Design royalties and the minimum price for a pattern
As a design agency Patternsfrom Agency approaches, and we get requests from all types of companies needing surface design services. The companies are big and small, startups and mature-ones, operating in hometextile and construction businesses, and absolutely everything in between. You name it, and we have it! To be able to work with the big variety of companies, we have put a lot of efforts on equal pricing of the patterns for all these players. Our solution are design royalties combined with the minimum price for a pattern.
When determining the price for a pattern, the first thing is to know how you are going to use our pattern. Do you manufacture wallpaper or bed linen, or do you perhaps design entire interiors? That helps us to determine a sales unit, which may be a reel of wallpaper, a set of pillowcases or the amount of hotel rooms in which the pattern will be used.
Furthermore we need to determine the rate for the design royalties. Again, this depends on your business and your margins: the designers can not assume to get the same royalty rates from designing the carton of milk or the bedinen, as the margins are very different in these product groups.
Having clarified these two points, we are ready to proceed with you, but the final price is still unknown. That depends entirely on your production volumes.
We have minimum prices for patterns sold either on exclusive or non-exclusive terms. The biggest difference in these terms is the geographical coverage: with the exclusive terms you will be the only company globally to use the pattern during the two year term of the agreement whereas the non-exclusive terms allow us to sell the same pattern also to other markets and/or product groups.
Before you receive the production-ready, color separated, layered pdf-files from us, you pay the minimum price of the pattern. This fee works as an advance against all upcoming royalties for a certain pattern.
To clarify things, let’s see two samples of design royalties and the minimum price for a pattern
1. You buy the rights for a pattern, and you want to use it for fabrics sold in meter. As your business is local, we sell the pattern with non-exclusive terms. A sales unit is one meter of fabrics and the royalty rate is 7%. You pay the minimum price of 250 euros for the pattern. During the two year contract period you sell the fabric with the price of 20 euros/m.
For each sold meter, the design royalty is 20ex0,07=0.7 euros. As you have paid 250 euros in advance, you can freely sell up to 250/0.7=357 meters of the fabric. If the fabric becomes a true succé, and you sell 1000 meters of it, you may expect an invoice for design royalties of 1000×0,7-250=450 euros from us.
2. You buy the rights for a pattern, and you want to use it for napkins. As your business is global, we sell the pattern with exclusive terms. A sales unit is one package of napkins and the royalty rate is 1%. You pay the minimum price 900 euros for the patern. During the two year agreement period you sell the napkins with the price of 1 euro/package.
For each sold package, the design royalty is 1ex0,01=0,01 euros. As you have paid 900 euros in advance, you can freely sell up to 900/0,01=90000 packages of napkins.
The aim of Patternsfrom Agency is to provide unique and well designed patterns that help you to sell your products better.
There are as many ways in selling the designs and their rights as there are designers and their agents. In contrast to many other design houses, the approach of Patternsfrom Agency is not to sell the design, but to lease it, as the copyrights remain in all cases at our designers. You can read more about us and about our terms and conditions.
(Image: Seitti by Hanna Ruusulampi)