Visual Design Inc. has a kind of calculation template for how usage rights are to be calculated. Article consists of recommendation for designers to ensure that the craftsmanship maintains its value. The meticulous application of this type of calculation is not always appropriate. How the designer ultimately calculates the offer is up to him.
The recommended usage rights are composed of four basic values:
- The type of use: simple (0.2) or exclusively (1.0)
In other words, is a design “simply” adapted for one or more companies, or does a company get the sole and “exclusive” rights to use it?
- Usage area: regional (0.1), state (0.3), nationwide (1.0) or worldwide (2.5)
The greater the range of a company, the higher the value.
- Duration of use: 1 year (0.1), 5 years (0.3), 10 years (0.5), unlimited (1.5)
How long can the company use the drafts before renegotiating?
- Scope of use: low (0.1), medium (0.3), large (0.7) or extensive (1.0)
It determines the extent to which the logo is used. For instance, here you can differentiate whether a global company has 5 major customers or millions of individual customers. Therefore, the logo is used to a different extent.
Each of these key points is assigned a value or factor, which is summed up individually and multiplied by the design total. That sounds complicated at first. Below I clarify this with the calculation example.
What are ancillary project costs?
That could be, for example:
- Purchases for licenses for fonts, graphics, images
- Time invested in project coordination (advice, research, telephone calls, meetings, e-mail or letter correspondence)
- Traveling expenses
- Material for dummies or presentations
- External services for copywriters and translators
P.S: We would like to mention here that these are fictitious figures and were calculated according to average design requirements. The calculation and pricing is up to each designer.
Sample calculation A – What does a logo cost for a medium-sized company
As a fictitious hourly rate, I use the average hourly rate recommended by the AGD for designers – it is currently $ 90. Note that the actual value can vary widely depending on the designer’s circumstances. Suppose an established, medium-sized company, which operates across US, wants to bring a new, promising product onto the market. The marketing plan is already in place and some investors have already registered. Sounds like a promising project for clients and designers. The company would like to test the thing first and limits the useful life to 5 years with exclusive use on. After a detailed briefing, the graphic artist estimates the working time for the three designs to be around 20 hours. Here we go:
- Design costs (hourly rate times estimated time required) // 90, – x 20 hours = 1,800,
- Rights of use – Type = exclusive, area = Nationwide, duration = 5 years, scope = medium to large
This results in the following usage factor: 1.0 + 1.0 + 0.3 + 0.5 = 2.8
- Usage rights (design value x usage factor) – 1,800 x 2.8 = $ 5,040
- Additional project costs (project coordination + Typo license) – 450, – + 150, – = $ 600,
- RESULT – 1,800, – + 5,040, – + 600, – = $ 7,440.
And here is another counter example:
Sample calculation B – What does a logo cost for a self-employed person/founder
Again, we set the fictitious hourly rate of $ 90, according to the demand of most designers in the market. A business beginner wants to get started with his idea for a private yoga studio and asks for a logo. The customer has prepared intensively for several years to start. Basically, I only put company founders, if not already done, to carry out an extensive market analysis and positioning in order to put the design on a solid footing. Without this, the designer creates “into the blue”, which is seldom crowned with long-term success. I leave that analysis out of here. A separate article will follow later. Meanwhile, have a look at these three ideal logo concepts.
The customer has already brought some ideas and styles as default. They agree on two drafts and only one correction run in order to keep the working hours lower. The calculation continues:
- Design costs (hourly rate times estimated time required) – 90, – x 10 hours = 900.
- Usage rights – type = simple, area = regional, duration = 10 years, scope = small,
This results in the following usage factor: 0.2 + 0.1 + 0.5 + 0.1 = 0.9
- Usage rights (design value x usage factor) – 900, – x 0.9 = $ 810,
- Additional project costs (project coordination) – $ 250
- RESULT – 900, – + 810, – + 250, – = $ 1,960.
In some cases, the designer can even weigh up the rights of use only partially or not at all in order to accommodate founders. That makes sense if the project is particularly appealing to the designer in the creative sense. It is also possible to agree on a later renegotiation of the rights of use. Depending on the success of the founder, this can be an advantage or a disadvantage.