On Wed, 19 Jul 2006 22:56:50 +0100, you wrote:

>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.

PS - the option of supplying ready-programmed parts is now more viable even for reasonable volumes
since Microchip added the pre-programming service to buy.microchip.com, as you can get programmed
parts with all the packaging/reeling/QC type stuff that a company may need for production.. 

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