License Fee

Hello,

Regarding boat design I have the following question:

We are looking to have a boat designed (or use an existing design) and we would like to build the boat and pay per boat for the design in a license form.

If at all possible, what would be an acceptable/normal fee per boat?

We are looking for a 24' - 30' sailboat for an expected selling price of $75,000 - $100,000

Willem

 

There are many answers. You should waite until a NA responds.

 

Welcome to the forum and congratulations on your new monarch.

 

I'm on thin ice here, but I expect a serious naval architect to bill his hours AND ask a license fee in case you prove to be a successful boat builder.
Professionals hate to work for free, especially if they already have a portfolio of proven quality.

But you could take the adventurous road and write out a contest for students....

 

Welcome to the forum, Willem. The responders above are correct. We naval architects are usually compensated for our time up front to create the design at hand, before construction begins. A royalty fee per boat is then paid to the designer for each boat built. This royalty fee is specifically for your right as the builder to build and market the boats to the design using the name of the designer as pedigree. Typical royalty fees range from 0.5% to 2.0% of the retail cost of the boat. This can be an approximate fixed fee that is reviewed and modified over time to account for inflation.

You may find a designer who will work on a time-paid basis, but the fee per boat is going to be much higher, maybe 5% to 10% per boat so that the designer can be compensated relatively quickly for his detailed work in addition to the regular royalty. You would have to negotiate to see what arrangement you can come to.

But the reason naval architects and boat designers are paid ahead of time is because boat design and construction is an extremely risky business, in many cases more risky that trying to start a restaurant. Most boatbuilding businesses fail, as do restaurants, and most new boat designs do not catch on and meet their builders' expectations of monetary return. So if a designer always relied on future orders to be compensated for present time work, they would all starve, their spouses would revolt, and their children would suffer. We have to be compensated for the design up front.

I hope that helps.

Eric

 

Licence; royalty.

I remember when Bill Lapworth (Cal 40 etc.) started the ball rolling about licence. When fiberglass boats started to be built in quantity, he mentioned 1 1/2% of the construction cost for royalty.
Gary Mull, also wrote somewhere about designing production boats where he started with the cost of producing the design and then applied a similar royalty for subsequent production.

 

fees vary with the individual designer. You could buy all rights, or negociate a variable royalty. Some have even a fixed fee, and than after a number have been produced and sold, than a royalty kicks in.

The way I see it, similar issues come up with my work as an engineer, you build one and you have been paid. Your liability exposure is one. If the same design is build and sold again, you have doubled your liability, but much of the unknowns are now known and perhaps less risky for the second one. If you build 100 or more, than the designer's liability exposure keeps going up and up. The quality and skill of those using it is unknown, and more likely to be less skill and poor judgement. Yet any one owning one of the production boats potentially could sue both the manufacturer and the designer. Even if not successful, the cost to defend yourself very quickly eats up your one percent royalty.

so some kind of indemnification is necessary for the designer he could take on unlimited liability.