Calculating Rates and Fees

A project rate is a total fee for the production of a piece of work.

If you are being offered an up-front payment plus royalties, factor in the probability – or uncertainty – that there will actually be royalty income.

What rights the commissioner is seeking is central to evaluating a fee. The greater the range of rights being sought, the larger the fee should be.

If you did not accept this commission, what would you be earning otherwise? In the light of which: is this a good use of your time?

Is there a shortage of people with the necessary skills? Will you licence your work exclusively to this client – which would mean that you cannot license it to anyone else? Does the project need to be completed in a very short time? Such things should command a premium when it comes to fees.

If the fee being offered is the same as that which you were paid for the same work a few years ago: inflation needs to be factored in. Inflation affects you as much as it affects the commissioner.

If the commission involves a mix of roles, for example writing, picture sourcing and editing: consider each of them separately when establishing a fair fee.

Remember that if you are VAT-registered, you are legally obliged to charge VAT on top of the fee and expenses.

How to ask about payment: the commissioner (which knows its budget and what rights it is seeking) should make the first offer. If they don’t, you should not be afraid to ask what payment terms they are proposing. Perhaps mention Creators’ Rights Alliance’s Pay the Creator campaign.

If the commissioner and creator pay tax in different countries, remember that payment will incur double-tax formalities that are sometimes time-consuming, and may also attract bank charges – so small commissions may not be worth it.

Always try to be paid up front- and consider and check what formalities you will have to go to in order to actually recover payment. It is usually uneconomic to have to sue overseas companies for unpaid fees so do factor that in before doing any work.

It is vital to ensure that you have the right to be credited, the right to approve if your material might be altered, and a clear right to revise or adapt their contribution for future uses.

You might also want to give a short-term licence only. See our CREATOR guidelines [link] for important terms to include in creator contracts.

A day rate is simply a flat fee for a day’s work.

Charging a day rate pays you for your time spent working on a project. But because some work like illustrations, photography, composing and journalism are generally licensed for specific purposes, in specific territories and for defined periods of time, you are not just charging a fee based on your time spent actually doing the work. Part of your fee is made up of the above licensing factors.

When calculating your price for a project it can be a useful exercise to work out how long the work might take you and consider what hourly or daily rate you want to cover. In this respect it is useful to have your own base rate for your time; let’s call this the ‘production cost’. You don’t need to share this rate with the client – it’s only for your own reference, and it will likely change over time as you gain more experience.

The rest of your fee will be calculated based on the licence requested by the client. As an example: if you are an illustrator, it could be as simple as a single brochure cover project for an organisation, or it could be a 5-year international marketing campaign with print, digital and social media applications. The amount of time spent actually doing the illustration work for these two different projects could be very similar. If you were to charge only a day rate for all your commissions, you would end up charging the same fee for both these projects, which would be unreasonable considering the much larger scope of the international campaign.

The difference between a day rate and a project rate (which includes the licensing factors) is a question of cost vs value.

The cost of making the work may for example be £750, if calculated using a day rate – but the value each of these respective clients is getting from the work is vastly different as a result of their different uses of the illustration.

Working solely to a day rate can also penalise you if you are a quick worker. You might be able to achieve in a day what others might take three days to complete. If you work quickly, efficiently and only charge a day rate, you make less money. Equally, many commission fees may offer less value than a day rate (for example a small spot in a magazine or on a website). So, even if the work took two days to complete the client may not accept a fee based on this day rate as it would work out higher than what would typically be paid for this type of usage.

If you are satisfied that a day rate is the most appropriate form of reward, the CRA Freelance Day Rate Guide is a tool that can help you calculate an appropriate day rate for your time. This does not include licensing your intellectual property. While this may be appropriate in some cases – which are detailed below – for illustrators, photographers, journalists, composers, screen writers and many others it is generally not the typical way to charge for your work.

If a client gets in touch about a potential commission and asks you what your day rate is, you could reply with:

“Typically I don’t work by a day rate (or hourly, or weekly). I calculate the price for the whole project based on the production cost and also the licence required. Could you tell me how and where you intend to use the work and how long it will be used for?”

There is the possibility that, if a client asks you to work for a day rate, they won’t consider the work to be licensed to them. They might assume outright ownership (“assignment”) of all rights in the work you have done: so it benefits you to bring up the subject of licensing early so your client knows they are not buying your intellectual property in the illustration outright, they are licensing it for specific uses.

CRA Freelance Day Rate Guide

When discussing your fees it is important to be firm, but polite. You, as a freelance, price your projects however you want. If a client is used to paying day rates and can’t understand why you won’t conform to that way of working, you can simply explain that a day rate only factors in the cost of the labour and not the licence. If the client insists on a day rate quote, you can calculate the production cost and the licensing cost and divide it by however many days are required – but it’s important to make it clear that the work is licensed.

There are some situations in which a day rate will be appropriate for you. It is more common for some types of work, such as:

There are varying industry standards when it comes to amendments and revisions. It makes sense to charge for your time here because you won’t know how much further work is needed until the situation arises. Presenting the client with a rate for a day’s work may also discourage them from asking for unnecessary changes.

Working at live events may mean you are working only for a couple of hours, or it could be a whole day. You also need to factor in your time travelling to the event and back. If the event lasts two hours, it might mean two hours extra to commute: that is half a day. For live events you should also ask for material expenses on top of your fee for travel, and if a whole day, an allowance for food. Many unions have detailed guidelines on terms and conditions for live appearances.