http://www.threadless.com/ Fri, 01 Jun 2012 08:45:44 -0500 Thu, 16 Feb 2012 22:57:29 -0600
So a friend of mine does PR and blogging for a t-shirt company that has a very solid business and does several events nation wide yearly. They have a good, recognizable name and they get lots of exposure for their business. Anyway, I need to buy something else their company makes and I threw the idea out to my buddy to ask them if they would barter me doing t-shirt designs for what I need. The owner seems kind of skiddish at this point but I plan on sending him some samples of my work to see if that will convince him.

Anyway, I initially asked "How many t-shirt designs would you want in trade for this?" It sounds like he's coming around to the idea, but he seems more interested in doing a Percentage based royalty for this. In truth, that's better for both of us down the road. If the design bombs and doesn't sell well, he isn't out hundreds of dollars for my work plus the cost of screen printing, etc. If it does good, of course I stand to profit too. I want to do the first batch for trading for the product, but after that if it goes well we'll have to work out some other compensation. I'll probably make less then what I want to on the initial deal, but I won't be spending $350 out of my pocket either.

So I guess what I need to decide is how much should I ask for in royalties?

I am a Product Designer by trade in my career, and it is common practice that if you are doing a contract design for someone and you are being paid in royalties, you get 3% to 5% of the net sales for a period of 3 to 5 years typically. Well that ads up to a lot more if it's a piece of furniture, etc. with a much higher value then a t-shirt.

If I did the same % applied to a t-shirt, here's what I come out with. Say it's a $20 t-shirt and they sell 300 of them. 3% = $180 which ain't a whole lot if I spend 15 or 20 hours on a complicated design. 5% = $300 which is a bit better. I do freelance Graphic Design currently and I'm charging $25/hr for that so $300 would equal about 12 hrs of work and I'd be okay with that.

So is either percentage too little? Too much?

Anyone done design work for royalties?

What I don't want to do is undervalue my work and end up with $100 or less per design when they sell $6,000 of net sales on the design. I realize that there's cost for screen printing, shipping, and my design services too, but I still shouldn't be doing this for $50 a pop.

I also want to mention that I expect to include in our contract that I would receive royalties per order of inventory and that I would want to be paid once all inventory is sold. So if they sell a lot of 300, and then re-order another 100 or 200, then I would get paid at the completion of each lot of inventory being sold. Not quarterly or yearly. That would be too difficult to track for both of us as they might sell twice as much in the summer when they are running a booth at events, etc.

Any feedback is REALLY appreciated. ]]>