Royalty % in housewares?

Hi,

Can anyone advise me on what the average royalty rate in the housewares industry is these days? To date I’ve only worked in-house or freelanced for an hourly rate. I’ll probably request a monthly retainer as an advance, and I feel comfortable coming up with a number for that, but I’m not sure about the percentage. I’ve heard 1%, is that too low?

Thanks!

jjello

Anyone?

O.k. If nobody is telling anything. I have to:

Year 1- 3 : 2,5%

Year 4-5 : 2,0%

Year 6-10: 1,0%

onwards: nill, zero, nada


Was used as royalty scheme for goods of low complexity (ceramics), but
I didn´t find it worth the hassle.

A clever twist to a simple thing might take you as long to develop, as a
mediocre solution in a more complex field.

the idea of 1% sounds ridiculous, unless your customer is known for shipping
those things by the thousands.

Thanks mo-i.

They would expect to be shipping product in the thousands - IF the project takes off. From the industry experience I do have I know that a great many projects don’t fly, for any number of reasons. That’s why I’m opting for a retainer, or at least an advance.

I appreciate your response,
jjello

Or at least get a royalty advance…

How do you audit and make sure royalties are properly calculated? Is there any way to find out actual sales? Any strategies to make sure you’re not getting ripped off?

That is a very good question. The one other time I received a royalty (furniture, not housewares), the company included a printed statement listing monthly quantities sold along with my check. I just basically trusted them, because there was no easy way to verify anything.

It really depends on the object, volume, and positioning of the product. Simple housewares like plastic dishes, cups, containers might only have a final profit for the mfgr in the 3-6% range. In this situation I hardly think they would give up 2.5 or 3% for royalties. With specialty, low volume, or high margin luxury goods, there can be more leeway. For general merchandise, royalties can range from under 1% to 3% unless they are highly specialized products or you add a lot of innovation that adds $ to the retail price in comparison to the competition. Getting a royalty advance isn’t the easiest. If they had it, they would just pay for design services.

Hi again, and thanks for all your responses. I just wanted to follow up by telling you that I went for the 1% royalty with an advance. The advance is slightly less money than if I billed for the time outright, but I’m definitely not working anywhere close to free.

Hopefully next time I update it will be to say that I received my first royalty check. Now there’s some optimism… :slight_smile:

Best wishes,
jjello

Just thought I’d update this for the heck of it.

When I wrapped up the projects in fall 2008, the sh*t hit the fan with the recession, just about exactly the time I submitted my bills. I thought it would be a miracle if I ever got paid, and since I was working for a factory in China, how exactly would I pry the money out of them???

After a week or so of no response, I emailed a few inquiries, always very politely. I liked the people I had been dealing with and our communication had always been very professional, so I chose not to assume the worst. I finally heard back, and the factory asked me if I’d be willing to wait until after the first of the year to get paid. I said yes and hoped for the best.

Lo and behold, after the first of the year I was paid in full. I was thrilled, to say the least, and felt like I had made a decent judgement call.

One last thing - I was also very glad I asked for an advance on royalties, since the economy tanked and nobody was buying. Last I heard, the factory was still trying to drum up interest in the items, so it seems they’re not dead in the water yet…