Understanding the money side of product development is just as important as the creative process. Budgeting and planning helps you plan ahead, manage costs, and make sure your product is financially sustainable. Fair payment means making sure artists and art centres are properly recognised and rewarded for their work.

This section walks through the steps to create a clear, transparent and fair approach to money — from setting a budget to deciding how profits are shared.

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Working out if it’s worthwhile

Creating a business case will help you decide if developing new products is worthwhile. It’s not just about making money — smaller and more affordable products can attract tourists and lead to bigger sales in the future. The main goal of a business case is to understand the costs and potential sales income so you can make informed decisions. If a product loses money, its benefits might not outweigh the risks. Ideally, products should be worth the energy invested by creating profit on top of the hours you take to make.

Visit the Business Case page for more information.

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Basic budgeting

Creating a basic budget when developing new products is important because it helps determine if there is enough money to cover all costs, highlights any financial risks, ensures wise use of resources, sets clear goals, and manages cash flow effectively.

Here’s a template to help you get started with your budgeting.

Cost Item	Amount ($)
Art centre costs (utilities, rent, storage, shipping, warehousing)	$
Administration costs (salaries, legal, etc.)	$
Artist payment	$
Design/tech pack costs	$
Production/material costs or price per unit of manufacture	$
Sales and marketing	$
Freight and distribution	$
Profit or mark-up	$
Taxes	$
Total	$

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Making sure artists are paid fairly

Royalties are payments artists receive whenever a reproduction of their artwork is sold, and are a way for the artist to earn money from their creations.

Revenue profit, on the other hand, is the money left over after all business expenses (like production, marketing, and wages) have been deducted from total income. Royalties are paid regardless of profit, while revenue profit reflects overall financial performance.

When deciding on royalties to be paid to artists, start with the Indigenous Art Code. This code ensures artists are paid fairly, understand how and when they’ll be paid, and have everything clearly written down before agreeing.

Benchmarks

A useful benchmark is provided by the Copyright Agency, which suggests most merchandise is licensed at 25–30% of the wholesale price or 15–20% of the retail price. If a product meets industry standards and includes a fair royalty for the artist in this range, it is unlikely to be considered unfair.

Royalty payments ensure artists are fairly compensated for their work when it is used on merchandise. If handled by the Copyright Agency, they manage the licensing process and deduct an administration fee. This simplifies negotiations and payment collection. If the Copyright Agency isn’t involved, artists and art centres must establish formal agreements. Arts Law has templates which you can use to ensure fairness.

Since royalty structures vary, what is considered ‘fair’ depends on different factors. Here are some examples:

• Manufacturer offering 20% of the wholesale price
  This might be fair because the artist is paid for every item produced, not just those that sell. While this could result in a lower percentage of total revenue, the artist receives payment earlier and doesn’t have to wait for sales.
• Retail chain offering a $20,000 upfront payment + 10% of retail sales
  This arrangement ensures the artist gets guaranteed money upfront, even if the product never sells. Although the percentage per sale is lower, the upfront payment provides financial security, which can be beneficial for artists.
• Major public gallery offering 12% of sales revenue for a product featuring an artwork from a major group show
  While the royalty rate is lower, the exhibition increases the artist’s visibility and may boost the value of their artwork. The art centre also benefits by buying merchandise at a discounted rate, allowing further promotion.
• Fashion brand offering 15% of wholesale price + a community-focused promotional campaign
  The artist is fairly compensated, and the brand invests in the artist’s community, featuring local models and widely promoting the campaign. All models are paid fairly and receive products, making this a broader cultural collaboration.
• Local ranger program offering a $500 flat fee for 150 shirts
  Although the fee is lower, the community benefits because the shirts help fund the ranger program. The number of shirts being produced is small, and the agreement helps support a local cause.

Each licensing agreement must be carefully considered to ensure fair and ethical compensation while taking into account broader benefits like timing of payments, cultural visibility, and community engagement.

Who is the licensee?

A licensee is an individual or entity who has been granted legal permissions by another person, known as the licensor or copyright holder, to use, reproduce, sell, distribute or display certain artworks under terms and conditions.

Visit the Licensing Artwork and Copyright pages for more information.