I have a client who is basically wanting submissions of concepts and if they like them they will go into production.
The client is not willing to pay hourly nor for every submission. The client said looking into commission which I assume is a percentage of profit they make off the item?
Also I was thinking I can do the concept work for free. If they deem any worthy I can keep track of my hours * my rate and then ask for a chunk sum at the end of the project? Or is that technically the same as hourly?
As well should I be having the client signing a contract that all products are my intellectual property until officially released by me??
We are both new to this so any previous experiences or story’s would be great!
There are lots of threads around here why you shouldn’t work for free, and how difficult working for commission can be.
This is the worst kind of client. Tell them thanks but no thanks and walk away. If they can’t even pay for concepts which aren’t that expensive, how will they have enough money to get to production? How can you know how much they make/sell?
Only a fool would agree to this. The concept is the most valuable part of the project.
Ask yourself, would a restaurant chef cook 10 dishes for you to try and then give you the chance to say you don’t like any of them and walk out the door haven eaten your fill?
Almost all of these kinds of arrangements end in you doing a lot of work and giving away your ideas for nothing in return.
It is expensive to protect your IP with patents, etc. Without them and without any bullet proof agreement, it is extremely easy to just walk away with your ideas.
All IP assignments must be “conditional” but I see so many loop holes where the client can say he contributed to your ideas and claim “Co-Inventor” status or just rip you off outright since you can’t afford to fight this with lawyers downstream.
If they don’t have money to properly develop a product what makes you think they have the ability to pay for engineering, tooling, and marketing?
If you do anything like this you must have a contract with terms and conditions spelled out and even then you’ll likely not have the money to fight infringement if the client turns out to be rotten.
You are better off developing this yourself and get your own funding than to do it with a client who is “new” to this. The fact that he is “new” too means chances for success are that much slimmer. I’d try something like kickstarter.com instead.
Just to clarify if it helps. They have been running there business now for about 15 years and are looking to expand there product line which they have been producing/marketing/selling. I just mean he is new to having a freelance designer work for the company.
I agree with a lot of what I see above but not all of it.
First, you’ve got to get some type of payment whether or not they use your ideas, you are working for them. DO NOT agree to anything else, your time is worth something even if your ideas are not being used.
Second, ideas are more or less a dime a dozen. While there is a lot of talk about IP and ownership, rarely is it a big deal on such a small scale. Getting an idea made, produced etc. is really where the costs and investment come in. Only once in my career have I heard of someone being paid royalties for an original idea when they were under a contract. If you’re super savvy about it maybe you can get some sort of sourcing deal, but that would involve significantly more work than royalties or commission.
Third, if this guy really has been in business for 15 years, there’s a good chance he knows how to stay in business. Part of that means maximizing investment dollars, if he can pay you nothing but generate ideas… wellllll… I’m sure he seems like a great person offering you the world, but you have to use common sense. If you’re going to be paid as a freelancer, that also means your taxes will be much higher and that you’ll have to take care of your medical and dental costs. Most employers save a lot of money by hiring freelancers, most freelancers don’t realize how much they’re being taken advantage of.
I don’t know much about you or your experience, maybe you have a lot but this is your first freelance gig, maybe it’s your first job in general. But you have to look out for yourself first, don’t allow yourself to be used.
All of these terms are terrible. This person is a thief and a cheat, not a client. It absolutely doesn’t make sense for anyone to do this without hope of getting paid for your professional services, which are backed by training and experience.
Personally, I would kindly tell this individual to take a hike. And ask them to give you some free work in whatever field they happen to be in.
If they have been running a business for 15 years they should know how to deal with trained professionals for quality work (whatever type of work that is, couriers, accountants, etc). You pay them. Or they have been successfully stealing from people for 15 years. Also, they should have money if they have a successful business, why can’t they invest to make their business more successful?
Don’t defend this cheat and take their side. Send them over to this forum, we/I can kindly explain how ridiculous this idea is, and how they are seen in our/my eyes as a thief.
Best of luck, don’t touch this project with a 10 foot stylus.
Your clarification that they’ve been in business 15 years and already have a selling product line doesn’t help, in fact, it makes it worse!
If they are experienced and successful business people who already developed products then they are not “new” to freelancers. That’s a bunch of bull. It’s clear they are trying to bait you and get something for nothing. Real businesses at this scale have used and consulted lawyers and CPAs. They work similar to freelance designers in practice. So they MUST know how freelancing works.
Even in-house staff designers are paid to generate ideas that may never be used. If I worked at a corporation, I still get paid if they don’t use 80% of my sketches. That’s still time and work to come up and lead to the one or two gems and golden ideas. Ideation is a process where we explore and go through several iterations to arrive at the final design. So they are trying to say they won’t pay you to go through that process.
It’s like writers of a sitcom not being paid unless a joke makes it on TV. That’s not right. You need to do all that ideation work and go through all those ideas before reaching and finding the good one or good ones. You should be compensated for the time it takes to get to that one great idea they use.
What did they promise you? A pot of gold at the end of the rainbow? Without tems worked out there’s a lot that can go wrong for you here.
Everyone knows you have to pay to get something. Unless they never shopped at a store or went to a barber shop. How did they get their current products designed? Do they have in-house designers on salary or did they sucker some other people before you?
Now with your clarification of how they make and market products already, they have even more reason to pay you something.
I think they’re playing dumb to get you to do free work or you’re a newbie with questionable design skills and they don’t know if you’ll be any good. I don’t like the smell of this already and don’t trust them at all.
I think the chances of you ever getting any money out of this is close to none.
Just to put it in perspective. You are probably a student or recent grad. Let’s say you bill out at $30/hr. If it takes you 3 solid days of work to generate concepts, that is 8 x 30 x 3 = $720. Heck, let’s double that = $1440.
If it’s an established business that has been going on for 15 years, they probably spend that much a month on office supplies. It’s nothing to them. Only reason they wouldn’t want to pay you upfront is if they are not confident in your skills (your problem to prove), or they are trying to be cheap and rip you off (their problem).
Also, never agree to a percentage of “profit.” It makes more sense to do percentage of “net sales.” If they insist on percentage of “profit” then they are trying to trick you and not as naive and “new” to this as they claim.
Percentage of profit can be zero because after they factor in expenses, “profit” can be nothing while they pay themselves fat salaries. Smart businesses do writeoffs and don’t report a lot of “profits” otherwise they pay capital gains taxes. SO they would buy a company car, expense meals, pay salary bonuses, etc. to take down the “profit” figures and avoid taxes.
Net sales is invoice price charged to customers for the product minus freight and excise taxes. There you have a paper trail and percetange is multiplied by a more substantial and reliable figure than the easily fudegable “profit.”
Smart accountants would minimize the profit and put it towards tax deductible expenses. Profit can be nothing while the heads make huge salaries.