Jump to content
Mags

Percentage for lure designer?

Recommended Posts

I'm not sure this is the right place for this post.

I have a guy that has helped us design a new bait that we are going to sell. I am offering him percentage of sales. I was wondering if there was an industry standard for this type of work? I need to get a contract set up, but want to make sure what we are offering for compensation is fair. This is all new to me and him. Thanks.

Steve

Link to comment
Share on other sites

This is a hard call at this stage of the game, but I am going to agree with Delw on this. You relly need to discuss this before all this starts. Either pay by the hour (that could be suicide), or pay by the project, one flat rate. I design for a living, and I do either or. I never expect anything more from someone else's concept, no matter how much input I give, as long as I get paid. I am there to put their ideas on paper, and then bring their product to the point where it can be manufactured, nothing more. I hope that none of these are family members or close friends, so you don't have any problems down the road with them...........Good Luck

Link to comment
Share on other sites

Pay a flat fee for designing it, Don't get into a situation were you have to pay a percentage cause it NEVER WORKS

just like Delw said you dont want to do the % thing..

if it sell a crap load you got to give him that piece of change if it dont sell he will be pissy and think you did not do you end of the deal...just give him a 1 time payment of what you think is fair:yay:

Link to comment
Share on other sites

Design is usually a flat fee, as stated above. An exception to this could be if the designer has come up with a new innovation or invention. It is a very difficult situation, discussing the designs worth, expecially after the job is done. Cadmans point about friends and relatives is a valid one. I suggest that you both consume copious amounts of happy juice, then discuss it.

Link to comment
Share on other sites

I've done a little designing here and there, mostly at a flat rate. Once I made a design (a type of pattern for multiple pieces) for a certain amount of $ for a lady I did sculpture work for. I thought I was doing her a favor but come to find out,the part that was left out was that it was a high paying job from outside the country and it really :censored: me off when I found out. So maybe pay them the flat rate for the help, and if you make a lot of $, maybe throw them a little extra. Your situation is a little different from mine, but be careful, things like this can cost you a friendship. Good Luck!!

Jay

Link to comment
Share on other sites

I think offering a percentage would be a HUGE headache down the road. Just some of the potential risks I would worry about:

1. What if after the deal I discovered I was paying too large a percentage because of unforseen costs to me? What if I sold gobs of the baits and he wants more money? Lawyers must be 200-500 bucks an hour.

2. Is he going to believe me when I tell him how many I sold? Or will he want to see my books and the names of my customers? Do I really want to be exposed that kind of risk? (He might see my customers and figure on starting his own lure company)

3.What if he dies? I don't know what kind of person might inherite his design rights. They may be evil? They may make unrealistic demands on me to prove sales figures.

4. What if my business relation with him sours?

I would rather pay a little more up front and know my fixed cost. If he wanted too much money just pass on the whole deal.

Just my humble opionion.

Link to comment
Share on other sites

I had another thought. If you do go with a percentage of sales, be careful. As an example:

You are a kind friend and offer him 10% of gross sales thinking this is only fair.

Then say you sell this lure for 1.00 . Now you pay him 10 cents as his design fee, thinking he is only getting 10%. Now on the surface this is true. BUT when you figure your costs of production into the equasion you will be shocked at what percentage he is really getting.

So say your lure sold for 1.00, minus the following costs (10 cents for his design fees comission,9 cents excise tax, 10 cents overhead costs such as utilities & insurance & advertising & printer toner/paper/software/postage stamps etc, 20 cents for the raw materials of the product, and 20 cents labor paid to your employee or you. Your net profit on each lure is 31 cents. His net profit is 10 cents and he did nothing to help manufacture it, nor incure any risks of production, carring costs of the components,tooling costs ,and/or promotion and advertising. So at a minimum he is getting 25% of the profit (your .31 plus his .10 = .41 profit between the 2 of you makes his .10 cents a 25% cut of the actual PROFIT of the lure.

I always figure whether or not to proceed with a project only after I have figured out my end profit. If the net profit margins are too small I won't proceed with a new product or idea.

Hope this helps you a little. You may already know all this stuff!

Just my humble opinion.

Link to comment
Share on other sites

"My opinion".

Pay the person a flat fee. Also get them to "sign off" on any future claims against the design/sales.

Make sure you cover all the bases; get a standard release form and go from there.(Google it)

The one big mistake that folks make is that they combine friendship and business together. The old saying holds here:- "nothing personal; it's just business".

Good luck.

www.novalures.com

Link to comment
Share on other sites

as a genareal rule a manufacturer will offer a lone or multiple parties 3% of the net profit in royalties, and in most cases a lump sum of projected sales to cover the first year before marketing starts. that's 3% without doing anything after the contract is signed. and zero monatary investment from person/them. more is normally given if the company wants consultation for a set time on difficult products. if the product is ever resold to another party most contracts have a clause where a percentage of the sale price is given to the person/people. in some cases the royalties can even carry over after the transfer, rare because it limits the sale attraction, but on very good products it's almost a given.

your case is more unique. is he going to continue with you? or be gone and do nothing? is the money forever or for a certain number of years? is he your brother in-law? wifes brother8O...? how much intell did he do?

if your good friends i'd say go for one year without any money exchange and after that you will have a better idea of what your profit and expense will be. but i'd come up with what percent he is deserving of first. how much exactly he is responsible for in creating it is the number he is deserveing of.

Link to comment
Share on other sites

You've gotten lots of good advice IMHO.

But as to the contract, I've learned to start out up front in the contract specifying how you two will unwind the deal. If the parties cannot agree how to separate the deal and get both back to 'as before' or made whole condition then it makes no sense proceeding further into specifying how the parties are going to share the rewards of the deal. When you start discussing how to fix a deal going sour, many, but not all of the warts, hickies and zits of the overall deal starting showing up and one or both of you may decide the deal is not worth the effort in fixing all the nits that could add up to problems in the future.

Good luck!

John

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...


×
×
  • Create New...
Top