What to charge for graphics?

June 15, 2009 5:06 AM

Designed a logo/mascot for a friend's online business with the understanding that we'd "work something out" when he started to make some money. Now his business has taken off, and I'm not sure what to ask for.

I'm not a professional graphic designer, but I'm handy enough with graphics that a friend asked me to design a logo for his new online business. Since neither of us knew how well his company would do, we agreed that I'd design the logo, we'd see how his startup did, and worry about the money then (we're close enough that this wasn't an idiotic arrangement).

His company has taken off pretty well, so we're trying to figure out how to best approach a fee structure for my work. My design includes the "mascot" for his brand, so it'll likely be reincarnated many times over as he introduces new products.

I'd like to ask for a percentage of his sales as long as my design is used (as opposed to asking for a straight one-time fee for each design), but I have no idea how much to ask for, or whether this is a good idea. In searching previous questions to AskMe, I saw an interesting suggestion here regarding the licensing of graphics work, so maybe that's more what I should be after.

This isn't a "I did some work on a handshake, and now I'm afraid of getting screwed" question. My friend is more than willing to pay me for my work, and anticipates keeping me on as his company's graphic designer as his business grows. We're just not sure what a fair price for my work would be.

posted by Rykey to work & money (20 comments total)

Your friend would be mad to agree to an ongoing percentage- particularly for a non load bearing element of the application. One off fee is usual- we just had a logo done for a new business, $1500 AUD, apparently that was cheap. Ring a professional graphic artist and ask them what a logo design.
posted by mattoxic at 5:23 AM on June 15 [1 favorite]

...would cost
posted by mattoxic at 5:23 AM on June 15

A contract exists to protect both parties to a business transaction.

You don't have a contract. Its hard to consider this a business transaction now, especially so once your friend's enterprise is successful.

From my viewpoint (banker, lots of negotiations, used to handshake deals) you've now gotta choose between the money or the friendship.

If it were me and my friend, I'd ask for meal, a piss up, a reference and move on. Think long term; you'll gain more.
posted by Mutant at 5:28 AM on June 15 [1 favorite]

I'd like to ask for a percentage of his sales as long as my design is used (as opposed to asking for a straight one-time fee for each design), but I have no idea how much to ask for...

This strikes me as unlikely, bordering on ridiculous, teetering on the edge of preposterous and insulting. I mean, if you can swing it, whatever. But, I certainly wouldn't ask for it.

I'm a programmer. I actually make the product for my clients, and I don't feel entitled to a continuing percentage. I have been known to take points off the back end in situations where I was asked to lower my up-front costs. But, if I've been compensated for my actual work, why should I expect to continue to receive payment? Likewise, why would I want the hassle of keeping them honest with the payments? And if they're not publicly traded, it's a sonofabitch to get them to give me the financial reports necessary to keep them honest.

But a percentage of sales for a logo? Unless the product is a shirt with this logo printed on it, I would (as the owner) just as soon drop your logo instantly and hire a new artist to create another one instead of profit sharing with you. Even if you were my best friend. In fact, as I think about it, I've totally made similar business decisions. We're still friends, but I don't ask him to do work anymore--I'd never seen that greedy side of him before.

You're welcome to charge him handsomely for your work. You're also welcome to charge continuing royalties or fees for the work. But, these should not be a percentage of his sales.

You didn't tell us what "doing well" means. But, assuming he's made six figures or more in profits (not revenue)? Charge him $15,000 up front and another $15k each year. Or, if he's not doing so well, charge him $5k now, with an increasing scale over the years--$10k next year, $15k after that, $20k after that, etc.

My freelance graphic designer friends charge between $40 and $100 an hour, depending on the target medium and their own confidence. How much time did you spend on the project?

If you think he's going to blow right up and you want a piece of that, add a clause to the contract (you will need one of these, and a lawyer to write/review it) that allows upwards renegotiation in five years or something. But, frankly, even that would be pushing it with me.

Now, the real way you can cash in on this is ask to be put on staff and given revenue sharing--not profit sharing, as whoever runs the business can trivially make it non-profitable on paper without affecting anything real. Tell him you'll continue to do work in return for a (small) piece of the gross plus a modest yearly salary.
posted by Netzapper at 5:32 AM on June 15

"we're close enough that this wasn't an idiotic arrangement"... that, actually probably makes it even more difficult... like Mutant says, the friendship part of the problem here.

I agree, a one time fee is appropriate. Check with a local Graphic Art professional that does this for a living, ask what he/she would have charged for the work (you might want to pay this individual for his/her time), send your friend an invoice for that amount.
posted by HuronBob at 5:34 AM on June 15

No, a percentage of sales is not appropriate here; the design is not yours to licence to him - it's part of his business identity. He needs to own it outright.

As you say, you're not a professional designer, so it really wouldn't be honest to set prices as one. You should decide on a mutually acceptable hourly rate for past work, and settle the account. If you want a cut of his profits in the future, you and he should consider either making you a partner in the business, or setting up a formal profit-sharing scheme.

While your friend isn't planning to screw you, there's nothing like doing business with no formal agreements in place to turn friends into enemies in the long term.
posted by le morte de bea arthur at 5:39 AM on June 15

My meaning is unclear in these lines:

You're welcome to charge him handsomely for your work. You're also welcome to charge continuing royalties or fees for the work.

I mean that I wouldn't feel insulted if you started the negotiations at "$15k, plus $15k for the next ten years". That doesn't mean those numbers actually represent fair value for your work.

Basically, what I'm trying to say is that doing one logo for one company is not the Lotto. It's like a week's billed work. Even if it's important to the company.
posted by Netzapper at 5:40 AM on June 15

Your friend would be mad to agree to an ongoing percentage- particularly for a non load bearing element of the application.

