January 6, 2024

How to Calculate Your Minimum Booking Fee as an Artist

Contents

As an aspiring artist, being smart about money early on will help you achieve long-term success. Charging an adequate price for your work, even as you start out, extends your financial runway and provides time to perfect your art and find your audience. 

Charging a minimum fee–whether it’s for a performance, an hourly rate, or other project–will prevent you from being locked into a vicious cycle of taking on low-paying work that takes time away from developing the skills needed to secure higher paying work.

Earning more and working less will allow you to spend more time practicing, networking, and generally honing your craft. Whereas working more and earning less takes time away from these activities that foster long-term success.

Of course, this is easier said than done. 

At first you take what you can get. However, once you’ve reached a certain level in your career, you’ll need to be strategic about how you allocate your time. You should only take on work that will promote your success in the long run and charge accordingly.

When you’re at that point, it’s difficult to know what you should charge if you don’t know where to begin with personal finances. That’s why I created this guide. I will walk you through how to calculate the minimum rate you should charge per hour, gig, or performance as an artist.

Bear in mind that I’m a CPA, not an artist. I tend to make decisions through a financial lens. Ultimately, you need to use your judgment as to what is best for your career. If that means occasionally charging less than you should because it will unlock doors for you, then do it!

Are you default “dead” or “alive” as an artist?

Living comfortably while creating to your heart’s content is a sure sign that you’ve made it as an artist. Creating unencumbered by extrinsic factors is what many consider to be artistic freedom.

To put this concept in economic terms, artistic freedom roughly translates to building a business that yields predictable returns for the owner year-over-year. 

The owner can either invest profits back into the business, allowing it to evolve and grow on its own terms, or take money out of the business for personal use.

As a matter of statistics, most businesses never make it to this point. 

Startups often fail because they run out of cash before they develop a viable product. Even if the startup develops a viable product, they may not have found a critical mass of customers who are able to financially sustain the startup.

Early-stage companies can increase their longevity by extending their financial runway. A long runway gives them time to iterate and figure out what works and what doesn’t.

Ideally, this runway would be infinite. Infinite runway is the point at which a business transitions from being “default dead” to “default alive.” 

A “default dead” business spends more cash than it brings in. Eventually it will run out of money and cease to be a business. It’s an unsustainable path.

A “default alive” business, on the other hand, brings in enough cash to cover its expenses. The financial runway for a “default alive” business is virtually unlimited because (even if it’s not turning a profit), it will have enough cash to pay its bills, providing it with time to perfect its product.

Let’s apply this concept to your career as an artist.

As an artist, you’re “default alive” when your total income equals your total expenses in a particular time period (monthly, for example). You’re bringing in enough money to pay your bills, which provides unlimited runway to develop your art and cultivate your audience.

Early on, this might mean that you work a full-time job and pursue art on the side. Later, once you’re good enough to make money, you might work part-time and devote more time on developing and selling your art. Eventually, depending on your personal goals, you might even make enough money to be a full-time artist. 

Regardless of where you are in your career, as an artist you should always strive to be “default alive” in a financial sense. This is the point at which your primary concern shifts from “how do I pay for groceries?” to “how do I get better at creating?” 

Once this shift happens your financial runway becomes infinite and your creativity accelerates tremendously.

What is a minimum artist booking fee?

A minimum booking fee is the smallest amount of money that you’ll accept for a performance, gig, show, or project. It’s the magic number above which you’ll say “yes” and below which you’ll say “no.” 

Your minimum fee is a function of your personal expenses, business expenses, taxes, and the time you have available for chargeable work.

By knowing your minimum fee you can say with confidence: “In order to make X dollars per month, I need to do Y number of gigs per month, at the rate of Z dollars per gig.” 

If, on average, you accept any amount below your minimum fee, then you’re not earning enough to sustain yourself.

Why artists should have a minimum rate

Artists who can financially support their personal lifestyle will have a more fulfilling career. For many, the ability to maintain a lifestyle that supports their material needs and desires is highly correlated with their sense of personal well being.

