Low overhead: getting your designs published and getting royalties

[saturation]

Has anyone heard or used a similar service as Jameco?

Basically, they will take any of your designs, kit its parts, and if it sells, you get royalties.  If not, you have no money upfront except the effort to spec out your design, write it up, etc.,  not sure who has to do the schematics or PCB layout.

http://www.clubjameco.com/index.php/contents/view/25

Would be interested in anyone who has done it and what their experiences are.

[EEVblog]

Seed Studio do a similar thing I think, and Sparkfun and Adafruit et.al will also do it via negotiation.

Dave.

[jpc6204]

Has anyone heard or used a similar service as Jameco?

The Jameco program is a joke (if you're trying to make money).  Here is the payout info taken directly from their site:


"Jameco will send all Designers a royalty check once a quarter (every three months). Royalties will be calculated based on the sliding scale below. The royalty percentage is based on each individual kit's sales volume during each quarter it is available for sale. Royalty payments will be calculated based on shipments, net of any returns during the quarter. Checks will be mailed to the address the Designer has provided within 60 days of the close of each calendar quarter. See the Designer Agreement for more details.
Project Designers can monitor earnings by accessing the Track Your Earnings section of My Account.
 
Royalty Payment
First $200 in sales for any kit each quarter
5% of Net Sales

Sales above $200 and up to $500 for any kit each quarter
8% of Net Sales

Sales above $500 for any kit each quarter
10% of Net Sales"

[Bored@Work]

The Jameco program is a joke (if you're trying to make money).

It is still more percentage than e.g. book authors typically get from their publishers.

I think AdaFruit once published their bulk discounts. I.e. how things look from the other side of the fence. Don't quote me on this, but IIRC AdaFruit is giving a 40% discount to resellers because that's what resellers expect. I.e. resellers are used to get ready-to-sell, produced kits pretty cheap.

Now, if the reseller doesn't get ready to sell kits, but has to produce the complete kit, then 5% to 10% (instead of 60%) for the designer doesn't look too bad.

If you look for a get rich quick scheme then this is of course not what you are looking for.

Or take publishing for Elektor for example. Elektor pays between 25 Euro and 50 Euro for a small article with a schematic and a PCB layout. Occasionally up to 150 Euro. Most of the kit stuff would fit that small article category. This is a one-time payment. For this one-time payment they ask for perpetuate worldwide publishing rights for all material in all media. Again, nothing to get rich quick.

Maybe the only way to make a quick buck is to take part in some design contest and win it. But as discussed here before, they usually ask for an arm and a leg, your firstborn, the right to use your name and photo in whatever phunny context they like, they want patent rights and whatnot, while you have to hold them harmless in every possible way. A high price to pay for getting some contest money. And you have to win the contest first.

[HLA-27b]

Goes to show why people are not in rush to design for these places. But then again going solo a la Dave does not yield much more than 30% maybe even less. So is it really worth all the labor an frustration then? Only if you like what you do and have other income I guess.

[saturation]

Royalties for most other issues are not that far either, 1-10%.  See the main Wiki for royalty examples from other industries.

http://en.wikipedia.org/wiki/Royalties#Book_publishing_royalties

The key to getting some benefit from this process is having the publisher do most of the work, so if you can give them a hand drawn but accurate schematic and a clear BOM, while they have to do the PCB layout, proofing etc., it can be valuable.  A lot of the PITA is typically writing instructions, diagrams, and worst of all, tech support!

[HLA-27b]

The key to getting some benefit from this process is having the publisher do most of the work, so if you can give them a hand drawn but accurate schematic and a clear BOM, while they have to do the PCB layout, proofing etc., it can be valuable.  A lot of the PITA is typically writing instructions, diagrams, and worst of all, tech support!

Which begs the question "Why does the publisher need a designer at all?" If they are capable of taking a hand drawn sketch and converting it to a product that SELLS then they are certainly capable of drawing their own sketches as well. Perhaps they are just trying to be cute.

[mc]

[Which begs the question "Why does the publisher need a designer at all?" If they are capable of taking a hand drawn sketch and converting it to a product that SELLS then they are certainly capable of drawing their own sketches as well. Perhaps they are just trying to be cute.

It's all to do with time/resources/ideas.
Quite often you'll find that alot of projects/kits come from one person who found existing items didn't meet their requirements, or they wanted to update an existing item, so they design something that meets their requirements. Any publishing fees/royalties are a bonus.
As for the companies publishing/selling your kits, they do all the hard work involved in producing/selling/marketing, so you can sit back and get something back if your idea is good enough. If you want to make a bigger margin, then by all means do it yourself, however unless you have a high margin product and popular item, then chances are your overall return is not likely to be that much once you take into account all the costs.

