How Do You Charge for Lisencing Your Art Work?
HELPING ARTISTS Chief THE BUSINESS OF ART, I STRATEGY AT A Time
What to Accuse for Fine art Licensing – Royalties Advances and Flat Fees
Slay those Dragons, Fright No More!
(Artwork provided by the wonderful, fun and talented Sara Jane Franklin.)
When you need to accept your sink unclogged, there'south little deviation in price from plumber to plumber. I recollect that at one time in the past, the wise plumbers got together and said "let's all accuse the aforementioned high price so nosotros all get paid well!"
If only artists could do the same, then pricing would be then much easier!
In the art business, while 1 artistic can garner $ten,000 for a painting, some other can only get $500 for the aforementioned size and medium.
Many artists accept a hard time financially considering they merely don't know what to accuse.
Ofttimes, artists will plough down a good opportunity because they are paralyzed by the fear of making a fault and charging besides little.
And when information technology comes to licensing your art, there are many different ways to be compensated.
Licensing Art means – yous retain all copyrights © to an prototype, and license, or "rent", the fine art to someone for either a ane-time use, such as in a magazine or advert entrada, or for a longer term use to print on products, such as a t-shirt line or pottery, greeting cards, etc.
(For more on art licensing:sign up for my Costless ten week series called "ART LICENSING Fabricated EASY" which teaches how to license your art, negotiate contracts and know what to charge $$$. SIGN UP Hither! )
Fearfulness THE LICENSE DEAL NO MORE – I promise you lot that one time you begin to sympathise how these things work, you'll feel more confident with bargain-making.
With confidence comes more deals, and no more lost opportunities. So delight, read on!
The almost common methods of pay for art licensing are:
1 – ROYALTY: This is where the manufacturer pays the artist a royalty percentage of their gross sales.
2 – ROYALTY WITH Advance UP Front end – Sometimes there will be an accelerate payable up forepart, which is later deducted from future royalties.
3 – FLAT FEE – A 1-fourth dimension fee is paid instead of royalties.
Okay, but how much moola do you inquire for?! Below are a few guidelines:
ROYALTY PERCENTAGE PAYMENT:
Before we get to the topic of how much to ask for, let'south brand sure you understand how royalties work.
Royalty payments are calculated based on the total (gross) revenues generated past the licensee (manufacturer) for your products.
Scarlet Flag Alarm: Never concur to become paid your percentage based on the Licensee'due south revenues minus their expenses. This is an impossible number to quantify.
ROYALTY RATE EXAMPLE: Let'due south say that you have agreed to license your art to Perry Pickle Manufacturing for t-shirts. They plan to sell the t-shirts to a chain of stores called Racey'south. You accept agreed to a royalty rate of half dozen% with a $3,000 Advance up front.
This ways that Perry Pickle Mfg is going to pay yous 6% of their full gross revenues generated. Since they agreed to pay a $3,000 Accelerate up front, they paid you the advance at the time that the contract was signed.
In their beginning quarter, Perry Pickle Mfg received $100,000 in revenues for t-shirt sales of your line to Racey's.
That ways that yous would receive a royalty payment of $6,000.00 ($100,000 x half-dozen% = $6,000.00), MINUS the advance of $iii,000.00 up forepart.
The advance is "recoupable against future royalties" so your showtime royalty payment would be the $six,000 minus the advance amount of $iii,000, and you lot would have been paid $three,000.00.
Okay, at present permit'due south talk most how y'all arrived at the half dozen% royalty rate:
ROYALTY RATES DEPEND ON SEVERAL DIFFERENT FACTORS, THE 3 Almost IMPORTANT:
- The Type of product existence produced
- The QUANTITIES expected to exist sold
- The POPULARITY (Forcefulness) of the artist or brand
THE FIRST FACTOR IN DETERMINING ROYALTY RATES is the type of production being produced. The boilerplate royalty rate varies from product to product.
For example, the average rate for art lithographs ranges betwixt v% – fifteen%, compared to 3 – 6.v% for wristbands. The boilerplate royalty rate is a good starting point for determining what the rate should be.
At that place are a few resources that will help you learn what the average royalty rates are, such as artists groups and reference books.
To notice out what others are being paid, connect with artists who are experienced in licensing through online forums and groups such as Linked In. Ask the members what the average royalty rates are, in their experience, for a particular product. These groups can be very helpful.
THE SECOND Factor IN DETERMINING ROYALTY RATES is the expected (or projected) sales volume.