Personal well being is, of course, a subjective measure.

Artists who successfully charge a minimum fee aren’t overdrafting their bank account, amassing credit card debt, or making exorbitant sacrifices to their lifestyle (see our article on cash flow tips for musicians). All of these problems diminish personal satisfaction and disincentivize an artistic career in the long term.

You’re probably familiar with the “starving artist” archetype. This archetype exists because it takes time to hone artistic skills and find an audience. By “starving,” an artist can decrease their cash outflows and extend their financial runway.

However, an artist can’t starve forever. At some point they’ll correctly identify their artistic ambitions as the source of their unhappiness and move to make a change, which might mean they stop pursuing art as a career.

Therefore, if you want to make music for a living, it’s important to know your minimum booking fee so that you are earning enough money to be minimally viable and sustain your career for many years to come.

Lastly, understanding your minimum booking fee allows you to negotiate from a position of strength. Instead of accepting any opportunity that comes your way, you can turn away opportunities that don’t serve your long-term goals. By taking what you can get you’re also taking time away from other opportunities that might better fit your needs.

Calculating your minimum artist booking fee

Knowing that you should charge a minimum fee is one thing, but knowing what that fee is an entirely different thing. In this section I’ll walk you through the math of calculating your booking fee. You can use our Minimum Hourly Rate Calculator as a companion to the steps below.

Step #1: Estimate your personal expenses

First, prepare a personal budget. 

A personal budget is an estimate of how much money you expect to spend per month on personal needs. At a minimum, your artistic work and other income will need to cover your personal expenses. 

Don’t include business expenses just yet, these will come in the next step.

Do include total household expenses, if you and your partner share finances.

Your budget doesn’t need to be perfect, but it should be thorough and you should overestimate amounts as opposed to underestimating.

The best starting point when preparing your personal budget is to review your bank and credit card statements. Start by identifying recurring expenses such as rent, utilities, car payments, groceries, and subscriptions. Then look for expenses that are variable, such as restaurants and gas stations.

I like to arrange budget categories by descending order of necessity. For example, I put rent and food at the top of my budget. Below these I add categories for discretionary spending such as entertainment and travel. Ordering like this helps me set spending priorities.

You should also include retirement and personal savings goals in your budget. Retirement savings include contributions to an IRA, Roth IRA, or 401k account. If you’re saving for a large purchase, such as a house payment, include the amount you set aside each month in your budget.

The result of this step should be a monthly and annual estimate of your average personal expenses. Annual expenses can be calculated by multiplying your monthly expenses by twelve.

Step #2: Estimate your business expenses

The next step is to estimate your monthly business expenses. 

This step is similar to preparing your personal budget, but it should only include expenses directly related to your artistic work. This budget should include fixed expenses such as subscriptions, production equipment, music purchases, and others. 

The list should not include variable expenses related to gigs. This would primarily include travel expenses such as airfare and lodging. The reason for this is that these expenses should be rolled into your performance fee as much as possible.

You should also include profit goals in this estimate. Think of profit goals as contributing to a savings account for your business. A profit goal is that amount you want to reinvest in your business after all expenses are paid.

The result of this step should be a monthly and annual estimate of expenses necessary for your creative work plus desired profit. 

Step #3: Estimate your income from other sources

Now, estimate the income you expect to earn from sources other than your artistic work. 

This number will be deducted from your total expenses to determine the total amount of income you must earn from your creative work to cover the remaining personal and business expenses.

Supplemental income could be passive income generated by your art (e.g. royalties), income from a part-time job, allowances from family, or any other income you receive consistently. 

If you’re married or share finances with someone else, include income earned by your spouse or partner.

The end result of this step should be the total amount of income earned in your household prior to deducting personal and business expenses and taxes.

Step #4: Estimate your taxes

Taxes will be calculated based on the sum of your other income, business expenses, and personal expenses. You may actually earn more than this amount, but our goal is to calculate the minimum amount you must earn per month to cover these expenses plus taxes.