I agree that asking for a percentage of sales is probably overreaching, but I disagree with mattoxic's characterization of a logo as "non-load bearing." The value of a logo (which is a trademark) is going to vary wildly depending on the company, its products, consumer audience, etc. Many logos are extremely valuable, and the most famous among these are almost certainly their owner's most valuable assets. I don’t expect your friend’s company will become the next Starbucks Corp., but don’t let anyone tell you that a logo is a minor incidental.

If you did not "sign any papers" with your friend then keep in mind that you own the copyright on that logo. (I am assuming you’re in U.S.)
posted by applemeat at 5:55 AM on June 15

IANYA
posted by applemeat at 5:58 AM on June 15

The logo is valuable because the company is valuable, not vice versa. Had Nike had a shitty product, if Coke were the most vile thing you've ever tasted in your life, there would be absolutely no value to the logo.

I'm kind of similar to you, in that I'm not a professional designer but I've done a few things for friends and acquaintances on a commission basis. I always agree upon an hourly rate with them, and charge them for however many hours I worked on that particular piece of work. Typically speaking, when you work on a graphic that has been commissioned, unless it has been expressly set forth in a contract that you retain copyright of some form over that piece of work and you are simply licensing it to the client, that graphic that you have created for them now belongs to them, in all senses of the work. They can do whatever the hell they want to with it; they can use it as a logo, or lock it away in a drawer and never look at it again. That's up to them.

I mean, in your typical day job, you put in x hours to work on a report or a project or something for the company, which is then theirs to use or distribute or whatever. Would you ask for a percentage of profits from the company? Do you see why that concept doesn't go over well with the AskMe populace?

I get the feeling you wouldn't dare ask for that if this person were NOT your friend, but when you're dealing with friends you actually have to be MORE careful about what you ask for, not less. If you'd like to keep working with this friend and being the designer for his business, ask for a flat rate, and negotiate some sort of contractor agreement. You'll keep the friendship, and get a side income to boot. Don't be greedy.
posted by Phire at 6:06 AM on June 15

I agree that a percentage of sales is an unreasonable request. Like le morte de bea arthur, I was tempted to say that "you're not a professional designer, so it really wouldn't be honest to set prices as one," but then a professional designer probably wouldn't have entered this speculative arrangement in the first place. You delivered a serviceable logo, and it should have the same value as a functional logo designed by anyone else. Your logo was better in the sense that it was available to your friend whereas a professional logo was unaffordable -- that's a benefit you've provided and should be compensated for. But, an ongoing percentage of profits is ridiculous unless the logo IS the product he's selling.
posted by jon1270 at 6:11 AM on June 15

Did you have some price in mind before you realized that his business was starting to boom? I wouldn't take his success as your chance to cash in, however tempting it might seem.
posted by scarykarrey at 6:52 AM on June 15

If you didn't negotiate for equity when you first did this for him, it's a ridiculous request. Now I'd say charging him $50-$75/hour is reasonable. If you're going to do something for free upfront, at least get equity, in writing.
posted by Optimus Chyme at 7:28 AM on June 15

Calm down, everyone. I get the picture. Flat/hourly fee it is. Thanks.
posted by Rykey at 7:58 AM on June 15

Yes, the percentage thing is way, way out of line. Somewhere between $50-$100 per hour for the time it took you to create the logo would be reasonable.
posted by paulg at 8:00 AM on June 15

On preview: sorry for the pile-on.
posted by paulg at 8:02 AM on June 15

Had Nike had a shitty product, if Coke were the most vile thing you've ever tasted in your life, there would be absolutely no value to the logo.

For reference, regarding Nike, the famous swoosh was designed for $35, a rate of $2 per hour. (12 years later, once Nike was huge, the designer received, "a diamond Swoosh ring and an envelope filled with Nike stock....")
posted by inigo2 at 8:23 AM on June 15

Essentially, IMHO, what you need to retroactively do is make this a work for hire. This is what is - by a wide margin - most typical for a logo because it is central to the identity of the business and the business must own it outright to avoid not getting screwed later.

Here is an example of the kinds of contracts routinely used for these sorts of arrangements, although I just send an invoice separately for any WFH items specifying they are indeed WFH. That works too. I would consider anything from $350 - $2000 within the realms of a reasonably sized ballpark.
posted by DarlingBri at 8:32 AM on June 15

I think a fair approach would be to calculate your usual rate (either by the hour or a flat fee), and then adjust upwards by some multiple to compensate you for the fact that you "took your chances."

So, suppose your normal rate would have been $1,000. Maybe in this case charge five times that, $5,000, since you accepted the (high) risk of failure.

I think if you explain it to your friend this way it may be a good way to rationalize a higher than usual fee.
posted by jameslavelle3 at 3:16 PM on June 15

Many logos are extremely valuable, and the most famous among these are almost certainly their owner's most valuable assets. I don’t expect your friend’s company will become the next Starbucks Corp., but don’t let anyone tell you that a logo is a minor incidental.

Only after the company had been established- as a startup a logo can be changed. A logo is not load bearing for a startup- unless perhaps the operators believe the logo will be iconic, or there has been significant investment in the corporate identity/rationale etc.

But if anyone who works for me suggests after the fact, and with no prior agreement that they wanted a percentage of profit as ongoing payment for the work, I would thank the for them for their efforts and go logoless until I had sufficient time to engage a designer- if it were a load bearing instrument I would invite them agree on a fixed price or engage a lawyer- in the meantime I would be expending effort to replace their contribution.
posted by mattoxic at 9:37 PM on June 15