Determining your own licensing rate
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I sell art on Etsy based on my original comics. One of my products is a pack of 5 humorous stuttering awareness pins featuring my cartoon character (who stutters). I also offer my pins in bulk as some stuttering associations and support groups have requested them in sets of 100s to give away or sell.
This can get expensive for associations in other countries, especially Europe where they also have to pay VAT on top of shipping and customs fees. So I also offer a licensing fee where they can have the pins printed in their countries in order to save on shipping and customs. Reason I can do this is I have friends in many stuttering associations around the globe. Still out of my comfort zone though.
So I charge whatever 40% of the production cost would be. It’s not too bad as it’s a win-win. I get an annual report that tell some how much they made, etc. I’m putting a lot of trust in this, I know. I’m trying to get them to switch over to me shipping buttons to them
However, there is one association that asked if they could pay a one-time fee and make as many pins as they want from a PDF template as many times as they want forever. I really don’t like this idea because it sounds like they just to leave me out of the equation. I prefer the 40% one. Unless I charge, say $10,000 for the lifetime use but that won’t fly for sure
Also, if I do that for this stuttering association, I should also offer it to the others, no?To give some context, the friend in this stuttering association is also the one who created the concept of humorous stuttering awareness pins in the first place. She told me how she made pins then I asked if I could have permission, split cost, to create and sell versions with my cartoon character. She gave me permission and also not to split the profits. So I’m not sure if I am being too nice or properly accommodating.
I wanted to ask here to see what others think of this. I see that in both scenarios, I’m still selling a brand. Not just pins.
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Yeah I can see how that can be sticky. I don't know what I'd do in your position to be honest. One thought would be a limited licensing agreement. Instead of a lifetime license, sell them an unlimited use for 12 or 24 months for a smaller fee. That might slide into their budget, and you're not locked into a bad deal forever and if it goes nuts you can always renegotiate. Plus you'd collect some valuable data about how many of these things they're actually selling (so you could gauge appropriate licensing fees to other associations).
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I’m not sure but could an annual licence be another option or say a two or five year licence.
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That’s the weird thing. I have been giving them a make-as-many-as-you-like license. Only thing was I made it 5% and a 2-year term. Forgot to mention that part. So when I realized the only profit I was making was $20. So I changed it to the 40% one. They suggested a lifetime one so they never have to get a new contract/pricing again.
My gut feeling is to just stick with my 40%.
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Yeah.... I think you're on the right track with that one.
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You could always throw out that forever price and see. You could be wildly surprised. And If they don't like it then they might be more willing to go with the 40%.
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@danielerossi The Association of Illustrators (AOI) in the UK just released a PDF to download for free about licensing. A good global guide.
Licensing illustration! DOWNLOAD LINK
This document sets out the industry standard for commissioning illustration.
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@sigross Awesome! Thanks!
