Pricing: Client requests an expansion to one of my typefaces

Kasper Pyndt

Hi TD!

I've got a client that's requesting a thinner weight of one of my typefaces. The client doesn't want any exclusivity, they just need a thinner style for the typeface.

Since adding a weight is also in my own interest, being the publisher of the typeface, I'm thinking that the price should definitely be lowered compared to what I'd charge if I was asked to expand someone else's typeface. I'm thinking something along the lines of 50% of my normal asking price.

What do you think? How would you go about estimating something like this? 

Miles Newlyn

I would charge 100%.
I'f the client accepts that it is great for you, if they need to negotiate then you can consider the discount.

JoyceKetterer

We've done this for language support expansions.  We always charge 100% of labor. If we want to sweeten the deal we'd give a discount on licensing, which is separately calculated.  

Something that often happens with these projects is that the client will expect some sort of design approval, even though that makes no sense.  We always explain in writing that we are making a retail expansion to our own specifications and that they will have no design input.  That way, if they insist on design input that is an extra fee and a change order.  Additionally, we make it clear that no modified version will be our retail release to Adobe.

Nadine Chahine

JoyceKetterer said:

We always charge 100% of labor. If we want to sweeten the deal we'd give a discount on licensing, which is separately calculated.  

This is very important! As this is a retail typeface, the license cost should be added on. If it were me, I would charge a full license but use a lower hourly rate. The license always has the potential to go very big, and to be upgraded later so it's good to keep it at full value. The labour cost is a one off so easier to keep tabs on.

John Hudson

My advice is always to calculate work and rights separately. The pricing of work should be based on the actual amount of time you anticipate spending, and based on rates that realistically support your cost of living. The pricing of work is the baseline that is non-negotiable. The pricing of rights depends on what rights the customer wants. Non-exclusive is only one aspect of this: what are the actual usage rights for e.g. numbers of users/devices, webfonts, etc. For a non-exclusive license, I would price the rights at whatever you would charge another user for those rights to the typeface extensions.

That said, part of the reason for pricing the work separately and making that fee non-negotiable is to allow the rights licensing to be more flexible. This is a situation where the client is going to fund development of something that you own and that has exploitable value for you, so in that situation it may be in your interest to be willing to negotiate or discount the rights licensing portion in order to secure the work. It will be important, however, to make clear that any discounted licensing price is for the usage rights as agreed at this time, and if the usage expands significantly in future additional licensing fees may be payable.

Johannes Neumeier

John Hudson said:

This is a situation where the client is going to fund development of something that you own and that has exploitable value for you, so in that situation it may be in your interest to be willing to negotiate or discount the rights licensing portion in order to secure the work.

I agree with this. As such, I don't think having the client pay 100% for the work is particularly moral in this situation. Great, if you can get the money, but for me it wouldn't sit right. In the end business and client relationships are about more than just money.

JoyceKetterer

@Nadine Chahine You seem to be suggesting that if I give a discount on the license now I need to carry that discount over if there was an expansion later?  Huh?  That makes no sense. 

I believe that labor should be a fixed cost, I charge a fair amount for people's time and never discount it. 

JoyceKetterer

@Johannes Neumeier Why would it be immoral to charge 100% of labor?  Just because you can make money later on the back end?  The only time I discount the labor is if the client is paying to expedite work that was already happening.  From the initial question my understanding is that this is work that @Kasper Pyndt would not undertake on his own, even though he abstractly thinks it's a good expansion to the font.

Nadine Chahine

JoyceKetterer said:

@Nadine Chahine You seem to be suggesting that if I give a discount on the license now I need to carry that discount over if there was an expansion later?  Huh?  That makes no sense. 

I believe that labor should be a fixed cost, I charge a fair amount for people's time and never discount it. 

During the process of negotiating a license, the parameters might change (for example, they suddenly need app licenses) but the actual work of creating the new font is the same. So for example:

Let's assume a foundry charges $10k to draw an extra style to an existing family, if that was a custom job. Many use the model of pricing per hour so am using that as a reference here. That 10k would cover both design+production+license. 

Now if this extra weight was an addition to an existing family in their library, that license part could be dramatically bigger, let's say $30k for web and maybe another $40k for app. Then the cost become design+production+30k+maybe 40k. A discount based on the variable part is by definition also variable.

For the foundries that charge custom type based on hours worked and that total covers includes the license part, it would make sense that they use a lower hourly rate for a library extension rather than a custom job because they will go ahead and charge a license fee on top of it.

In your case, you charge work separate from license so it's a different scenario.