The college the volume, the lower the royalty : If the products will be sold in mass marketplace retailers and in mass quantity, the royalty rate volition be less because mass market retailers (like Wal-Mart, Costco) demand better prices, which means tighter profit margins for the manufacturer.
Usually, an creative person will earn more coin from a lower royalty rate when products are existence sold in mass market, than they would with a higher royalty rate for products beingness sold in modest mom and popular shops.
The lower the book, the higher the royalty: If the products will be sold in specialty stores and in smaller quantities, the royalty rate should exist higher.
For instance: A t-shirt manufacturer that sells in mass market stores (Wal-Mart, Target, chain stores) might pay four-six% royalties. A t-shirt manufacturer that sells in smaller channels such equally core skateboard shops might pay 6-10% royalties.
If the artist is well known and their art is a proven seller, the royalty rates would be on the loftier end of the calibration. If the artist is unknown and new to licensing, the royalty rate might exist on the lower end of the calibration.
In some cases, a licensee that works with artists on a regular basis volition have a standard royalty to offering to y'all. At that time, yous can decide if you want to take their offer, or negotiate for more
Apartment FEE PAYMENT: A apartment fee is a lump sum that is paid up front at the fourth dimension the contract is signed. There are no royalties that will be paid later.
Flat fees may be calculated past image (i.due east. $500 per image x 10 images = $5,000); or they may be paid in 1 specified sum (i.e. $2,500 total).
The flat fee method is all-time when the licensee is either a minor company that does low book, or is a start-up company that does non have a track record of sales.
The disadvantage to a apartment fee royalty is that if the product sells above expectations, y'all may be missing out on sharing a piece of those revenues.
The best fashion to protect against the possibility of missing out on a slice of a great selling product is to have a short term, such every bit a one twelvemonth or 18 month contract.
With a shorter contract, if sales are very good, the licensee will want to renew, at which fourth dimension you will exist paid again, or you tin can negotiate for a ameliorate deal.
How much of a flat fee should you enquire for? Like all deals, the range is wide. I know of some artists who charge equally piddling equally $100 per paradigm for a flat fee license. In the greeting card industry, an artist might be paid a flat fee of $275 – $500 for a bill of fare design. I've had deals in the activeness sports market where I charged a flat fee of $one,500 per epitome, with a price suspension if they license multiple images.
The apartment fee corporeality that you get volition depend upon: 1- the forcefulness of your brand, 2 – the contest in the industry and 3- what the licensee is willing to pay.
The about important matter is that you get paid what yous feel that your art is worth and that you are happy with the cease issue.
ADVANCES: An advance is a dollar amount that an artist is paid up front end, due at the time of signing the contract. The accelerate is commonly non-refundable, and is deducted from hereafter royalty payments.
What I love near advances is the most obvious: you lot receive a payment upwardly front end.
Oft in licensing deals, y'all won't see royalties for a year or more because it takes that long to develop a line, sell it and get it shipped to stores. The accelerate is coin At present, which is when virtually of us demand it.
I use the accelerate as an insurance policy should something go wrong. It hedges against the possibility that there will never be royalties paid in the time to come, because if a company is willing to pay an advance, than that means they are committed fully to the product sales. Without commitment, sales often won't happen. Sometimes the products never make it to the marketplace or are dropped from the line.
And that means No sales which means No royalties.
The primary reason we almost always crave an Accelerate for Drew's piece of work is that it helps me to weed out the serious people from the non-so-serious.
If a visitor is willing to pay us an accelerate, I'm more convinced of their commitment to the success of the product sales.
Red Flag Warning: If the deal yous are about to enter into is going to require an excessive amount of work on your cease, it's crucial to require an accelerate or a design fee to cover your time. That way, you lot don't have to wait the 12 months or so that information technology takes for royalties to generate earlier you become paid.
Since there is no guarantee that a license will generate any royalties at all, an advance is insurance that you'll exist paid something in the consequence anything goes wrong.
What could go wrong, you ask?! The client is then excited and they program to put a lot of effort into the line.
One personal example is when we did a deal with one of the largest toy companies in the U.S. They went bankrupt one calendar month after nosotros gave them the artwork for a kid'southward skateboard line. Drew had spent weeks working on it. Give thanks God nosotros were paid a generous accelerate so that Drew'southward time was covered.
Another time nosotros signed on with a child's wear visitor. They had their Drew Brophy line ready to go, afterward weeks of work on our finish. Then a new partner came in and changed everything. The line never made information technology to retail and no royalties were generated. We had been paid an advance upwardly front end, so we didn't lose a month's worth of work for zilch.
