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Pricing
Jani Paavola
Posts: 43
Some time ago someone (could have been Kris Sowersby) was pondering about new ways of pricing the font licensing, especially licensee organization size and location and it's economic status.
My current price variation idea for desktop fonts could be like:
Organization size:
Freelancer: 100%
My current price variation idea for desktop fonts could be like:
Organization size:
Freelancer: 100%
Micro (<10 people): 120%
Small (10-49 people): 150%
Midweight (50-249 people): 300%
Large (>250 people): 500%
AND
Roughly based on IMF country classification:
North America/Europe/Japan/Australia/New Zealand 100%
South America/Asia: 50%
Africa/Oceania 25%
Or could be location based on UNICEF Human Development Index (HDI): Very high, High, Medium, Low
Or World Bank income classification: Low, Lower middle, Upper middle, High
What do you think?
What do you think?
4
Comments
When it comes to pricing by company size, I have major gripes against the model in general. We need to have answers to these questions:
1- What happens when the company grows and how will you know? Example: Instagram was only 7 employees in the beginning.
2- What is the difference in price between a branding typeface and one that is only used for a Christmas card by an in-house design team?
3- And how do you count company size? Does that include part-timers, those on zero-hour contracts, and external contractors like Uber drivers.
If you would still like to go with that model, you might need to raise your brackets for companies that are actually quite large. So maybe more than 5000, and more than 50,000. You never know if you get a large bank or insurance company as a client.
Company/organization revenue could also be taken in consideration instead of staff size, as in almost every part of the world there are huge corporations.
But my views to your doubts:
1. I wouldn't mind this, the company size at the time of licensing would be enough. Using the traditional font users (or CPUs) model you wouldn't know anyway how many users (or CPUs) have actually installed your font.
2. EULA could prevent branding use, or have different more pricey licence for branding use. But personally I don't care about the use.
3. True this, maybe revenue would be better measure for organization size
A general comment to all: A very large portion of income in the type world comes from branding work and we need to keep that in mind when discussing new licensing models. The model needs to be fair, and the only fair way I see is based on usage of fonts rather than if the client is big or small. It feels like the big ones are being punished for being big, when the font usage might not necessarily be a big one. Like for limited time campaigns and similar.
The way that the font industry can protect itself from being labelled anti-business and so as not to push companies towards free fonts, is to have fair practices. And pricing per font use seems the fairest way, even though it is not without its pitfalls.
There are a few foundries including mine that use company size as the single cost parameter.
I'm very happy with the model after a year of use.
What do you mean by "How do you make buyers’s follow up?"?
Annual 55%
Perpetual 45%
That just isn't true. All the foundries I know that use company size admit that and say they negotiate with companies who come to them with that concern. Why add such friction?
Probably because it freaks you out when you see a small order from a big company. But I can tell you that I track every single such order, watching carefully for large use, and less than 10% of the ones we get turn into a big use.
We are sticking with company size because we are brand focused, and because of the simplicity it lends to many aspects of running a foundry.
I think I can infer what the “risks” are for the different licensing models, but I think it would be good and useful to say explicitly what you think they are—and what you think other people are worried about.
It's not a deceptive practice on the part of the company requesting the license because they only need it for how they plan to integrate the font to make these items but by withholding the actual end use of the integrated font to make the items, the licensing won't actually cover the use and it skirts the fair market licensing fee for the value the font brings to the offering.
This alone could have a significant multiplier on the cost of the license that if not for the digging would never have been known so the Use must be licensed. The company who is the beneficiary should always be paying fairly for each use case but 99% of the time, the total number of End Users in an organization is not equal or the same as the Use of the font itself.
I also just have a fundamental philosophical disagreement. Yes, fonts are a design product. Yes, fonts contribute to the over all value of a brand. But at the end of the chain I believe that we are licensing software, not design. For the same reason I include logo, broadcast and social media at the basic level I don't want to be talking about the over all brand value when I price something.
That reason, to state it plainly, is to avoid customer confusion.
Since we launched the Simple License, our sales have be roughly 50/50 between simple and traditional licenses and we’ve sold licenses in every tier of our revenue options.
Of course if you avoid risk, you'll stick to a traditional model.
I spent many years licensing by use, and in the end it became a headache to account for emerging media, and the measurement of use - asking licensees to guess page views, installations, downloads, etc,.. I just don't want to be involved in that complexity.
It didn't make sense to manage, via legal agreement, the ever increasing use cases of fonts. It became far clearer to both me and the licensee, to describe a few things there are not permitted than the plethora of things that may be permitted, and the limits applied to them.
Having spent a large part of my career designing logos at the highest level, my objective has been to understand the value typography has to an organisation. Now that I'm licensing by organisation size I feel that I'm using that knowledge, whereas previously I felt I was treating my work as a commodity.
Lastly, the licensing by use was not sustainable for me. Revenue was not facilitating the lifestyle I sought. Changing the license model has worked for me.
I’m glad your model is working for you, Miles, and I am not someone who ever thought there should be only one model at use in the type market, because I never thought there was only one market. Unfortunately, a lot of people do seem to think there should only be one model—I’ve lost track of how many times I have heard calls for a unified EULA—, so there may be some pressure on people to adopt a particular model that might not be suitable to them or to their fonts, especially if that model ostensibly makes things easier and less complicated for the customer, whether that is customer-size pricing or libre licensing.
JoyceKetterer said: 1. What would be examples that outline all of these categories? And what are the main use cases from the "other" category? For example, if the company uses a font for the website headlines and body text is it branding, editorial, or other?
2. I am not sure I understand what the client needed in this case. They just wanted to use it as a placeholder while building the online platform, or (I guess) something else?
3. All these years, I have a feeling that font licensing is far more detailed and complex than the ability of independent foundries to track and get real numbers, and then to pursue possible breaches. Taking piracy into account, and in the case of smaller businesses, they could in theory say they ordered a design on the crowdsourcing platform (a hard-to-track designer) and get the outlined text (never used a font file). That's why I relied on the good intentions of the customers like I wouldn't steal in the supermarket even if I knew I wouldn't be caught.
However given discussions in the last few years, I see indicators that I must be making a few wrong assumptions.
So, how do you track if the chain of barbecue restaurants printed flyers to celebrate 10 years of just one local store? Maybe on the web, looking at their site and social networks? I guess often that kind of printed material never finds its way to the web.
What methods of tracking do you usually use? Is it tracking worth of effort, giving the licensees sold as a result of spotted breaches? How do you know that numbers about annual income are true?
1. examples of other large licenses that we've had are:
• the embedding of our fonts in digital hardware, e.g. printers and vehicles
• license for use across a city transport network: bus, train, airports, etc.
• licenses for use by departments of government
3. We use FontRadar to track online use and recommend it. Axel and his team are very helpful, and the service to foundries has developed very well since we started with them.