Is 50% of profits a fair image licensing fee?
May 20, 2012 22:58:37 #
never knew that. bringing up jackie gleasons name brings back so many funny memories. he really had the comic gift. I believe that he is still underapreciated as the comic guniess he was. from the honeymooners, to smokey and thebandit to the toy, he sure could makeme laugh. could anyone other than jackie play sherrif buford t justice? thanks for putting a smile on my face. i think im gonna have to watch smokey on dvd tommorow.
May 21, 2012 05:38:58 #
LGilbert
Loc: Earth
New2blog wrote:
A friend is offering me 50% of net profits for allowing them to use an image I made
It is never a smart business decision to accept a percentage of the profits unless you are an equal partner in this business, have direct access to the sales and cost models, and are willing to make nothing without quibble. Licences are a form of right and have a cost associated with them, usually a flat fee or a per item sold. Except for the flat fee, all other garage business licencing schemes have potential accounting problems unless a third part is fulfilling the orders and the sales history is therefore available. Perhaps, just give him the photo and hope he does well by it or sell it to him for a flat fee plus residual per shirt. Then, don't expect to ever receive a check and you won't be disappointed.
May 21, 2012 05:44:10 #
May 21, 2012 08:11:14 #
New2blog wrote:
A friend is offering me 50% of net profits for allowing them to use an image I made on a t-shirt they want to sell to area tourists and maybe even on-line.
That sounds very fair to me, but I'm wondering if anyone else here has experience and an opinion on this?
That sounds very fair to me, but I'm wondering if anyone else here has experience and an opinion on this?
This is a very good deal for you, if you keep the books. ;)
Businesses have many ways to reduce "net profits". So be prepared for surprises from this, even the possibility of losing a friend. Ask me how I know...
May 21, 2012 08:27:53 #
ole sarg
Loc: south florida
If I offered this kind of a contract and actually got someone to take it I would be in heaven. Every time I started to make a profit I would give myself a raise, or invest it in the business - there goes the profits.
Get a flat fee, say $2 for each shirt sold. Of course, you like the IRS have to depend on your friend when it comes to cash sales.
Get a flat fee, say $2 for each shirt sold. Of course, you like the IRS have to depend on your friend when it comes to cash sales.
May 21, 2012 09:44:38 #
Are you going to check his books to assure you get your share of the net profits? Remember, "net profits" is the number after everything else you can possibly charge to the project is deducted. Not to be confused with "gross profits".
I would suggest a fixed fee or $ per shirt and then a % of net profit after a certain level is atained. If he is an honest business person that should not be a problem.
I would suggest a fixed fee or $ per shirt and then a % of net profit after a certain level is atained. If he is an honest business person that should not be a problem.
May 21, 2012 10:44:22 #
sinatraman wrote:
never go in to business with or buy (car, camera, whatever) from a friend unless you don't mind losing the freindship. on the bad idea scale it ranks right under playing a game of pool for money against somebody named minnesotta.
Uh oh! I just sold my old camera and accessories to my nephew. I guess that's even worse since he's a relative! :mrgreen:
May 21, 2012 10:58:59 #
New2blog wrote:
A friend is offering me 50% of net profits for allowing them to use an image I made on a t-shirt they want to sell to area tourists and maybe even on-line.
That sounds very fair to me, but I'm wondering if anyone else here has experience and an opinion on this?
Thanks,
Jeffrey
That sounds very fair to me, but I'm wondering if anyone else here has experience and an opinion on this?
Thanks,
Jeffrey
If it sounds to good-----
If sell price to low or high - $0 profit.
Get either set amount to use - ?# of times (shirts) or one $ amount. Get it in writing!
May 21, 2012 12:54:18 #
Since this is a friend and you're licensing your photos to him, not being a partner in his business, I don't see much risk to the friendship as long as:
1. you don't set your expectations too high; and
2. base the payment based on percent of sales instead of profit.
Jerry's point about profit is a good one. A business has a lot of overhead and salaries that comes out of sales before profit is calculated.
Your friend is the one doing the work, and taking the financial risk, to make inventory, sell the shirts, etc. Also, profit is funny money. He could charge his business $100/hour for his time, making profits difficult to achieve, leaving you with nothing. If he doesn't account for his time at all, then profits look to high and he's not being fair to himself.
What I would do is talk this over with your friend, come up with an expected profit amount, and then have the agreement be a percentage of sales instead. You could do apercentage of sales over some fixed number like $5/shirt instread. Percentage of sales is an easier figure to account for and more fair to both of you in the long run. If he can charge a premium for the shirts you share in the benefits. If he has to lower his price to dump inventory then he doesn't overpay you.
