I think there is a generalization here worth mentioning-- you need to understand what your contractor actually wants and figure out the best incentive for him.

I think there is a generalization here worth mentioning-- you need to understand what your contractor actually wants and figure out the best incentive for him. For example I value being able to work multiple jobs at the same time and/or on my own stuff. This implies when I give people a deal on a rate I give them a LOWER rate for the FIRST X hours and then the rate goes up after X. The client is happy because he knows he's getting a deal for the first X hours but more hours are always available if needed albeit at a higher rate. I try to make the average rate over 40 hours a slight deal for the client. This strategy seems to make clients happy as they wind up with a real deal on the first X hours. And I get diversity/freedom. Everyone wins.