It might not have been clear, but I quoted your text to make sure that @Kasper Pyndt didn't miss that one can charge design fees and licenses separately. I thought that was important to flag. The rest of my text was for Kasper. 

JoyceKetterer

@Nadine Chahine yeah, I'm suggesting not charging one price for labor and licensing.  I'm saying to treat the licensing of a custom project as a spearate and serious thing.

Johannes Neumeier

JoyceKetterer said:

@Johannes Neumeier Why would it be immoral to charge 100% of labor?  Just because you can make money later on the back end?

If an architect draws you plans for a house, or to stay more topical, let's say a garage add-on to your house, should the price not be lower for you if you and the architect both agree that they are going to sell that plan to other clients afterwards?

Marc Foley

Johannes Neumeier said:

If an architect draws you plans for a house, or to stay more topical, let's say a garage add-on to your house, should the price not be lower for you if you and the architect both agree that they are going to sell that plan to other clients afterwards?

I personally wouldn't care. There is no guarantee that it will produce future revenue. However, if the plans had five upfront clients then I'd expect the costs to be split amongst the clients. Potential future clients don't count imo.


What do you think? How would you go about estimating something like this?

As much as you can since your time on this earth is finite.

Jasper de Waard

The key here is that labor and licensing are separate. That non-exclusive garage would indeed be cheaper, since its license would be cheaper. 

John Hudson

If an architect...

1. You want a new garage and the architect has an existing design for a modular system that will meet your needs, so you pay a license fee to be able to use that design.

2. You want a new garage and you want the architect to produce a new design that will be exclusive to your home, so you pay the architect for her work, and you pay a premium for a contract that says she will not produce a similar design for anyone else.

3. You want a new garage and you want the architect to produce a new design that will meet your needs but you don’t care about it being exclusive, so you pay the architect for her work, and you pay a license fee to be able to use that design.

Each of those options involves different amounts of money, but in all three there remains a separation of work fee and licensing fee. In the third option, the license fee is a negotiable amount, and whether it is the same, more, or less than what a possible future licensee might pay is going to depend on the immediate situation of the arrangement. Are you desperate for a garage to protect your classic car, or is the architect desperate for work? Is the layout of your property so weird that the garage needs to be an odd shape that no one else is going to want, or is the design going to be something with mass appeal?*

There is also another option...

4. You want a new garage and you want the architect to produce a new design that will meet your needs but you also recognise that you are funding the creation of something that has potential long-term licensing revenue, so you go into business with the architect and you split the revenue from future licensing.
_____

*To translate this into the terms of the original query: is the client desperate for this font extension because they’ve built an entire brand around this typeface, or is Kasper really keen to do this work and to have this extension as part of his library? Is what the client wants idiosyncratic and something that only makes sense in the context of their branding, or is it something that might have mass appeal (which Kasper can reckon relative to the popularity of the existing weights)?

Johannes Neumeier

Marc Foley said:

Johannes Neumeier said:

If an architect draws you plans for a house, or to stay more topical, let's say a garage add-on to your house, should the price not be lower for you if you and the architect both agree that they are going to sell that plan to other clients afterwards?

How would you go about estimating something like this?

This:

John Hudson said:

*To translate this into the terms of the original query: is the client desperate for this font extension because they’ve built an entire brand around this typeface, or is Kasper really keen to do this work and to have this extension as part of his library?

It is a balance between what the designer wants (and has time and skill for) and what the expected revenue from the extension is. I stand by my original point: If there is any retail value in that addition at all, having the client pay the entirety of the work seems like a rip off. What percent of the design work they should be paying, now that is up for discussion.

It is a gradient. For example, I would say new weight or width additions, or full script extensions, or doing a round of manual hinting, those have the potential for more retail revenue, because I would charge more for versions of the typeface that have those in the future. Whereas adding a few marginal glyphs, or designing stylistic alternates, or implementing some more specific opentype feature behaviour would be something I would say falls in the category of client specific wishes.

I am fully agreeing with the split of license and work cost.

John Hudson

If there is any retail value in that addition at all, having the client pay the entirety of the work seems like a rip off. What percent of the design work they should be paying, now that is up for discussion.

This is where we differ. If a client comes to me and says they want some thing that does not currently exist, they are expressing a willingness to pay for that thing to be brought into existence. Simply put, they want to pay for the work to be done to create it. If they didn’t, they would use some other, already existing font. The price of the work is the price of the time and labour that will be required to do the work, which is a fixed sum quoted accurately, from experience, and relative to cost of living. If I were not spending that time and doing that labour for that client, I would be making a living in some other way. 

