greetings to the forum from miami, florida!
I'm a new, fresh furniture designer about to do business with 1 of 2 furniture manufacturers (one is in N. Carolina, the other in Columbia)who are both interested in a stool I designed.
My family owns a small (very small) scale shop where we have been manufacturing this stool (as well as kitchen cab, wallunits, tables, so on) for about 2 years and have sold over 500 (for private clients generally in sets of 4) I have read ALL the threads on royalties and from what I gathered it seems royalty days are over(WEEEP)soooo what do I do? My father does not want to commit to mass producing it ("we don't have the capacity" he says) and has suggested I seek a company that will (I did, actually one contacted me through aperson who owns a few of the stools)and they are both interested- one has asked me what are my terms (whatever that means and the other I have not yet heard from, other than that they are very interested and will get back to me)I'm not a good negotiator and have ZERO experience dealing with manufacturers,or big companies of such. As far as "developement","prototyping cost" etc. the stool has already been made, and er,um perfected (its actually so simple...)so its just a matter of handing over the specs and manuf. process (or am I being oversimplistic?). Is their a "standard contract", or a written commitment that allows one to be paid for this design? what is a stool design worth? (we sell our stool between $150-$225 depending on materials and quantity-our cost about $35-$50), another little thing that worries me is that one of the manuf. has shown interest in 2 other of my designs, so I do not want to come off as being to greety and scare them from doing business with me (now or in the future), also a few friends have said that they will just probably produce it as their own design (since they both have seen it firsthand) any DETAILED guidance would be appreciated.
Gracias
Cindy
I have no answer...
...but greetings from Miami is just what we needed here. This morning we started the day at -30 C that's just about -20 at your scale....
Let's se, where do we start. First of all you are in the envious position to have a product with a proven record. I am sure that you can translate those figures into realistic figures for your two prospects. The nice thing with a proven record, no matter how small is thet you can multiply and have a good basis for royalty discussions. The days of royalties are not over. To link your financial reward to the performance of the product on the market is still an attractive proposition for most manufacturers. In the north american furniture industry, 4-5% on wholesale is still a common royalty percentage. Although a percentage is still a good basis I would turn it into a flat rate per product, just because it is so much easier to handle.
Yes there are standard royalty agreements and I am sure that your local IDSA (Industrial Designers Society of America) chapter can provide you with the most up to date one. Make sur the contract specifies an advance on royalties and a limited time of licence that can be renewed automatically as long as both parties are happy. The advance on royalties is important because it decreases the risk that the project is put on the shelf and being "considered" for too long a time. If it does not cost anything up front there is not enough incentive to bring it to the market. Without being greedy it is important to make it a seriuous amount 10 to $15.000 seems reasonable for a product that will give you a revenue of at least double that amount a year. If yuo can gather evidence thatit will be more, raise the amount accordingly. The most important part of what you have to know is not the small print of a contract. The most important part is to do your homework which basically comes down to knowing how much they are capable of selling. With what you have sold already it must be easy to do the math.
Good luck!
If you want to get into the small details, send me an E-mail.
whewww thats coooooold
thank...
whewww thats coooooold
thank you for your insight koen, but i'm still sooo very confused who is to say that the 1000 they "really sold" is a 100 they "told me" they sold? i will look into idsa (although i'm not a member), a few friends have told me to hire an attorney (but i don't really know of any that practice in the furniture segment in miami and i probabably couldn't afford it anyways), and yes if it would not be an inconvenience i would like to correspond with you, but i know not your e-mail address
gracias
cindy
in a standard
contract normally is mentioned that you may appoint an accountant to check once a year the companies books to see if the amount of products sold by them is correct in order to calculate your royalties. Also stippulates that by any changes made you must give your approval (eg you will have a contract for that chair in wood and one day they want to produce it in plastic...).
thanks for the input, that last suggestion was noteworthy gerrit.be, it did not cross my mind, the other company contacted me, it seems I got more than what I bargained for!- I went into idsa, but could not get into the section (i suspect ) has these ellusive contracts- is there some common, general, adaptable,designer friendly, idea protecting, manufacturer happy, mutually pleasant contract that i can modify or use as is to my particular situation? does anyone know perhaps of some book or site that can show me an actual contract commonly used by industrial designers related to furniture
any guidance or suggestions are greatly appreciated- its been a miserably, rainy, gloomy monday in miami, mondays aren't made to work!!
gracias
cindy
Hi Cindy
I can not locate it. I must given it to someone...That's why I buy most books several times...
If you send your adress to info@designaddict.com Alix or Patrick will send it to me off line. Instead of the book I will send you a recent standard contract that we use with U.S. clients. Sorry it's the best I can do.
Negotiation
If you get a patent, then you can license the design regardless if it is a new functional invention or just a pretty design.
A typical markup for things I've heard are 2.25 percent off the wholesale pricing. This means it's marked up 55 percent to the consumer by the middle man.
For mass produced goods, I've read 3-5 percent on wholesale manufacturing. This includes the cost of packaging and the product. Some products can be sold a variety of ways, so the royalty may fluctuate depending on how it is sold like a tool that is marketed in a tube or in a blister pak.
As a result, it may be better to settle on a royalt amount as a fixed number regardless of how the product is sold.
People like to buy ideas outright because it's cheaper and they don't have to track the royalty. If you think the idea is awesome, you may want to fight for the royalty with a minimal amount of product produced each year binding in the contract. This way your gauranteed money.
There's a lot of other considerations to take into account but the nice thing is that you can create your own sweet deal.... if you keep the forum open to negotation that is.
I'm in the process of licensing a cutter I designed to a huge manufacture in the home-improvement market. I've also designed a gag-gift and am also in the negotiation stages for that too!
faithful fellow designer
thank you all sooooo much for your input- been out of the loop due to a recent tragedy- a very close friend of mine passed away at too soon a time in his journey- this has put quite a few things into percpective for me. All you out there with motorcycles REMEMBER it doesn't matter who is at fault YOU will always end up losing-BE CAREFUL OUT THERE
I found it...I think
thank you koen.
in regards to that book its Licensing Art and Design by Caryn R. Leland if the link doesn't get you there its at amazon.com
http://www.amazon.com/gp/reader/1880559277/ref=sib_dp_pt/105-7654111-182...
has anyone read it?
If you need any help, please contact us at – info@designaddict.com