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Negotiating Royalties: Looking for advice.

RobbieFoston

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Hola Fastlaners,

Over the last few days I've had a great conversation with some of you around freelancing and increasing revenue. On the back of that thread I wanted to start a new conversation around the topic of royalites.

Over the last few years I've been freelancing (failry successful). In order to take revenue to the next level, I'm looking at trying to secure some royalty deals with clients. I'm a direct response copywriter and most of my work is designing & creating adverts. Roaylties are common in this industry but it's completely new to me so I'm looking for advice from people who have successfully done this in the past.

For example:
• How do you structure the royalty? (flat fee + a percentage or just percentage of profit etc).
• Do you have a contract in place?
• How long do you earn royalites for? (forever, or fixed time).
• How do you ensure client payment (especially if you can't see performance metrics)?

I'm sure there's a lot more questions but I'm not so much looking for one particular answer, just some insights into royalites from those who have experience in this area. Doesn't have to be copywriting related, can be from any industry or skillset.

Also any mistakes you've made or traps to avoid.

Cheers all,
Robbie
 
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Savania209

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How do you structure the royalty? (flat fee + a percentage or just percentage of profit etc).
• Do you have a contract in place?
• How long do you earn royalites for? (forever, or fixed time).
• How do you ensure client payment (especially if you can't see performance metrics)?
I can only speak for royalties in design work.

There my experience is
— % of revenue not profit (aka net amount of sales)
— payment is fixed via contract for example quarterly payout
— payment is paid until product not sold anymore or otherwise fixed amount is paid (buy out)

Hope that helps!
 

RobbieFoston

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Sep 12, 2021
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London, UK
I can only speak for royalties in design work.

There my experience is
— % of revenue not profit (aka net amount of sales)
— payment is fixed via contract for example quarterly payout
— payment is paid until product not sold anymore or otherwise fixed amount is paid (buy out)

Hope that helps!
That's very helpful, thank you.

Do you mind me asking what percentage you'd benchmark against for royalties?

You don't have to tell me what percentage you agreed with your clients, but more of a guideline for what's to be expected. For example, are we talking .5% or like 10%. Don't really have any idea on this front and appreciate it's largely going to be down to the company and their profit margins.
 

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