Help! What % do you charge for royalties on merch?

[ElonGrad1997]

I have a rather successful store on Cafepress.com, and a vendor in the sport I concentrate on would like to pay me royalties for use of my designs from my online store. He goes from event to event and puts vector images onto all kinds of apparel in flock, vinyl and heat transfer. This is great, but what percentage of each sale should I be asking for? 20? 25? I have no idea! I do have a contract from "Business and Legal Forms for Graphic Designers" ready to go, and I copyrighted all of my images with the Library of Congress in December. That certificate just arrived.

Also, other than his word, how can I tell if I am really being paid for all of my designs?

Please advise quickly! Thanks a bunch!

-Lindsay

[EC]

Hmm. 25% seems a little high. That means that the price of the shirt materials, manufacturing, marketing, distribution and their profit must equal 75% of the sale price for him to break even. And maybe that's good for this type of product I don't know, if the markup is high enough then maybe (like if the wholesale shirt is marked up 10 times).

Without knowing the profit margin, it's tough. Any way to find out?

Just a hunch, and based on no actual facts or knowledge, I'd be thinking in the 10% of sales range.

[Rocketpig]

Hmm. 25% seems a little high. That means that the price of the shirt materials, manufacturing, marketing, distribution and their profit must equal 75% of the sale price for him to break even. And maybe that's good for this type of product I don't know, if the markup is high enough then maybe (like if the wholesale shirt is marked up 10 times).

Without knowing the profit margin, it's tough. Any way to find out?

Just a hunch, and based on no actual facts or knowledge, I'd be thinking in the 10% of sales range.

I was thinking the same thing. 10% for design rights sounds good to me. The other guy has to make a profit, too.

But that is just a guesstimate by me. I don't have much experience with this sort of thing.

[ElonGrad1997]

Sorry, I wasn't clear. I meant 20-25% on the profit, not the total sale.

My husband...the business guru...said I should keep it simple and make it $1 per item. So if this guy sold 250 shirts with my design, I would make $250.

What do you think?

[urstwile]

I don't know if this will be helpful, but I thought this was kind of interesting (pursuant to the original post):

http://news.com.com/Apple+seeks+tax+on+iPod+accessories/2100-1041_3-5620959.html

My suggestion is that you contact a lawyer who's up on this kind of thing.

[SurfPark]

Why just $1? If this is an on-going business and the guy sells more shirts than normal or rasies the prices, you need to get your cash too! I say stick with percentage. You get a check written to you, so its not like you're going to have to figure out the sales figures and stuff.

I suggest you figure out what percentage equals about $1. So let's say he's selling shirts for about $25. Ask for 4% of the profits...that would be $1. Its to your benefit to ask percentage rather than a flat rate.

[ElonGrad1997]

Thanks for your input everyone. I went with the $1 on all die cut items, and $2 on embroidery for a year. He is also going to create a vinyl display banner with some design samples on it stating "Now a licensed dealer of ABC Company Designs <insert company name>), which is cool. He agreed it's a win-win. There is no reason to cheat me, because for him to grow and be successful, he needs new designs from me, so I'll give it a year and see how it does. What he'll do is pay me the $1 per design he bulk cuts up front, monthly, to eliminate the hassell of keeping track of what he sells. The embroidery will be done per item.

Guess we'll see how it goes!

[cjoe]

well done, i'm not sure if this falls under the discussing pricing category, but i guess there are comparative or relative figures for anybody to look at (i.e. no profit or net profit) so its okay.