The Percentage Question: What to Charge in Art Licensing

Artist: Winnie Dougall            Artwork: Abstract Triangles    License This artwork

It’s a common query that vexes new and established artists: “What royalty rate percentage can I charge for a license contract?” The answer can vary on many factors, so here’s what you need to know:

Go large: Negotiate the biggest percentage you can based on your knowledge of the product’s distribution to retail (where are the products going?), the type of product licensed and your “creditability” in the art licensing world. Can you ask for higher rates based on good sales history, brand recognition and reputation? If you’re new to licensing, then don’t expect industry maximums.

Sourcing industry royalty rates

Several companies specialise in assessing industry rates, but often charge extortionate prices for publishing and sending them on.

Another way is to check regularly updated rates of any industry issued by the Licensing Industry Merchandisers’ Association (LIMA). Interestingly, LIMA suggests the average rate for art licensing agreements range between 3-6%.

Companies or manufacturers selling to mass retailers are pressed hard to keep costs low and can’t afford to pay hefty royalties, so expect to see a 3-4% range. The assumption is the Licensor (the artist) will make up the difference in volume. And don’t be put off from signing up as low rates with high volume can still give you a healthy payday.

A considered deal is around 5%: higher if you have credibility in the market, lower if the distribution is to mass retailers or discount channels.

Other examples of royalty ranges are:

Celebrity: 7-10%

Collegiate: 6.5-10%

Corporate:  6.5-9.5%

Designer/Fashion: 4-8%

Entertainment: 8-12%

Sports: 8-11%

While these rates are broadly in line with industry norms and a framework to start from, they may not necessarily apply to your situation. Always factor in everything before committing to a License Agreement.