[Bored@Work]

As for the companies publishing/selling your kits, they do all the hard work involved in producing/selling/marketing, so you can sit back and get something back if your idea is good enough.

Don't forget they are not a charity. They are in this for the money or at least the reputation. They are not in this to make money for you. They would rather give you nothing if they could get away with it.

So there is not reason to be thankful. It is business and you are just business for them, even if they tell stuff with buzzwords like community, social, maker movement and whatnot.

If you want to make a bigger margin, then by all means do it yourself, however unless you have a high margin product and popular item, then chances are your overall return is not likely to be that much once you take into account all the costs.

Things have changed there. The Internet made it possible that even mere mortals get access to cheap production facilities, typically in China. This reduces the need for a middleman, since they no longer have exclusive access to cheap production. Similar with marketing. And cutting out the middleman is a known means to increase your margin. If you manage to cut out the middleman and manage to use all that modern stuff to keep your cost under control you have a chance to be successful. Dave has a few times published his idea of bootstrapping a business, keeping your initial cost low.

[Mechatrommer]

schematic and a clear BOM, while they have to do the PCB layout, proofing etc., it can be valuable.  A lot of the PITA is typically writing instructions, diagrams, and worst of all, tech support!

if you say it is than it is, i agree. but for me, those you mentioned is nothing compared to "marketing" ie getting your product to customers and be accepted. thats the most PITA for me. i was a salesman for a not very good product, not very good marketing skill.... i quit! not for long.

[EEVblog]

Maybe the only way to make a quick buck is to take part in some design contest and win it. But as discussed here before, they usually ask for an arm and a leg, your firstborn, the right to use your name and photo in whatever phunny context they like, they want patent rights and whatnot, while you have to hold them harmless in every possible way. A high price to pay for getting some contest money. And you have to win the contest first.

Not so. Almost every contest I have seen only wants non-exclusive rights to publish and re-publish the stuff. The IP remains with the author to do with whatever they please.
Using your name and photo costs you nothing.

Dave.

[EEVblog]

It is still more percentage than e.g. book authors typically get from their publishers.

I've been offered to write some books for No Starch Press, and the deal is 15 percent royalty with no advance. Or lower if you want an advance on sales.
http://nostarch.com/writeforus.htm

They also offer authors a deal to buy (and resell however they like) their own books at 60 percent off the RRP.

Dave.

[pickle9000]

I keep thinking of the Maximite guy, yes he seems to have a winner but he also seems to have a great deal of grief. His design was duplicated (as was allowed by the license) an now Olimex produce 3 or 4 variants of his design (lower cost and better depending on the application).

http://geoffg.net/maximite.html 

http://www.olimex.com/dev/duinomite-mega.html

...mike

[EEVblog]

As for the companies publishing/selling your kits, they do all the hard work involved in producing/selling/marketing, so you can sit back and get something back if your idea is good enough. If you want to make a bigger margin, then by all means do it yourself, however unless you have a high margin product and popular item, then chances are your overall return is not likely to be that much once you take into account all the costs.

This has been talked about before, but the rule of thumb for margin in the one-man-band kit/product business is typically between 2.5-3 times the product cost. Absolute minimum of 2 times. So if your widget retails for $100, you'd want to be getting it made for $40 tops. And that would include a reasonable cost for your labour as well.

But that's only if you want to sell it yourself and keep all the margin for yourself. If you want to sell it through say Adafruit or Sparkfun or someone else, they are going to want to make say 40% on your widget, that means you'd sell it them for say $60. (rough figures).
Your profit has now dropped from $60/unit to $20/unit, and you are still doing all the work getting it made kitted up etc.
So at that point you'd be better off looking at getting them to do all the work making it and simply taking a 20% royalty of retail price with no work on your part (maybe support, because it's your design)
Or if you still want to do it yourself for satisfaction or control reasons, then you'd want to make sure that extra sales generated by selling through a bigger higher profile company is worth it. Otherwise you are better off selling it yourself.

So it might come down to say making $20/unit for no work, or $60/unit for all the work on $100 product. Your choice.
Jameco are offering half of that figure it seems.

