Hi - I’m a furniture designer putting together a proposal for a new project. I’ve worked out all the other details, but am curious if those in ID have any thoughts on this subject since it’s a new issue for me.
My client wants to integrate some electronics into a furniture unit - basically an entertainment center that comes with all the good stuff built in. I generally get paid a royalty of 4-6% on wholesale for designing (empty) pieces of furniture. However, since this piece will sell at 4 to 6 times the price of comparable furniture mostly because of the electronics, I’m wondering what to base royalties on. Because it’s a high-end product, there won’t be a lot of volume, even if the product sells extremely well.
So, my question is, should I base the royalty structure on the wholesale price of the whole unit (including the integrated electronics), or somehow quantify a case-only royalty? I’ve probably debated all of the major pros and cons (what really sells it? the look, the guts, both, etc.) and I’m favoring the former (possibly at a lower-than-normal percentage) but I don’t know if there are any standards for this that someone in electronics/Industrial (or even automobile) design can express. Any help would be most appreciated - I want to be fair to both parties. Thanks!