How much should I sell the IP and source files....

Hi,
I dont post much in here, but I still hope you can help me.
I have posted this in General and Job Discussion, because its kind of releated to both.
My friend works at a IT company. As a side project he got me to redesign his companys logo in 3D. I have since had a meeting with the buisness's directors (total company is 10 people, they make data bases and network programs) and they mentioned they would buy the full IP from me, includeing all the source files. They need to do this, as they will copyright the image as their logo.
I have already figured out my hourly rates, and render time rates, and at the risk of sounding either a) a gold digger, or b) a newb that doens't know anything about real work, I am charging $50 an hour for work, and $10 an hour for render time.
So far they owe me $510 bucks for work and render time.
How much should I sell the IP and source files for? Considering once its theirs, thats the end of what they need me for. Anyone else been in a similer posistion?
(At this moment I would rather keep the company and what I have done confidential)

Edit: At the moment, work comes to $510, so at the moment, I was going to round it off to an even $900, thoughts?

lorien's picture

To me $50ph seems pretty reasonable for a trade mark: it's something they could make a LOT of money from. Really if you've spent years developing you skills you should be making people pay you fairly for them.

The games industry won't pay you anything like that much, but "making games is fun" apparently, even if the game's a load of crap. Souri has a list of Aus game dev salaries floating around on sumea somewhere, it was made by ambit recruitment.

Remeber though that there are people who may undercut you by huge amounts. Charging those rates you have to be worth it.

Yug's picture

When you get to a point where you earn enough money to support yourself, you need to stop thinking 'how much should this company pay me for the job' and think 'how much is this job worth to me'.

Think of things as a time basis ... this is taking up this much of your time, what is your time worth to you. Is it worth $50 an hour? Then thats how much you should charge. Thats my thoughts anyway, cause to be honest, design is subjective to the designer.

That said, I am a web graphic designer, and any work I do for other people, logo design or otherwise, if they ask for the source files I just give it to them. It's not 'MY' I.P., because I'm contracting to them to create something for them. Am I missing something here?

lorien's picture

I doubt any company would want their trademark owned by someone else!

I know when someone contracts my university to do something if they want to own the IP they have to provide pretty good reasons and pay a lot more than otherwise.

CynicalFan's picture

I think it depends upon what that IP is. If it is the IP to a well known game license, well, you'd pay a lot to acquire it if you were to do so.

If it is just a company's trademark that will just be used by the company, not directly used by the company by selling it as a product, or products directly derived from the IP, then it isn't worth that much really. Though, a company like BP would take their trademark quite seriously, even as going as far as registering a particular shade of green so as to protect it's use from other companies, especially those in the energy biz - so they may see it as having far more worth to them.

I would also ask myself, how much came from me, and how much came from the company that contracted my services. If all you did was follow their specs and translated their ideas into the end form, then maybe you shouldn't be asking all that much if nothing. If you came up with 100% in that they gave you something very vague to go off of if nothing. Then you may wish to ask for more.

Something else I would factor in, is how more worthwhile would it be to have this work in your portfolio as opposed to not having it. Meaning if you ask too much and then they decide to go with another concept or their old one, then you won't be able to list the work in your portfolio. Though, this will only matter if you have only just started your career, as you want the "credentials" via a body of work so as to be able to negotiate better deals for yourself.

You may already have years of experience, but I would ask how realistically this translates into your "skill" level. Some people will go years thinking they are hot-shit, when all they are is the scum at the bottom of the barrel. Others will find some place in between that and the very best in their field. It is usually the very best that can ask for the best rates of pay as they are the ones in high demand. Those in between have to compete with the very large number of others that are also in the "in-between" category - so even if they are "good" or even "great," so are hundreds of others I'm afraid.

Sorry if that is all a bit sour, but that is my point-of-view :/.

lorien's picture

A trademark is a large part of a company's identity. If the company identity means something to them then the trademark is valuable.

I'd meant to add some points that you've made here later tonight Cynical- the points that are covered by "Remeber (spelling!) though that there are people who may undercut you by huge amounts."

I've noticed many in the games industry seem to treat IP belonging to individuals as unimportant. It's more important than IP owned by companies imho because the people who produce it are often at the bottom of the food chain.

Wouldn't surprise me if you and I might have a few differences of opinion in this area.

