I created an illustrated design for a client for use on fliers and on their website- and I simply charged a flat fee for the design work. Now, they're reaching back out to me because they would like several modifications done - now, with the intention of putting the design on Tshirts, Towels, etc. to sell as promotional merchandise, and give some away for free.

How should I go about pricing / licensing my design, when they're planning on making profits off of selling the design on tshirts, etc.?

My plan was to charge a flat design fee for all of the design modifications they want... plus a small percentage of each Tshirt sale. Does anyone know how to determine what % to use / what seems reasonable? And also about the licensing part? I'm not familiar with how this works.