The contract agreement with your licensee is the legal form of your partnership for the entirety of the app licensing project. You’ll want this to include everything you want to get out of the deal, and you also want it to be beneficial for the company you’re working with. When both parties gain something from the agreement, they will work better together and the venture will be a success. Here are some ways that you can sweeten your end of the deal and earn money off of your idea and hard work.
1. Get your licensee to pay for the development and marketing of the app. This is the whole reason you’re licensing your app – because developing apps is expensive! One app can cost from $50,000 to $200,000, and the iPad or iPhone version of the same app (whichever was not created originally) will cost up to 75% of that same amount.
2. Try to get most of the download money from the app. Apple takes 30%, so you have 70% to play with. Hopefully, the company is getting some additional benefit – a new customer market, increased marketing, or customer loyalty – from the app, so they won’t be as concerned about the profit. If the app is going to be free, try to negotiate based on downloads.
3. Ask for minimum payments regardless of the success of the app. As long as they’re running the app, you should be able to negotiate some kind of income for yourself.
4. Try to negotiate spin-off rights for apparel, toys, and other goods related to the app, or at least a portion of any profits made by the company on these items.
5. Be sure to get some money up front. Remember, you can’t control when the company will start app production, and you want to be sure you’re compensated for the time you’ve put in already. Shoot for a significant up-front fee, then a percentage of all future sales or benchmarks.
However, these are just guidelines!! Remember that the agreement needs to benefit you and the company or they might back out, so don’t push any one issue too hard. Just be creative and be sure you’re compensated fairly for your hard work!