CynicalFan's picture

Well yes, to some companies Lorien ? that is why I mention BP. But to most it doesn't matter that much at all, especially if they are relatively young by company standards. If they can come up with one concept, they can come up with another.

And yes I think we do have difference of opinion in this area as we probably do in lots of areas, but, I am just being realistic for a change instead of idealistic ? I find to many people hide behind it. Idealism is a good thing, but when you are in the position that the starter of this thread is in, then being idealistic when you cannot afford to be, may not be the best approach ;). Though it does depend on the specifics of his situation.

lorien's picture

The more established a company is and the more they rely- or would like to rely- on brand recognition or reputation and name recognition, the more valuable the trademark is.

I'm not sure about "most"- perhaps most small companies. edit: and small companies get bigger, but trademarks often stay the same.

I think we should have this conversation off the forums Cynical, it's hard to discuss properly with you without letting out a whole lot of really identifying stuff about you. Just deleted a heap of stuff from this post for example (pre-edit delete).

CynicalFan's picture

Nothing bad I hope ? that you deleted about me that is.

To most companies, their ?brand-image? or trademark is not that important. Not that important as say ?Coca-Cola? is or Nike's swish. It is just another image in a sea of images, and depending on the company, one is as good as another for most of their purposes. I think how much ?exposure? you plan to have for that trademark also factors into to it. In that ?Coca-Cola? is really marketed to just about everyone, but, something else like a company that makes small widgets that go into a range of manufactured products, well, it only matters to a much smaller market ? say one of Australia's manufacturing industries, not even to Australia and as a whole.

Companies change their ?branding? all the time, especially if they are small companies serving small niche markets. What keeps people buying your products is the reputation attached to that brand ? though, I'm sure it is not the case all of the time.

FYI: you do know my email Lorien, so you can always send me an email.

lorien's picture

No, nothing bad. Will do.

Mario's picture

Well, seems like this conversation got a lot more complicated than it needed to be :)

Because the company did not commission your services, yes they will need you to explicitly assign the rights to the design to them.

If they had commissioned you, a straight fee for time spent would have been appropriate. Because you went out on a limb "on spec", and seem to have nailed exactly what they want, I'd feel free to charge them a bit extra.

Your time comes to $510. A logo from a design studio could cost them thousands (and actually trademarking a logo would cost 10s of thousands potentially). I say your bumped up $900 fee is fair.

At the end of the day get as much as you can but be prepared to compromise. "owning the IP" in this instance is worthless given the logo has been designed for a specific company and you probably wouldn't be able to use it elsewhere. And if I was them, there is no way I'd start using a logo for my company that was still owned by someone else.

LDM's picture

Thanks for the replys guys.
I got the deal all sorted out with the company.

I was aprroaching it from a games perspective, where you make the game, sell the game, but if someone wants to buy the source code, thats extra.
Like Unreal2k7, the game will cost $100 for us, but will cost $100,000,000 to buy the source for it.

Being a software company, they aprroached it from what they are used it, which is making someone, and handing it all over to the client for no extra charge.

I decided in the end to cuy my loss's, take the money and run, while the company still likes me, rather than charge them more for something they perceive is theirs.

In the end, the original logo was their design, I only did it in 3D.

I might as well post the outcome as it stand now.
They give me $510, and I give them a 640x480 360 render, a 1280x1280 psd single frame render for posters and banners and stuff, all the source files (max files and PSD's) and they own it all. This gives me more money than I had at the start of the deal, and a contact that could get me more work.
If your interested, the old and new logo can be found here....
http://www.sevenpurplehampants.com/gallery/v/art/comparison.JPG.html?g2_...
Dont flame me for it. After all, it is good enough for some cash. :)
Left hand side is their old image they aparently paid through the teeth for. And the right.. is mine.

Thoughts?

J I Styles's picture

quote:Originally posted by lorien

...The games industry won't pay you anything like that much, but "making games is fun" apparently, even if the game's a load of crap...

Of course that's true, and it's the same for most every creative industry, but still only if you're willing (and quite frankly silly enough) to undervalue yourself and accept that - especially when we're talking contractual/freelance basis. To be honest, if you're not earning at least AU$50-AU$75 per hour contracting in games you should be asking yourself why. Especially when there's $3500 software to upgrade each 6 months, bills to pay, hardware to upgrade etc before you even see a profit.