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Royalty Rates |
Home > Control Panel > Design Mediation > Royalty Rates |
Royalty Rates
This page gives an idea of how much royalties you would expect based on a particular type of design category. The numbers given here are for reference only provided by DesignMediators free of charge without any liability, for each individual category the numbers are to indicate a general idea.
When calculating royalty fees, it is crucial to consider the nature and value of the intellectual property, the industry norms for royalty rates, and the anticipated revenue generation. The licensor's brand reputation, uniqueness, and demand for the IP significantly impact the fee structure. Also, the type of license (exclusive or non-exclusive), geographic scope, and licensee's business scale should be evaluated. Additionally, consider any associated costs, such as marketing or distribution expenses, and ensure that the royalty rate aligns with both parties' profitability goals while encouraging sustainable business growth.
When calculating royalty fees for industrial designs, several modifiers can significantly influence the final rate. The level of exclusivity is pivotal, with exclusive licenses often commanding higher royalties than non-exclusive ones due to the limited competition. Market demand and uniqueness also play a crucial role, as high-demand or unique designs can justify premium royalty rates. Geographic scope is another key factor, with global rights often increasing fees compared to regional licenses. License duration matters too, as longer periods may result in discounted royalty rates or higher upfront fees. Volume-based adjustments, such as sliding scale royalties based on sales tiers, can reduce rates at higher volumes, encouraging increased sales. Design complexity can justify higher fees, especially if significant adaptation is required, while the licensee’s industry can also influence rates, as more profitable or competitive sectors may support higher royalties. If the design significantly reduces production costs, licensors may negotiate higher fees. Additionally, established licensees with strong market penetration might secure lower rates due to their broader distribution network, and a high marketing commitment by the licensee could further affect the negotiated royalty rate. Understanding these modifiers enables licensors and licensees to structure agreements that reflect the design's true value while aligning with both parties' strategic interests.
| GENERAL MODIFIERS | ROYALTY RATE MODIFIER | |
| Exclusive License where you sell the global design rights to only one Client giving him exclusivity over your design. |
+ 2 % | |
| Fashion or Trendy Sectors where products change rapidly according to years, treny products will sell fast but sales will decline rapidly. |
+ 3 % | |
| Low Advanced Payment where you request the Client to make a none or very low of upfront payments thus increasing your risk and royalty rate. |
+ 1 % | |
| High Advanced Payment where you request the Client to make a lot of upfront payments, thus decreasing your risk and royalty rates. |
- 1 % | |
| Licensing to an Infringer where you sell your design to a company that has already been copying your design. |
+ 2 % | |
| High Investment Requisite where the company that is going to buy your design has to invest a lot of money to market or produce the design. |
- 2 % | |
| High Market Potential where your product idea is very easy to market, sell or produce, this will increase the royalty rates. |
+ 1 % | |
| Already Patented where you have already patented your design idea, this will increase the royalty rates. |
+ 1 % | |
| Already Tested where your design has already been produced, and tested for market based certifications etc. |
+ 1 % | |
| New Designer where you are a new or young designer on the market, or if this is the first design you are selling. |
- 1 % | |
| Award Winner where your design is redeemed as good by being a winner of an international design award such as A' Design Award. |
+ 1 % | |
| You are Famous where your name has already a brand value in the country where the design will be sold. |
+ 2 % | |
| Low Expected Sales where the design appeals to a niche customer segment with low volume of sales forecasted. |
+ 2 % | |
| High Expected Sales where the design appeals to a large customer segment with high volume of sales forecasted. |
- 1 % | |
| Highly Technical or Technological where your design includes highly technical or engineered systems or incorporates high-technology. |
+ 2 % | |
| Relevant Intellectual Properties where you also provide some other IP together with this design to the Client. |
+ V % | |
| V = Volatile: Variable between %1-%5. |
Industrial
The Industrial supercategory covers highly specialized and technical design categories like Vehicle and Transportation Design (3%), Engineering and Technical Design (6%), Medical and Scientific Design (6%), Materials, Components and Texture Design (3%), and Digital and Electronic Devices Design (5%). This group showcases the application of innovative engineering and technology in various domains ranging from medical and clinical products to vehicles and electronic gadgets. Royalty rates are generally moderate, with most designs attracting a base rate between 3% and 6%. To this base, you would apply the modifiers above.
Architectural
The Architectural supercategory focuses on large-scale, built-environment designs. Categories under this umbrella include Architecture, Building, and Urban Design (3%) and Interior Design (8%). While Architecture and Building designs have a standard rate of 3%, Interior Design commands a much higher base rate of 8%, likely due to the complexity and customization involved in this field. The supercategory reflects the demand for comprehensive design strategies for buildings, interiors, and urban spaces.
Product
The Product supercategory encompasses a diverse range of consumer-focused designs such as Furniture and Homeware Design (4%), Packaging Design (3%), Lighting Design (4%), Home Appliances Design (4%), Toy and Recreation Design (5%), and Unexpected Design (9%). Royalty rates in this group vary from 3% to 9%, with Unexpected Design commanding the highest rate due to its unique and trendsetting nature. This supercategory emphasizes the creativity and innovation required to cater to various product markets, from everyday furniture to specialized toys.
Communication
The Communication supercategory includes design fields where the primary objective is visual or interactive communication. It consists of Graphics and Advertising Design (5%), Computer Graphics and 3D Model Design (5%), Photography and Photo Manipulation Design (5%), Interface Design (4%), and Movie and Animation Design (9%). Royalty rates generally hover around 4% to 5%, with Movie and Animation Design standing out at 9%, highlighting the significant creative investment required for media and entertainment projects.
Service
The Service supercategory involves design services focused on experiences and strategies. It includes Social Design (4%), Meta Design (5%), and Idea Design (5%). Royalty rates range from 4% to 5%, indicating the value of creativity in shaping sustainable, strategic, and innovative solutions. The focus here is on broader social and strategic goals that can have lasting impacts on clients' business and social outcomes.
Fashion
The Fashion supercategory encapsulates style-centric designs like Fashion and Jewelry Design (4%) and Food and Culinary Design (2%). Royalty rates are 4% and 2% respectively, suggesting that while fashion is generally more lucrative, food design is still a niche yet emerging category. This supercategory underscores the rapid evolution of trends and consumer tastes in the fashion industry.
Strategy
The Strategy supercategory includes Arts, Crafts, and Ready-Made Design (5%) and Strategy Design (5%). Royalty rates for these design categories are both 5%, which reflects their role in strategic creative thinking, incorporating a blend of art, craft, and innovative business ideas. The emphasis lies on the value of unique artistic creations and strategic management designs in influencing market trends.
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