Licensing/Collaboration/Midtech advice?

J

Jason Fry

Knifemaker / Craftsman / Service Provider
Joined
Jun 5, 2008
Messages
3,160
I'm a small time one-man shop. I do decent work, have been published a few times, and am working toward Guild membership. I've been approached by a custom firearms manufacturer about the possibility of some kind of collaboration or production run on a couple of my designs. I have a few questions, but also realize that there are lots of questions out there that I don't even know I'm supposed to ask.

How do these kinds of things usually work? I can think of several possibilities... They build them on my design, I get a small %. I build them, they sell them, they get a small %. We co-manufacture or contract some of the building, and both get a decent % of the profit. Which is the most common?

Let's say we settle on a knife that I would retail for $200. Should the price the dealer gets be less, equal, or more? Am I supposed to give him a "deal" because we're making a bunch of them, or should my standard price be the price?

I'm thinking of having a bunch of blades waterjetted, sticking with one or maybe two standard handle materials, and paying a kid to drill holes. I'll grind, then send out for HT. More of a production run than I usually do, with savings from the quantity processing, and time savings from the outsourcing of profiling and HT. I don't know exactly the quantities yet, but I routinely only produce about 60 knives a year. If I were to go in "big" batches like this, I'd think it would be 30 or 40 knives, based on the size of the other guy's operation.

Open to suggestions and comments.
 
This is an interesting subject, but it isn't a Shop Talk subject.
I am moving it to the General Discussion forum.
 
Hmmm.... OK. Seemed like a knifemaker question to me, but I'll take your word for it that the General forum is the place for it.
 
I would think wanting to hear input from knife makers this would be the place to ask as well...
 
The question isn't about making knives, or the knife he is making, it is a business question about a business deal he is working on. We are trying to keep these discussions out of Shop Talk. The general forum will have more people to discuss it. When it comes to licensing and contracts, the person who he needs to talk to is his lawyer.
 
Funny, but it strikes me as a more general how do I make knives for a mid tech project, etc question. Now if he had said that he wanted to see about having Lion Steel, Rowen or this gun company make the knives, then that would be a pure contract/business question.
 
Unless I am reading his post wrong he didn't ask how to make the knives, or how to drill the holes, or how to attach the handles. He did ask about how to set up the busines deal for a production run, and how to divide the profits. The title is - Licensing/Collaboration/Midtech advice?
 
Ok, so am I the only one that doesn't understand why threads like this one can't be in Shoptalk?

One of the moderats has a thread in shoptalk that is talking about what he's currently working on. I didn't see anything about asking how to make knives, how to drill holes, or how to attach handles in his thread... but there it is.

How is that thread "shoptalk worthy" but this one isn't????

I'm confused.
 
Don't worry, I'll give you some General Discussion worthy advice, buy a Para2, you will love it. Haha.

A lawyer would be a good place to start. Maybe a free one.
 
Nick, your not the only one that was thinking the same thing. This thread has been in shoptalk twice and over here twice in the same day.
 
LOL, I don't really care where it is. Somebody care to answer it?
 
Jason,
My advice to you is to reach out and talk with makers that have already worked with manufacturers, ask them how they got started with making collaborations. Mike Snody, Rick Hnderer, Alex D, RJ Martin, Ed Shempp, Sal Gesser, on and on. There is no shortage of people to simply reach out to by phone or email.


S.Knowles said:
I would think wanting to hear input from knife makers this would be the place to ask as well...
Click to expand...
Seems clear to me

bladsmth said:
The question isn't about making knives, or the knife he is making, it is a business question about a business deal he is working on. We are trying to keep these discussions out of Shop Talk. The general forum will have more people to discuss it. When it comes to licensing and contracts, the person who he needs to talk to is his lawyer.
Click to expand...
Mid techs and collaborations kinda is making knives though. It's a blurry line at best, not as clear cut as one would think. General is for discussing knives themselves, their qualities, steel, use, not business or "How To" stuff.
 
It doesn't belong in General Knife Discussion. This "Your area to discuss knives in general: Folders, Fixed blades, Swords & knife related equipment, etc. Take off topic posts to the Community Center & manufacturer specific questions to their respective forums."

It is not Bladeforums general purpose bulletin board.
 
What I've observed in my line of work: A designer licenses his design to a third party, the third party may pay upfront for the design or may pay a percentage for each item sold using the design. Clever designers write contracts such that variations of the design or adaptations of features contained in the original design belong to the designer not the third party regardless of who came up with the variation. A general rule of thumb is that the wholesale cost is 2x the cost to manufacture an item and retail is 2x the wholesale cost, but that's a very rough rule of thumb. What your design is worth is very difficult to predict, but if you work the numbers backward and assume the knife will sell for $100 (a round number that makes it easy to calculate percentages) the wholesale cost will be $50, which means manufacturing costs are $25, your business partner is only making $25 on each knife they make, this profit is split up in the executive's salaries, the sales budget, interest on business loans, etc. Being realistic, the third party can't keep a favorable profit margin unless they're licensing your design for just a few percent of the MSRP.

What you should do and how you should do it is your decision. You could make a lot of money for not a lot of effort on your part, or you could put in a lot of effort and your business partner may not be able to follow through with their promises. The recommendation to speak to an attorney is a good one, with the proper contracts if the other party doesn't follow through the courts may be able to get you what your work is worth.
 
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