Hmmm… as I understand your reasoning, the cost of the design doesn’t figure into the final cost of the product?
But before I go further, let me first say that I’m not condoning the proposed payment. In fact, I wouldn’t do the work for that. That’s like saying I could do the job in half a day at a billable rate of $50. Granted, I’m a staff designer that makes less than $50/hour (I won’t elaborate beyond that) but as a consultant my fees would certainly be more.
But the cost of the design must figure into the overall cost of the product, as does shipping, materials, employee benefits, local bribes and just about everything else that a “company” must deal with.
Selling it for $10CDN means that is landed for $5 or less, wholesaled for $2.50 and sold by the mfg for $1.25CDN (or about 99 cents US!).
If we figure that Guvana sells 12 million watches annually and has about 100 designs in their product line, that’s about 120,000 units annually for the one design. If we figure a healthy margin of 30% for the watch, that works out to base mfg cost of around 70 cents US. Generally materials and labour are around 3/4 of the cost leaving us with 23 cents. Overhead is typically 15% so we are left with 12.5 cents. If the owners skim off 5%, we have 9 cents. For 120,000 units, that is $10,800 USD. From that we subtract tooling and startup costs of around $10,000 (which is cheap!) and we are left with $800.
That’s what they should be giving away for the design. And even then, I wouldn’t do it, unless it only took me a day to design.
My reason that this doesn’t cheapen the field is that no matter how well or beautiful the design, it would not be possible to make it for a dollar without taking shortcuts in the mfg or materials. The resulting product doesn’t look like a designer worked on it. It just looks cheaply made… which it is.
PS: Can you tell that I spend more time doing paperwork than design!