We are licensing artwork for our newer, smaller company to sell on media and when negotiating royalty rates, are finding ranges of “net wholesale sales” in all of the contracts. We have tried looking this up and the explanations need explanations. So please, explain like I’m 5.
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When you are selling to someone who will put your art into their product, you will be paid on THEIR wholesale prices, not what they ultimate user pays at retail.
So, for example, you do a some artwork for a video game I am producing. I pay you based on the number of ultimate products shipped. I will sell the units for $10 wholesale to the retailer. The retailer sells the unit for $49.95 to the end user. Your agreement will be for the $10, not the $49.
I used to sell photographs. I would get a flat rate based on the distribution. What they charged for their magazines or books was irrelevant.
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