Edward Cooper wrote:
> Dear group
>
> I'm doing a consumer audio appliance project, the concept, design,  
> and protos will be supplied by me, I'm looking around for  
> organisations that are want to brand and take on this product, there  
> will be significant costs involved in customising the product for  
> their requirements, and probably an exclusivity agreement.
>
> Now they want to pay me in royalties, with nothing up-front, is this  
> a bad idea? I'll find it tough affordng it.
> What rate should I be asking for considering this product will sell  
> in the shops for $250-300 or so?
> Should I ask for a up front amount, or should I bill them for my  
> time? Should I subtract this from the
> royalties.
>
>   
Bad idea. Here's why:

1. If you commit to royalties-only, you are expecting them to honestly 
pay you at their leisure.
It won't happen. People are human, and humans won't pay unless hammered 
by lawyers to pay.
You don't want to have to deal with lawyers, do ya?

2. The ability for the product to be commercially successful depends on 
many factors beyond
your control. Management is the key to success, not a "wowie" product.

> I think this is a fantastic product and I hope it does well, but, I'm  
> not willing to 'give it away'
>   
Then don't. Ask for a development contract, and ALWAYS ask for 30%+ up 
front. However,
you will need to come across; if it doesn't work right, you can be sued.

>   
I have only seen ONE royalty scheme work to the benefit of the engineer. 
It was a situation where the
firmware was very VERY complex. He simply charged $50 for each 
microcontroller chip, which was
copy-protected. The client made the board, etc then to make it work, he 
sold them the critical chip.

--Bob

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