1. you don't set your expectations too high; and
2. base the payment based on percent of sales instead of profit.
Jerry's point about profit is a good one. A business has a lot of overhead and salaries that comes out of sales before profit is calculated.
Your friend is the one doing the work, and taking the financial risk, to make inventory, sell the shirts, etc. Also, profit is funny money. He could charge his business $100/hour for his time, making profits difficult to achieve, leaving you with nothing. If he doesn't account for his time at all, then profits look to high and he's not being fair to himself.
What I would do is talk this over with your friend, come up with an expected profit amount, and then have the agreement be a percentage of sales instead. You could do apercentage of sales over some fixed number like $5/shirt instread. Percentage of sales is an easier figure to account for and more fair to both of you in the long run. If he can charge a premium for the shirts you share in the benefits. If he has to lower his price to dump inventory then he doesn't overpay you.
May 21, 2012 12:59:20 #
Roger Hicks
Loc: Aquitaine
Trust people if you think they're trustworthy. It usually works. Most of the time, if it doesn't, how much are you out? Well, for me, on one occasion with a particularly crooked publisher, $10,000. But with T-shirts and a friend?
Cheers,
R.
Cheers,
R.
May 21, 2012 16:17:56 #
Your photograph is part of the cost of the t-shirt, not part of the overhead. (Utilities, payroll, taxes, etc.)
You should receive a percentage of the GROSS profit.
(Sales less cost of the blank t-shirts, ink, etc.)
Or so much per shirt no matter what the selling price is.
He could sell 100,000 t-shirts and you could get $0
under this plan. He just pays himself salary equal to
the profit. You would be last in line.
You should receive a percentage of the GROSS profit.
(Sales less cost of the blank t-shirts, ink, etc.)
Or so much per shirt no matter what the selling price is.
He could sell 100,000 t-shirts and you could get $0
under this plan. He just pays himself salary equal to
the profit. You would be last in line.
May 21, 2012 16:20:46 #
Roger Hicks wrote:
Trust people if you think they're trustworthy. It usually works. Most of the time, if it doesn't, how much are you out? Well, for me, on one occasion with a particularly crooked publisher, $10,000. But with T-shirts and a friend?
Cheers,
R.
Cheers,
R.
Good info. In general, you'd be better selling the work and rights to use it [a] for a year on T-Shirts or [b] forever on whatever. Such prices might be what your work usually sells for plus the same amount if (a) (for example $200 + $200 for a total of $400) or what your work usually sells for plus 4x for [b] (for example, $200 + $800 for a total of $1000).
May 22, 2012 00:28:23 #
I think you might have better results by charging a set price for each shirt sold. Several years ago I shot a photo with 2 local models for a poster. The models were paid $50 per-hour each for 4 hours work. I was offered the same rate plus expenses or expenses and $1.00 per poster sold in 1 year. I took the year deal and I'm glad I did. At the end of 1 year I recieved a check for $10,680 after taxes.
The company never offered a price per deal again after that.
The company never offered a price per deal again after that.
May 22, 2012 01:16:09 #
Just as an aside, the term Net Profit is a strange one, no matter how often it is used. My economic and accounting professors used to cringe at its use and swore it was a double entendre (of course, none of them were wealthy or, to my knowledge, even moderately successful businesspersons).
Gross = Total Receipts
Subtract the cost of doing business (start-up, on-going costs, materials, manufacturing, royalties, taxes, insurance, depreciation, amortization, replacement reserves, etc.)
The remainder is the Business Net or Profit.
Gross minus Cost equals Net.
So, how does Net differ from Net Profit?
Gross = Total Receipts
Subtract the cost of doing business (start-up, on-going costs, materials, manufacturing, royalties, taxes, insurance, depreciation, amortization, replacement reserves, etc.)
The remainder is the Business Net or Profit.
Gross minus Cost equals Net.
So, how does Net differ from Net Profit?
May 22, 2012 07:08:01 #
Sweet Story!
photobob1968 wrote:
I think you might have better results by charging a set price for each shirt sold. Several years ago I shot a photo with 2 local models for a poster. The models were paid $50 per-hour each for 4 hours work. I was offered the same rate plus expenses or expenses and $1.00 per poster sold in 1 year. I took the year deal and I'm glad I did. At the end of 1 year I recieved a check for $10,680 after taxes.
The company never offered a price per deal again after that.
The company never offered a price per deal again after that.
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