Graphics Reference
In-Depth Information
Royalty-based Licensing
The designer's compensation is a royalty or a percentage of the money received from
the net sales of a product that incorporates the designer's work.
•Thisoftenoccursformerchandiseforsale.
•It'sfrequentlynegotiatedbyproductdesigners.
•Compensationistiedtosalesandthepublic'sacceptanceoftheproduct.
•Thelicensee(client)mustallowthelicensor(designer)toreviewaccounting/product
sales records.
•Paymentstypicallyaremadequarterly,butcanbenegotiatedotherwise.
•Anadvanceonroyaltiesisapaymentthelicensee(client)makestothelicensor
(designer)upfrontthatisthendeductedfromtheroyaltiestobepaidinthefuture.
Even if you do not choose to be paid under a licensing agreement, your subcontractors
may prefer to be paid this way. For example, it is common for an illustrator to allow his
orherworktobeutilizedthroughause-basedlicensingagreement.
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