The $ get quite small when you are talking say sub $50 retail products or kits. To the point of it being almost pointless to get a royalty on say a small $20 kit. Let's say you got 10%, or $2/kit royalty, you have to sell in the 10's of thousands to make a decent amount of money from it. Even at 20% royalty, that's only $4/unit which isn't much. FYI, a reasonably successful kit will sell in the several thousand, with only a few achieving 5 figure sales.
But at those levels for say a $20 kit, it's really not worth your own time doing it yourself, you'd be working for slave labour rates, even at a very high 60-80% profit margin. Remember all the time and effort it takes to test, pack and ship etc, especially overseas.

Dave.

[DrGeoff]

If you are getting royalties for the sale and distribution of kitsets based on your design, there will probably be an obligation of support in there as well. If your design does not stack up as reproducible every time, you may end up with a major support headache. Since you are not in control of the kitting, some inferior or substitute parts may be included. The fact that the built project does not work does nothing to enhance your reputation, no matter whose fault it may be.

It also begs the question as to who or how the sales volumes are audited. It may well be that many more are sold than you are being paid for.

[EEVblog]

I keep thinking of the Maximite guy, yes he seems to have a winner but he also seems to have a great deal of grief. His design was duplicated (as was allowed by the license) an now Olimex produce 3 or 4 variants of his design (lower cost and better depending on the application).

http://geoffg.net/maximite.html 

http://www.olimex.com/dev/duinomite-mega.html

I was involved a bit with that, and IIRC he arranged some sort of royalty on that (but I could be mistaken).
And that's one of the unwritten rules of OSHW. Although you are legally allowed to it, you don't undercut or muscle in on the original author who is also selling a kit. Or if you do, you work with them and offer them a royalty.

Dave.

[HLA-27b]

Another problem of OSHW is the sharing of the royalties.

What I mean is that the reason we make projects open source is to allow our projects to evolve in time and get better with the input from other people, right? Here is the problem, do we share royalties with the people that contribute to our projects and how?

Let's say that our host here made available an OSHW design and started selling it. Then another guy comes and changes a chip in the design and a few resistor values and improves it in some way. Now does this new person pay royalties? Or if our host decides to adopt the change in the design does he pay royalties?

  Edit: apparently I was trying to say exactly the same thing as Geoff of Maximite. Sorry, should have red more carefully before I post.

[Bored@Work]

Not so. Almost every contest I have seen only wants non-exclusive rights to publish and re-publish the stuff. The IP remains with the author to do with whatever they please.

One problem is to grant this publishing rights for IP, because you can't be sure you really have these rights. We have discussed that before. Not the least because the current patent system is a mess and you can't be sure your clever idea wasn't patented by someone else. And then they weasel out of the problem by asking you to hold them harmless should anything go wrong.

Using your name and photo costs you nothing.

It costs you privacy. Not a problem if you live a public life and have your face out there on 280 videos and your details widely published. A problem if your industry is sensitive or if you value your privacy. And if you want to make sure a greek nutcase doesn't suddenly show up at the door of your family's house. And if you don't want to have your name associated with the particular company, e.g. because they are not well regarded.

The solution is of course easy. Either be prepared to pay the price or don't take part in such contests. But I don't find anything wrong with telling people there is a price to pay.

I've been offered to write some books for No Starch Press, and the deal is 15 percent royalty with no advance. Or lower if you want an advance on sales.
http://nostarch.com/writeforus.htm

You have to check if it is a percentage of net sales or net income. Because net sales > net income. Jameco says net sales, while the 15% from No Starch are based on net income, i.e on a lower base.

But in general the offer looks good for a book. Especially the part "Our royalties are flat, meaning that we don't cut them in half or thirds for various types of sales." is good. Because that is a typical way publishers cheat. By having a clause that you get less royalties for discounted sales, and then giving that discount to all the large book retailers, i.e. where the majority of the books will go to.

[Bored@Work]

Another problem of OSHW is the sharing of the royalties.

Very large open source software projects try to work around this (to some extend) and around other problems by setting up a foundation. The foundation gets the copyright and tries to generate money from the software. With that money they pay expenses, like hosting, and they pay people like a project manager and developers. As long as the foundation works in the interest of the community unpaid contributors seem to be happy to contribute.

Setting up a foundation is certainly not a thing one can do for an average project. But maybe you can pay contributors in another way. If you use their changes you could send them a kit or PCB with the changes as a small thank-you. Maybe that is enough for small projects.

What I mean is that the reason we make projects open source is to allow our projects to evolve in time and get better with the input from other people, right?

That is one of many reasons. Altruism is another.  Making a name for yourself yet another. Or showing off. And I would think there are a lot of open projects just because it is fashionable and "everyone" does it.