The Pros and Cons of Licensing a Design

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Posted by: Kristin Crane Category: Insight Tags: , Comments: 0

The Pros and Cons of Licensing a Design

So, you need a design for a project or product. Great! Now what? It can be a big decision whether to license a design, design one yourself, or buy one from a designer. Like everything, there are pros and cons of licensing a design. Knowing them can help you make the best decision for your business and have the best design possible.

To help you make the best decision, here are the pros and cons of licensing a design.

Licensing Pros:

  1. There is little to no up front cost.
  2. You pay for use of the design with a royalty structure. This means, you only pay for a design when you use and sell it. This is why there is little to no up front cost!
  3. You don’t need to know how to design patterns or hire your own design staff.
  4. You can choose from a lot of high-quality design options! Consumers make unconscious decisions constantly based on pattern or color. It doesn’t matter how good a product is, if the pattern is ugly, they won’t buy it. Good design matters and can make or break a sale.

Licensing Cons:

  1. In general, a design won’t be exclusive to you. (Although you can sometimes negotiate exclusivity.)
  2. You may find forecasting challenging since your royalty payments are dependent on sales and not a one-time or fixed cost.
  3. You don’t have as much control over a design as you would if you were directing your own in house staff.

Still not sure what’s right for you? Here are examples of the perfect time to license a design.

Let’s say you designed a really cool product. Maybe it’s the world’s greatest farmer’s market tote that keeps your veggies cool until you get home. You did a lot of engineering and designing of the actual product and you want to be able to offer it in fun designs. It’s a risk to launch a new product. Your skill is designing totes, not patterns. By licensing designs, you can offer 5 different options to your customers without hiring a designer.

Now, maybe you’re an interior designer working on a cool project designing a boutique hotel. The color palette and mood is very specific. It’s a boutique hotel, you don’t want it looking like any big chain hotel. The seating in all the rooms should be unique and fit the mood and color scheme. Instead of choosing something in the market that may show up in another hotel, you choose a design you like and customize the color perfectly to your mood board. Have that design printed on-demand printer and order the exact amount you need, no minimums!

You’re a printing facility excited about the future of print-on-demand digital technology. You bought a couple of cutting edge printers and want to offer a product line produced on-demand. This technology allows you to offer no minimums and doesn’t require you to carry inventory. You are a small shop though and want to offer a lot of design options, but can’t afford an entire staff. By licensing designs you instantly give your customers a lot of design options and only pay when you print them.

Have more questions? We wrote a more in depth piece about licensing designs over on the ITNH blog or ask us a question in the comments.

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