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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.

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I have been in the screenprinting / embroidery / graphic design industry for over 25 years. As far as I am concerned, this is how it works… The customer pays me for art work or for me to create any design for him. It makes absolutely zero difference what the design will be used for. The service is straightforward. Customer wants or needs a design, I create the design and I get paid. That same customer comes back to me and says “the original art you gave me was great and worked perfectly for my website but my T-shirt people tell me they need the artwork at this size and at this resolution…. Can you please make the changes for me to the artwork?” My response is always, “sure thing… what are the dimensions you need or whatever”

Changes and edits like this take only five or 10 minutes to do. Bottom line is the customer originally paid me for artwork. It's his design. Not mine. Really it's none of my business what he intends to do with it. My suggestion would be: bite the bullet and take one on the chin. You will quickly find if you start asking for percentages or making things difficult, you will wind up losing your customer. If the edits to the artwork are minor, charge nothing. Make yourself look like the good guy. However if it's significant and will take a half an hour or an hour or more.. Charge your hourly rate. Feel free to do whatever you want, but I do know what I'm talking about.

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  • Depends, some people actually specify what rights they transfer over, so thay might not have transfered over the right for merchandize. If not then one is well within their right to ask more money. It really depends on the client. Some clients have the money some dont.
    – joojaa
    Commented Jun 13, 2017 at 19:37
  • I agree with "joojaa". At first, the agreed to project was simply for promotional use (website, brochure)... but now, once it comes to commercial use (as in using on merchandise & making a profit on the design) these rights don't necessarily automatically transfer over to the client- correct me if I'm wrong. My pricing is always very fair & reasonable, but I still think this shouldn't be a "freebie". Thanks for the helpful feedback, it seems like going for a reasonable flat fee instead of dealing with % is the way to go.
    – JL1208
    Commented Jun 14, 2017 at 16:23
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If you expect that they are only going to sell a few (or even a few hundred) products then I would recommend charging them a reasonable flat fee for the work that they need you to do. You could include in this a stipulation that there is a maximum number of products that they can use the design on before paying again. This is the model used by some stock photography providers.

If you think that they will sell thousands of products (or more) over a prolonged period, then you should try to negotiate a royalty per sale, but this becomes more complicated because you have to check (or trust) the sales numbers.

In cases where a royalty seems like the best course, there is a balance to be found between upfront fee and royalties. A large advance (aka upfront cost / guaranteed minimum) will generally mean a smaller royalty while a low (or zero) advance will usually mean a larger royalty percentage. Both options will require a contract and maybe a lawyer so I would only recommend that course if you are confident that the financial rewards will make it worthwhile.

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