|Let’s Make a Deal!|
by Richard C. Levy and Ronald O. Weingartner
The authors say that negotiating contracts is a skill that can be learned. People tend to make it complex. It is not.
Key Deal Points: Two key deal points in a game license are the advance and royalty. A fair advance is typically not less than a third of what the manufacturer estimates the inventor’s first year royalties will be.
Royalties are all over the game board, so to speak. A standard inventor royalty is 5% of the net wholesale price. But a company will pay more under special circumstances and/or to certain inventors. It will pay less than 5% if the game requires a third party license, e.g. the name of an entertainment property. Note: Chapter 9 includes a sample licensing agreement annotated by three successful agents.
Here are some general guidelines found in Chapter 9 of their book. The chapter is titled Molding the Deal: The gets and Gives.
• Assume everything is negotiable. If something is not, you have nothing to lose by asking.
• Never fear to negotiate. Never negotiate out of fear.
• Know in advance how you will respond to counter-offers. Have alternatives. Know your bottom line. In short, have a strategy for compromise.
• Negotiation is mostly about listening. You must understand
where it is the other side is coming from. Once you do, keep listening.