- A percentage of royalties on each item sold with your artwork on it agreed via contract.
- A one off payment for commercial use rights to whatever piece of artwork. Paid upfront with no future income coming in from any sales made of whatever items sold.
- A payment for a licensing period of 6 to 12 months or more agreeable in contract. After that licensing period ends, the client can then pay again or not use the artwork for sale anymore.
The cost of commercial use should after that be decided on any of the three options. If you're going for a one-off payment. Think about your base costs on an ordinary commission for the kind of image the client wants to commercialise. Then charge double the amount, or three times. What you think is fair in proportion to what they expect to make with your artwork on their gear.
Also consider these things too:
1 - Are you selling the commercial usage right on one image or a series?
2 - Are you selling the commercial usage right forever as in perpetuity so that it never expires, OR for a shorter period of time like 6 months or a year? That qualifies as a licensing period.
3 - Will the commercial use cover one kind of merchandise like a t shirt or many like a mug, placemat etc?
4 - How long do you think the items with your artwork on it will be made available for sale? A couple months, a year, or longterm?
5 - Is this client going to work with you longterm or is their commission/desire to purchase commercial use a one off?
In the end it's whether or not you want the right to sell commercial use of your artwork to be an extra thing you'd willingly provide on top of commissions.
It's also up to you to do so via a contract OR not. But keep records of everything that discusses the sale of commercial use. Emails, bank records if money changes hands etc. If you do end up taking legal action, it'll cover your own backside. Plus they'll expect evidence, without it well your case will be hard to prove.
With this item the customers are buying your art on shirts and not just the shirt. They could buy any shirt but they buy his shirt with your art on it.
What is unique here is not the shirt it is your art.
If you demand what your art is really worth you might ask for too much up front for a small outfit that is just starting out so I would suggest a small amount per shirt sold.
5c per shirt sold means if your art is rubbish and only one shirt sells you only get 5c but if your art is hot and 10,000 shirts sell and he gets rich with profits made from your art of around 50,000 dollars you will get 500 dollars and that is a sweet deal for you.
Or you could mix it up and ask for 10 dollars up front and 4c per shirt sold or 20 dollars up front and 3c per shirt sold.
If your art is real good you could be clever and ask a compound amount of 5c for every shirt up to 1000 shirts sold and 10c for every extra shirt sold over the 1000.
For him any shirts you help him sell over 1000 are gravy and this pricing model makes them gravy for you too.
With this pricing model if he makes huge profits from your art you get hooked into those same huge profits. This could end up being a real big earner for you if your art is good enough and you cut the right deal.
If he sells huge numbers of shirts due to your art being in demand then it is your art that is made all the sales not his shirts so you can ask 10c for all the shirts over the first 1000.
If for example he sells 20,000 shirts the breakdown is then 1000 x 5c plus 19000 x 10c that yields 50 dollars plus 950 dollars that is a cool 1000 dollars for you and he gets 100,000 dollars from his shirt sales and he wont miss the 1000 he gives to you for making his 100,000 possible
He is unlikely to sell 20,000 shirts but the principle holds.
The principle is less can be more. Taking less or nothing up front helps his bottom line and reduces his overheads on small numbers of sales but the money skyrockets for you if your art, his shirts, and his marketing skills all work together.
No business man should refuse zero upfront cost and a few cents per item sold because that is a sweet deal for him ask him how many shirts he expects to sell before cutting a deal.
This could be the start of a great partnership you support his business while ensuring you still get good money if your art is good. This is how you can do that.
This will also encourage him to come back to you for more art as it makes him more profit and doesnt take any money off him up front.
Remember this, if you cut a deal of a small amount to you per shirt sold it ceases to be commission work but becomes a regular income for you. As he sells his shirts he sends you the earnings you make from his sales.
You might eventually end up not having to do any work and the money still rolls in as he keeps selling those same shirts with your art on them year after year.
For commericla use I wouldn't take less than $100, and I take $15-25 for fullbody for non-commercial. So you, probably $160-200 It's commerce. They'll make money on it. Only natural they should be willing to pay more.