Blog post —
How much should we charge for our ideas?
Creators have the autonomy to set their own prices for their licenses, as PitchMark® does not dictate specific fees. Creators should negotiate this with their prospects.
However, here are some ideas for how innovators can determine the right price:
- Percentage of production cost: A practical rule of thumb is to set the licensing fee at approximately 10% of the total production price. For example, if a full campaign would cost $20,000 to produce, the creator might offer to license the idea alone for $2,000.
- Opportunity cost: For large-scale projects, such as a $2 million advertising campaign, a creator might set a fee (eg, $10,000 or $20,000) that reflects the value of the conceptual work while factoring in whether they are handling the full production
- Custom licensing terms: The price can be adjusted based on specific licensing conditions. Here are some thoughts on how to settle on a reasonable offer price:
| Likely to reduce license fee | Likely to increase license fee | |
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Geography – which country/ies is the buyer intending to use the idea in? Is the buyer intending to use the idea in a limited physical space or does the buyer want the rights for every country in the world. In general, an idea that is to be published online will be difficult to restrict geographically (it is the world wide web, after all! |
Limited to one or several countries | Limited to many countries Not limited by country or region |
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Validity – what is the time period during which the idea will be licensed? We recommend an auditable process to ensure the idea is not used beyond the date stipulated. |
Limited to a short period of time | Limited to a long period of time, or unlimited. |
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Assignment – does the licensee intend to allow someone else to use the idea? For example, if the buyer intends to find a cheaper vendor to execute on the idea. |
Buyer intends to execute the idea internally | Buyer intends to pay another external vendor to execute |
| Exclusivity – is the licensee to be the only licensee of the idea, or does the creator wish to have the option to license the idea to someone else? | License is non-exclusive | License is exclusive |
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Publicity – does the licensee require rights to communicate the idea, or publicly perform it? The PitchMark® platform allows these two parameters to be set independently. |
No publicity and/or no public performance | Publicity and/or public performance |
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Reproduction and distribution - does the licensee wish to reproduce and distribute the concept? The PitchMark® platform allows these two parameters to be set independently. |
No reproduction and/or no distribution | Reproduction and/or distribution |
| Adaptation – does the licensee wish to build on the idea and create something new? | No | Yes |
There are two other factors to consider:
- Transaction history: As PitchMark® builds a history of transactions, the platform expects to offer more refined advice to creators regarding appropriate pricing based on past successful deals.
- Market value: Ultimately, the value of an idea is determined by what the market is willing to pay.
By offering these choices, creators move away from an "all or nothing" model, allowing clients to license an idea in good conscience if they prefer to use a different production partner or an in-house team.