The flip side to all of this is that for every bargain that isn't successful, there'due south one that is successful. Yous have to sign on with many companies because some will be duds and some will be good.
Remember, there are no set-in-stone pricing structures for licensing or for art deals. You have to exist creative and come up upwards with a deal that works for you lot and for your customer!
Maria
PS: Read "Beware of these Reddish Flags in Contracts" for more than food for thought.
Would you like your ain licensing agreement template that you can use again and over again? My new LICENSING AGREEMENT/CONTRACT TEMPLATE Parcel is now available. This package makes information technology piece of cake for you! Complete with a template that you can change every bit needed, and instructions, this is the perfect short, elementary agreement for artists not yet prepare to hire an chaser. More than details here: Licensing Agreement Contract/Template
358 Comments → What to Charge for Art Licensing – Royalties Advances and Flat Fees
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I am looking to offer an visual portrait artist a license for use equally an art cover on a unmarried music release. I volition be offering $100.00 non returnable downwards (the artist keeps it) plus a 6% 360 royalty on any related sale to that song. Too the right to use the art to promote the sale without royalty of either the vocal or whatever related merchandise in gild to sell the vocal/and or promote the artist. The creative person will have the right to continue to independently sell the impress of the aforementioned artwork and may as well include the words "as seen on… the music single). The artist may not sell the art or impress utilize of the fine art to another competitor in the music manufacture simply is free to practice so exterior of so long every bit the brand proper name of our artist is not identified with information technology. – That is the get-go anyways. What practise you think?
I bought the book Currently I am in the concern writing phase. And looking forwards to reading more than of the volume.
Howdy there! I was wondering if y'all could assist me with a couple questions?
I've been approached to do some artwork for a series of journals. This is a small, new startup, and I've never done anything but sell the odd print before.
I've been told that for doing volume covers, it's typical to practice flat fees. I'm non opposed to a apartment fee, but I'm confused as to why a journal is considered different from any other given production with fine art on information technology that'd usually become royalties (like a mug or tshirt). I'chiliad having a hard fourth dimension finding info on that specifically. Could you explain the rationale?
Likewise, as all-time as I tin gather, this person seems to be working off the idea that I would charge them the same fee I would charge for commissioning a drawing to be sold as a 1-off picture or print to someone, but then they'd exist able to reproduce it on an unspecified number of journals to exist sold indefinitely. This doesn't make sense to me – from what I can gather, fifty-fifty a flat fee would commonly have a limit with how many can be produced, or a time limit, or some such thing. They say this is "manufacture standard" for book covers and illustrations (which I question because I know they're new to the manufacture themselves, and because that just seems like a really raw deal to me). What do you call back almost that? And if more limited terms are the norm, are these and then re-negotiated or renewed after the term has finished (including a given number of items having been produced)?
I'm then confused with this, given that their info seems to be rather different from what I've found, and as well due to all the variables at play.
Thank you!
This is literally the aforementioned situation I am in and they are insisting that it'south mutual to just sell a piece of fine art work at a flat rate (which isn't high) and for them to go along and brand several copies on a product they are going to sell. They dismissed royalties like information technology was taboo and no creative person does this according to their reasearch
Question: I have been approached past a charity, they would like to do a licensing agreement for them to utilise my artwork on a t-shirt. Practice you inquire for royalties, if it'southward a charity?
Hey Ashley,
Great question! The respond depends on their projected volume. I would get an advance of royalties up forepart – and – if yous know the volume will be very high, then as well get a % of royalties.
Hi Maria,
Thank you for the helpful article. I have been asked to submit a digital file of a work of art that I have already completed to a very large concatenation of boutique hotels; they want to brand a print of my painting and place it in the model room of one of their new properties, and if it receives a good reception, they would make 160 more than for each of the rooms in the hotel. I have worked with them before, but have only done original paintings for them, and I am having problem finding much online to know how to approach this. My work is starting to garner attention, merely I am still establishing myself as an artist. I would actually like this chore. Any advice will help, and thank you so much.
I capeesh this annotate and question. I, as well, am seeking information on advice for a very similar circumstance. The company has called my piece of work to go in each hotel room (210) are seeking a digital file for their framer to print. I have the choice of printing myself. What is the recommended licensing fee for utilise in a hotel, for instance?
Thank you in advance for your for your advice.
-Jennifer
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