Income from rights licensing, on the other hand, is profit (after administrative costs, marketing, etc.), because it is the economic leveraging of something that has already been made and does not require more time and labour to make.

If you want to negotiate on the amount of profit that you are going to make from a deal, by all means do so. But don’t negotiate on the amount of loss you are going to work for: that’s what discounting work cost means, that you are working at a loss. You wouldn’t ask an employee to work for less than a living wage—at least, I hope you wouldn’t—so don’t ask it of yourself, and don’t give clients the idea that they can ask it of you. It doesn’t matter one jot whether you might be able to recoup the loss through future leveraging of the value of what you spent that time and labour making. That is irrelevant to the pricing of work.

I regularly haggle with clients over rights pricing. I try to get some idea up front what their budget is, first of all to see if they can afford the work. If they can afford the work, then I know I can do the work, and the only question is whether I also want to make a profit from it and how much. I have done some jobs for zero profit—only covering my time and labour—because the work interested me or it looked like it might lead to other, more profitable projects. I typically want there to be at least some nominal licensing fee involved, though, because it is important to maintain the usage rights licensing model on which our business is founded. Otherwise we drift into being someone else’s exploitable labour class, rather than being creators who directly exploit the value of the things we create. Sometimes, what gets negotiated is not the amount of the licensing fee but the payment schedule. This summer I received the final payment on a license fee that was spread over three financial years to assist the client’s annual budgeting.

Nick Shinn

Be sure not to underestimate the amount of work involved, just because the typeface already exists.
It may well be that the client has developed a brand and will send you back to the drawing board repeatedly to get the new font working just right, in their opinion, in that branding—whereas if you are extending a family with no outside input, you might not be quite so demanding.

On a related note, it’s always a good idea to make a hairline Thin when developing a new design, whether or not one has a client who requested that weight. (Don’t mention this trade secret or deliver it to the client, unless the stars are properly aligned, that would be presumptuous!)

It’s not too hard to do (for a sans, especially), simply drawing a skeletal line and adding weight by expansion or paralleling, no stroke contrast necessary.
And it comes in handy for interpolating other weights, especially Extra Light, for which it’s otherwise quite demanding to draw nuances in joint thinning etc.

Johannes Neumeier

John Hudson said:

If you want to negotiate on the amount of profit that you are going to make from a deal, by all means do so. But don’t negotiate on the amount of loss you are going to work for: that’s what discounting work cost means, that you are working at a loss. You wouldn’t ask an employee to work for less than a living wage—at least, I hope you wouldn’t—so don’t ask it of yourself, and don’t give clients the idea that they can ask it of you. It doesn’t matter one jot whether you might be able to recoup the loss through future leveraging of the value of what you spent that time and labour making. That is irrelevant to the pricing of work.

This is an interesting way to put it. I agree from a business perspective, of course don’t negotiate a loss for yourself in an actual situation.

My whole argument is about the intrinsic retail value of the product of the designer’s work, regardless of who invests money (a client) or time (the designer) in it. Bluntly following your logic, no retail typefaces would get created to begin with, because no one is paying designers to do so and they are working at a 100% loss. No? Maybe I’m just thinking about it too philosophically. The likely real value an extension requests adds to a retail product may be 1~5% of the overall future value of the IP, unless you’re adding an entire subfamily or something substantial like that.

Of course the client needs to pay to get a designer to do something that they would not otherwise, but having the client pay for 100% of the work seems to say that there is no value at all in the extension (which well may be true for some menial requests, and then, by all means, the designer should charge 100% for their time). Or that any future revenue partially attributed to the extension is just the designer’s bonus on top of already getting payed for their time (which they would not have gotten paid, if they designed the extension as part of their own investment in the IP).

James Hultquist-Todd

There’s no guarantee that adding a thinner weight is going to increase the value of the font in the retail market relative to a 50% discount for this client.

John Hudson

...they are working at a 100% loss. No?

Yes. And plenty of them never recoup that loss.

I put investing time and labour in creating a new typeface on a speculative basis in an entirely different bucket than doing work for a client. People make a new retail typeface for all sorts of reasons: because they think it might sell well, yes, but also because the idea interests them, or because they want to contribute something to a community, etc.. But even if their motivation is purely financial, it is based on an unrealised assumption of value. An existing typeface that a client wants to pay to have extended has realised value, and discounting that value by underpricing the time and labour involved is foolish. If you want to work for free for yourself, do so. Don’t work for free for other people. Remember: the client wants to pay for this thing to be created. Discount the usage rights all you want, but don’t discount your time and labour.

John Hudson

Put another way: yes, a typeface may have value, but your skilled labour definitely does.