Royalty vs Flat fee

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Breakdown:

Many artists have a hard time financially because they just don’t know what to charge.

Often, artists will turn down a good opportunity because they are paralyzed by the fear of making a mistake and charging too little.

The most common methods of pay for art licensing are:

1 – ROYALTY:  This is where the manufacturer pays the artist a royalty percentage of their gross sales.

2 – ROYALTY WITH ADVANCE UP FRONT:  Sometimes there will be an advance payable up front, which is later deducted from future royalties.

3 – FLAT FEE:  A one-time fee is paid instead of royalties.


Royalty payments are calculated based on the total (gross) revenues generated by the licensee (manufacturer) for your products.

Red Flag Warning:  Never agree to get paid your percentage based on the Licensee’s revenues minus their expenses.  This is an impossible number to quantify.

A flat fee is a lump sum that is paid up front at the time the contract is signed.  There are no royalties that will be paid later. Flat fees may be calculated by image (i.e. $500 per image x 10 images = $5,000); or they may be paid in one specified sum (i.e. $2,500 total).

The flat fee method is best when the licensee is either a small company that does low volume, or is a start-up company that does not have a track record of sales.

The disadvantage to a flat fee royalty is that if the product sells above expectations, you may be missing out on sharing a piece of those revenues. The best way to protect against the possibility of missing out on a piece of a great selling product is to have a short term, such as a one year or eighteen month contract.