On Wed, 19 Jul 2006 18:47:31 +0100, you 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.
>
>I think this is a fantastic product and I hope it does well, but, I'm  
>not willing to 'give it away'

At the very least you should insist on an advance, i.e. royalties on the first X units sold, and any
exclusivity agreement should have a clause that voids it if they fail to market/sell/make the
product in an agreed timescale so you are free to go elsewhere.

Royalty arrangements can be a pain, unless it's the sort of situation where you can supply something
like preprogrammed secure devices to keep track of numbers.
 
A company with the most honest intentions can get behind/muddled with paperwork, and without any
independent means to track sales, it puts you in a difficult position as you generally can't verify
that they are paying you correctly. Also, royalties are something that don't fit well into some
companies' accounting systems if they're not set up for it, and again this can lead to confusion and
uncertainty over payment amounts etc.

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