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How to Determine Licensing Rates

April 14, 2010

(Illustration by Diana Ponce)

What follows is part of a Q&A discussion about art licensing that recently took place in the Escape From Illustration Island LinkedIn group.  I’m so grateful for the growing community of artists who are sharing ideas in places like this, as well as on Twitter, right here on the main site, and on the EFII Facebook Fan Page.

In this case in particular, I wanted to highlight a very insightful exchange where artist Catherin McMillan posed a question about how to quote a price for licensed work, and artist Diana Ponce offered some very sound advice.

Special thanks to Diana for taking the time to post her useful response, and for allowing me to republish it here.

Q: Ive been asked to give a quote for a drawing to be used on merchandise clothing etc.  [I’m] wondering what the base price to charge is as well as royalty %?

A: The fee and royalty rate would be based on a number of things, but mainly on how many items the art will appear on, what kind of distribution (local, national, international), how long the item would be in use by the company and how exclusive they would need the item to be.

According to the most recent PEGS ( http://tinyurl.com/gag-pegs ) flat rates for illustration for apparel for national distribution run anywhere between $1800-$4200. I find that kind of on the high end, but it’s a range of pricing that some are receiving. In the book Licensing Art & Design ( http://tinyurl.com/lic-ArtDesign ) the royalty rates for t-shirts are listed at 5-10% (based on either the retail or wholesale price) and in Art Licensing 101 ( http://tinyurl.com/art-lic-101 ) they note 8-10%, both of which are pretty decent. You may want to opt for a non-refundable advance against royalties, as you would get money upfront (probably around $500 give or take) and earn out a lower % once they earn past the initial advance.

Personally, I prefer a flat fee for usage of the art over a set time, that way if is successful, I can later renegotiate for the same or more $ or if it is no longer needed, I will have collected the bulk of the fee upfront.

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About Diana Ponce: Native New Yorker Diana Ponce is a fashion and lifestyle illustrator focusing on advertising, editorial and licensed product artwork. Having over 20 years of experience as an illustrator, Diana’s artwork has been enjoyed by many companies worldwide. Past clients include Avon, Hearst Publications, Jones Apparel Group, L’Oréal, Publicis-USA, Star Magazine, Shecky’s Media, TRESemmé and Rodale Books. When not juggling art-related projects, she likes to cook, bake and spend time with her graphic/web designer husband and her 29 year old parrot.

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7 Comments leave one →
  1. April 14, 2010 8:22 AM

    This is a great article. It’s the most common question I get from artists, and I laugh and say “what you charge depends on about 800 variables!”

    But, one thing I urge artists to do is get a non-refundable advance of royalty up front. This way, if something goes wrong (the co. decides not to take it to market, co sells and new person comes in and scraps it, etc etc) at least you got paid for your time up front.

    The other great thing about an advance is it weeds out the serious from the not-so serious. When a co is putting money up front, you know they are now invested enough that they are going to see it through. If they aren’t willing to give an advance, it’s a red flag for me.

    • Diana Ponce permalink
      April 14, 2010 10:26 AM

      I totally agree about the non-refundable advance… I consider it a design fee for work done. Once the art is handed over, it is up to them what to do with it or how to market it. Royalties are kind of like gravy, it’s great when they kick in but I don’t always expect it to.

  2. April 14, 2010 8:58 AM

    Interesting article, I charge %10 for Art licensing so glad to see I wasn’t off the mark :0

  3. April 15, 2010 9:16 AM

    It has been my experience that sometimes you have to gauge the company, they me be a start-up that has a great distribution set-up but may have all their cash tied up. So you get paid for the creation of the art up front and take a smaller royalty for about a year and put performance clauses in the contract so that if certain goals are reached you recieve more royalty monies. You still recieve the money for your creative talents, both parties get the exposure and as sales increase both parties get more of the proceedes.

    You also have to take into account your worth, you may be a big fish wherever you are, but when you dip a toe into the waters of licensing those waters get very wide and very deep. Most companies do not want to pay top dollar to someone who has no track record in the licensing world, and sometimes taking a little less than the market rate gets you a contract, gets you exposure, gets you more contracts and sets up a renogiation of the exisiting contract for a more lucrative one because you have proved to them what you alredy knew, which is your work will sell.

    Lets face it that is the bottom line.

    • Diana Ponce permalink
      April 15, 2010 11:20 AM

      Very good points. The art licensing world is definitely quite different from assignment illustration as companies usually do not like to take chances on unproven talent/properties.

  4. May 24, 2010 8:10 PM

    I normally ask around $250 for an existing design with the offer of free customization as needed, with the stipulation that my name stays on the work some where. Royalties are a great idea but I never expect them as so many people run out of steam rather early in the marketing and production phases, I work for 2 companies who have yet to create a single product or functioning web page after years of them working on it and commissioning me.

  5. jhonnybook permalink
    December 31, 2011 2:03 PM

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