For instance, if this bride(below) would ask me to use this image for a Bridal Magazine and online advertisement. I would be asking a lot of questions before I could come up with a price.
Marketing campaigns come in all shapes and sizes. Small local retailers might only intend to use your image in a local paper for 1 year. This might cost them $3500. A larger international retailer on the other hand might use your image in a multitude of places, and their budget for that might be $350,000.
In order to fairly value our work we employ what is known as a sliding scale. A sliding scale simply means that the more money your client spends on their marketing campaigns, the bigger the discount they receive on their license. The reason for this is quite simple. If we had a flat 20% license rate for all our clients then the client who only spends $3500 on his marketing will owe us $700. That is still fairly reasonable. Yet if we try and charge that same 20% to the client spending $350,000 we need to price our license at a whopping $70,000! That wouldn’t fly in any market.
On the other hand if we charged a 1% license rate, then our client spending $350,000 would only need to pay us a license fee of $3500. That is quite reasonable. However if we keep that 1% for our smaller local client and apply the 1% to his $3500 marketing budget, we are left with a $35 license fee. That hardly seems worth our effort.
As you can clearly see, we need to employ a sliding scale which allows us to charge a higher license rate for smaller clients to offset their smaller marketing budgets, whereas larger clients who have bigger marketing budgets will receive a smaller license rate from us so that we don’t over price our services.
How you structure your sliding scale and the percentages you use are completely up to you. There really is no “industry standard”. There are acceptable ranges and you will learn those over time as you price out projects within your own individual markets.
This article was posted at F-stoppers by Peter House
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