Product licensing and commissions

[Brown and Boris]

Sorry for a confused and meandering post here.

I am awaiting a ‘marketing plan/strategy’ report from a company to whom I hope to licence a new product I have developed. They will take over all sales and marketing, and I will ensure the web site stays up and works properly (it is a web based HR tool).

However, I have no idea what constitutes a good marketing plan/strategy. It is doubly important to get this right as it is likely to be an ‘exclusive’ UK licence so if they get it wrong I won’t be able to take the product elsewhere for 2 years ( unless I get sales targets written into the contract?).

I have looked at sample plans and it seems to me that marketeers fish predicted sales and market penetration out of the air. Is there more science to it than a wet finger in the air? Should I expect to see targets for each sector and the means by which they expect to achieve those sales? Will it detail the time/money they will commit? Can I hold them to those targets? I suspect they won’t agree to a minimum royalty in year 1 which was one suggestion to sharpen their attention.

What should I expect them to commit to, e.g. a product launch event, advertising in identified publications, an email or paper product communication to their own and other HR manager databases, prominence on their stand at key trade shows? I suspect it needs all of these to bring it to the attention of buyers across the key sectors as it is a product they have never seen before. Should I get them to agree to targets and make the licence conditional on them meeting them?

Final point. I think they will expect to market, sell, collect the income and pay me a royalty on the product. The standard author’s royalty in the sector is 15% of net sales (whatever net is, I presume it was minus the printing costs of paper products). However, since effectively I own and I am producing the product online and there is no paper version(whereas usually they would do it in hard copy and online and I just collect my 15% quarterly royalties) I see the relationship as reversed; with me keeping everything except their agreed cut in terms of the marketing, sales, sales admin and customer service.

So what might they expect as a %? On the reverse side I know they pay a 15-20% commission to intermediaries who sell their products to clients so they would need to boost their share by that to pay those sales staff.

[edb49]

Simple. You are having discussions with a single agency, you have no benchmark to judge them against, so you need multiple agencies competing to make sure you get the best deal.

[Brown and Boris]

edb49 said:

Simple. You are having discussions with a single agency, you have no benchmark to judge them against, so you need multiple agencies competing to make sure you get the best deal.

Perhaps. Thing is I already have other products with this company. In addition they have recently been taken over by a large european company so if this works on the Uk, it will get EU wider use. Also, the industry is pretty small and if I start touting it about I could get a bad reputation. There are perhaps only 2 or 3 players could could do it properly. I see your point though and should keep that option open.