creative work

There is work — as labour. And then there is ‘the work’ — the creative work.

‘The work’ is the finished product such as an artwork, an illustration, or a journal article. It is what an independent contractor is asked to supply. It can be either:

• as a stand-alone outcome, or
• in combination with other services that may involve work as labour.

For example, an artist is engaged to run an art workshop (work) and produce their own artwork for display (‘the work’).

There is no universal formula for pricing and valuing ‘the work’. This means that independent contractors or artists have the freedom to price their own work.

Things to think about

It can be helpful to consider certain things in setting a price for the work. These include:

• what the market is prepared to pay (particularly for anything comparable)
• the profile of the artist, creator, writer or maker
• the size, dimensions or types of material used
• how rare or original the work may be
• the value of any intellectual property rights (learn more about intellectual property)
• the time spent producing the work
• the fee arrangements and practices in particular galleries, venues or publishing businesses.

There are also industry rate guides that recommend minimum rates for particular creative activities. 

Working out: what it costs

A more concrete way to work out a price (at least in part) is to understand the costs. Costs can be:

• direct — what it costs to do or create the work
• indirect — also known as overheads.

Direct costs

Examples of direct costs include:

• art supplies and materials needed for the work or service
• tools, equipment and software needed for the work or service
• venue or workspace hire required for the work or services
• labour in the direct supply of work or services.

Direct costs should be considered, and where possible, quantified.

Including direct costs in the price helps make sure an independent contractor doesn’t incur a loss for a particular piece of work.

Indirect costs or ‘overheads’

Indirect costs are costs not directly related to creating a work or supplying a service. Sometimes these are called ‘overheads.’ Indirect costs are not as obvious as direct costs.

Indirect costs may be the day-to-day costs of running the independent contractor’s business.

Examples of indirect costs include:

• ongoing workspace rent
• ongoing advertising or marketing costs for a business
• internet, postage, printing, electricity, phone, etc
• business insurance
• professional memberships and union fees.

It is important to understand the overall costs of making or doing work and running a business and factor these in when pricing work.

Learn more about expenses and keeping track of them as part of taking care of business tax.

Working out: the supporting work

Supporting work can be a big part of any contract. It is the labour required to complete the work. 

Supporting work is sometimes called incidental work – it is work that has to be done so that the main work can be completed. 

Supporting work takes time, and can include:

• researching
• spec work (including quoting or pitching)
• shopping for materials or parts required specifically for a particular job
• interviewing or auditioning people
• reading required material
• coordinating or organising other artists or arts workers
• arranging permits
• meetings, emails and planning
• writing quotes and invoices
• travel.

It is important to understand the overall costs of making or doing work as well as running a business. These things should inform how work is priced. If some of these activities are outsourced for a particular contract or job, that outsourcing cost may be treated as a direct cost for the work.

Working out: what else to consider

Even when all the costs and work have been tallied up, there are other things to consider.

Superannuation

Many independent contractors running their own business need to provide for their own superannuation on retirement.

There are some exceptions to this, depending on the nature of the work and the particular engagement.

Where an independent contractor is responsible for their own super, it may make sense to consider:

• working out the value of any appropriate super contribution
• factoring into the contract price.

Learn more about superannuation before agreeing on a price.

Opportunity costs

Opportunity costs are the opportunities or other work that an independent contractor might miss out on by taking on particular work, and what that might cost them.

For example, accepting one contract might mean missing out on something else.

That ‘something else’ might be other paid work, chances to learn new things or build new relationships, or work that is more personally fulfilling.

The opportunity cost of this is worth taking into account.

Future earnings

Fee and payment agreements that are partly, or completely, percentage-based come with risks. Percentage-based examples include a share of sale price, profit or ticket sales, commissions, consignment fees or royalties. 

What an independent contractor ends up with can be less than they’d expected if:

• they agree to be paid a share of ticket sales, but the show doesn’t sell many tickets
• a commission fee is a percentage of a sale price, but the work doesn’t sell for as much as expected. 

On the other hand, an album that becomes wildly popular can result in an artist receiving much higher royalties than they had imagined. 

It’s worth thinking through different scenarios for percentage-based payment arrangements when deciding what to agree to.

Target earnings

Independent contractors also need to think about their target earnings when deciding whether to take on particular work. 

In creative industries, ‘portfolio careers’, or piecing together an income from many sources of work, is common.

For independent contractors, it is a good idea to think about the income you need overall to make ends meet, and whether a particular job will help or allow you to meet this.

Sometimes it can be right for you to make sacrifices or trade-offs. For example, to build your practice or career, to take on work that’s personally fulfilling, or to ‘give back’. 

It is important to always be mindful how work impacts our personal lives, health and wellbeing – in both positive and negative ways.