As a self-employed artist in the United States, you’re subject to three types of tax: 

  1. Federal income tax;
  2. State income tax (unless your state doesn’t have one); and 
  3. Self-employment tax.

Federal income tax rates can be found here. Your state income tax rate can be found by referring to your state tax authority’s website. Self-employment tax is roughly 15.3% of the income you earn from your music business.

Personal plus business expenses equal the amount you must earn after taxes. Your before-tax minimum income is the sum of taxes, personal expenses, and business expenses. Therefore, you must calculate taxes based on your after-tax income,

Confusing, right? 

To simplify, assume your total tax rate will be 33% across all tax categories:

  1. Divide the sum of personal expenses and business expenses by .66.
  2. Then multiply the result by .33
  3. The result is your estimate of total taxes that will need to be paid (federal, state, and self-employment taxes)

Summing taxes, business expenses, and living expenses equals the minimum amount you must earn from all income sources, including your artistic work.

Step# 5: Calculate your billable time

Lastly, estimate the number of hours you can reasonably spend per month on your art. 

You should only include “billable” time in this estimation. Exclude non-billable time.

Billable time includes time spent on activities directly associated with making money. This would include work like performing, travel, consulting, and other revenue generating activities. Non-billable hours include time spent on administrative activities such as answering emails, marketing, accounting, and of course practicing.

You can quantify billable time in other ways, such as the number of performances, projects, gigs, etc. you’re able to do in an average month.

The result of this step should be a figure, such as 40 hours or 6 shows, that approximates your monthly availability for earning income related to your art.

Step #6: Calculate your minimum booking fee

Finally, to calculate your minimum rate you’d divide your minimum income calculated in step #4 by your availability calculated in step #5.

Your minimum booking rate is: (Personal Expenses/mo. + Business Expenses/mo. + Taxes/mo. - Other Income/mo.) / # Performances/mo.

For example, suppose you need to earn $7,000 per month to support yourself and your business. You want to maintain a 40 hour work week. Of these 40 hours you expect 20 to be billable hours. In other words, you’ll spend half of your time each week working for clients and the other half developing your business. This means that your rate is $80/hour ($7,000/mo. divided by 4.33 weeks/mo. divided by 20 billable hours/mo.).

If you calculated availability by some other quantity, such as performances, you’d divide your total monthly expenses, less income earned from other sources, by the number of performances per month. This equals the minimum amount you must earn per performance.

When to accept less than your minimum booking fee

There are, of course, reasons to accept less than your minimum booking fee.

For example, you might be new and need to build goodwill with venues, booking agents, or other artists. You may also want experience in order to develop your performance skills.

Assuming you’re earning enough to support your lifestyle through other income, and that you have spare time to perform, this is perfectly OK.

Regardless of where you are in your career, you must ensure that your living expenses don’t exceed your total income. That’s how you build a sustainable career.

When to ask for more than your minimum booking fee

On the other hand, there are also reasons to demand more than your minimum fee.

Your minimum fee is exactly that: a minimum fee. It’s the smallest amount you need to earn per unit of time in order to support yourself and your art. You can earn more than that.

Suppose you have no living expenses because you’re living with a relative who has graciously offered their home and will pay for expenses related to your music. Your expenses are $0 which means your runway is virtually unlimited. This also means your minimum rate is $0.

Does this mean you should perform for free? Absolutely not. If you’re good, and you can negotiate a higher rate, you can and should ask for more.

Conclusion

Once you’ve calculated your minimum rate, ask yourself: “Can I earn this in the market?“

If the answer is yes, you’re in good shape. 

If the answer is no, you may need to find additional sources of income or cut down on expenses.

Remember, the goal is to attain an infinite runway in order to perfect your art and cultivate your audience. By pricing based on what you need, not what you can get, you extend your runway indefinitely and increase the likelihood of your success.

This content is for informational purposes only and does not constitute legal, business, or tax advice. You should consult your own attorney, business advisor, or tax advisor regarding matters mentioned in this post. We take no responsibility for actions taken based on the information provided.

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