Flat fee or percentage of profits?

I’m starting a little business where I have come up with sayings that I want printed on t-shirts and the like. However, I want the sayings to be professionally designed, perhaps have some small graphics included as well. I am planning to reach out to a friend who is a graphic designer to see if she would be interested in making the design. Should I offer to pay her a flat fee, or a percentage of the profits? I feel it’s the combination of the saying and the design which could make this a marketable product.

On the one hand, I am wondering if it is right to profit, in part, off of my friend’s design without sharing them with her. On the other hand, perhaps it is right not to share the profits since the sayings are my creation and the whole business venture is mine, and a flat fee is normal in this scenario. I am curious to know your thoughts on which approach is correct?

You should ask her. If she’s been around the block a time or two, she will likely tell you she prefers to be paid a set fee, in which case you keep all the profits (if there are any).


My vote is a flat fee now. If the product sells well, give her an additional “thank you payment” later.

Royalty payments are tricky. The designer shouldn’t risk not being paid if the products don’t sell. If the products sell really well, will you want to allow your designer to see all your sales and accounting information so she is sure she is being paid appropriately? See blockbuster movies that barely make a profit according to the accountants (because actors, producers, and others are owed a percent of the profit.)

Your designer is most likely going to want to be paid for their time, not your guess on what will sell in an entirely oversaturated “trash and trinkets” market.

You also have to determine how any imagery is going to be handled. Royalties for imagery used on on-demand items can be difficult to determine and often requires extended licensing whether you sell anything or not. Before you say “just use free art only” be sure someone does the due diligence on the free stuff. I can’t tell you how often I find the same image on high royalty websites after finding it on a free site. We had one on here just last week. :slight_smile:
And if the designer provides custom illustration, you need to negotiate that as well. Who owns the copyright, how many impressions, etc. etc. etc.

Yeah, I’ve been offered royalty and equity deals in the past. I’ve always opted for flat fee and have never been disappointed.

Graphic Artists Guild Handbook of Pricing and Ethical Guidelines advises designers to not accept royalty-only deals from start ups, due to the newness of the business and lack of sales records.

Once you get the business established, and you’ve got good distribution channels and accounting and sales records, royalties are a legit option to consider.

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I’d also recommend you secure exclusive rights to the design across all mediums when negotiating your flat fee. Today it is on t-shirts, tomorrow it will be on the yet-to-be-invented phone case.

As far as the perception of who created what, if your company is paying for this, then the public can assume you designed it. Giving someone extra cash or a cut of profits as a means to say “Sorry, I didn’t give you public recognition for your work,” is not the way to go.

Best of luck!