Am I being ripped off by my parents?

Question

Here's the scenerio, my parents have invested in a new business selling T-shirts incorporating my art. I have many projects to do and the hours I'm putting into it will
be outstanding. The cost of making one shirt is at the most $10 and they plan to sell the for $60.They have me commissioned to receive 10% of every shirt sold. That's $6 a shirt sold; am I being ripped off?

Also, I recently found out that they are also selling the shirts through a store, which the store owners will receive 25% of every shirt sold. Are my parents ripping me off? Is it normal to receive such a commission? If not, how can I convince them to give me a higher percentage? Thank you so much.

Thank for all the quick responses. Yes, I've took into consideration that they are my parents. I appreciate them for everything that they have done for me, but this is a business and I won't be ripped off by them because they are my parents. Everyone I've told about this business and what I'm making have told me I was being ripped off, and I thought it would be best to get an outside opinion. I'm not being greedy, I'm looking for my fair share and expect no more. Regardless of the negative feedback, I appreciate it.

Answer 1

I've noticed that over half the answers are coming from ignorance. These are people who don't comprehend what it takes to own their own business.

In answer to your question:

They put up the money for all of the material (its called Capital), so you have to substract that money from their profits and there is more to subtract from them.

In the retail game to sell at a store, it get's more complicated. The middle man has to be paid as well, so the price goes up to accomadate the middle man. Subtract the profit they are paying the store owner.

Most consumers don't realize that most things they buy every day is on average, is a 300% markup, so your shirts selling for 60 bucks is "nothing" in the retail game.

You must understand that when you subtract their investment in materials, time (negotiating to sell the shirts during their free time), the middle men in retail, the gas, the phone bill, the electrical, water, and other bills to run the business.your 10% is actually beyond fair!

Why? Because in the real world, artists get a "one time fee" called a flat fee. No one gets an ongoing percentage for a one time effort, even while they sleep called "residuals."

Residuals is a desireable income for those who want money for a one time effort. It is how the rich make money work for them. - You lucky dog!

Unless you joined your parents as an investment partner who is putting up 1/2 of the money for materials, and equal time running around networking to build relationships to negotiate your product... The only thing you can demand is a one time payment for each design as an independent contractor. .

Now that you know this reality, look at the bright side.

You have no paper work, no tax forms, no negotiating or beating the pavement to convince people to sell your stuff, no risks of losing money for your investments involved in losses and you are not getting typical pay as an artist who designed the image for the shirts, which in "real life" is only a one time fee. Sorry for being redundant, but you have to know this.

You get to do the fun stuff and build the experience of becoming an independent contractor as a designer and learn about becoming an entrepreneur because your parents are a great example for you, and ongoing residuals for your art is unheard of in retail unless you are the owner of the company like "Paul Frank" who does all of the monkey heads.

If I were you, I'd learn as much as I could from their examples, save every penny, and then start up your own business and do it better.

In the mean time, I'd think of a really nice way of saying thank you to them.

Answer 2

The $10 cost you quote probably does not include the cost of the machine just the disposable products.
If you knew nothing of the rest of the business would you be happy get $6.00 every time one of the shirts was sold?
At what dollar amount do you become happy?
I can not imagine that at 10% you should feel like you are getting ripped off. In fact overall the average net profit of most business is less than 6%.
Your parents have taken all of the economic risks is any of your money invested?
The typical mark-up on a retail product is 50% so the fellow making 25% is cutting it thin. Unlike you or your parents he has a store front and employes taxes and benifits that he has to pay out of every sale he makes.
If you want a high commission rate, you should be prepared to start paying rent and food as well as collage and transportation expenses. SInce in all liklihood that is where their net profits are going.

Answer 3

Probably not. Hopefully you and your parents are being open and honest with each other about the business. The hope in this situation is that you will sell a ton of tshirts and everyone will make a lot of money. More likely you will sell a few tshirts and make a few dollars. Your parents are doing the marketing, advertising, production, billing, collections, probably a web site etc. You are the "creative". One idea that might make you feel better would be to put some incentives in place so that if they sell a lot, you will get paid more. For instance, if you create a design that really sells, you could make 20% per shirt rather than 10%.

Answer 4

1. You have a choice here. Did you license them to use your artwork? Do you own it? Did you sell it to them? Did you agree to this? You could sue them or take them to court. But you need a WRITTEN agreement that you both can sign.

but honestly i think you're getting a great deal and 25% is a very good deal for a retail outlet. You really could not do better. Actually i think your parents are subsidizing/helping you here. There are probably many costs you have not considered (such as your parents' time and gas to take the shirts to the store, negotiating with the retail store, doing the accounting etc.)

You do not have to work for your parents if you don't like the terms. but if you want to see it as a business, you need a WRITTEN agreement. What if they never pay you at all because none of the shirts sell? You need a contract that says how they will use your artwork and also about how much you have to produce and who approves it etc.

Answer 5

I believe your parents have supported you all your life by raising you, feeding you, clothing you, roof over head, so maybe you shouldn't be trivial over such matters. I only say this because looking back at living home with my parents I don't think I appreciated how much they did to provide for me in the long run. As an older adult now, I feel maybe I should have done more to show them my appreciation in life. I guess this is why I'm suggesting these ideas. If the business ever does get off the ground and is a money making proposition, then I would say you deserve a raise. Just drop a hint to them that if this venture is successful, you would hope for an increase in commission. Leave it at that and hope they are successful in their endeavors. After all they are your parents. With discounts and overhead costs, I don't think the profit will be as great as you suspect. What you should do is to arrange a higher sales percentage with your parents for each shirt you sell yourself. That way you can start selling some shirts yourself to your friends and buddies and make a commission from sales. That way everyone in the family is making money off this venture. PS. Do you think they will really be able to sell these shirts for $60 a piece? If this is that important to you this early in the game then you may want to investigate percentages through other sellers of shirts in the business. That way you'll have a better foundation for determining what's fair or not. Good luck!

Answer 6

I don't know what the going rate is for commissioning an artist. However, without your art, they wouldn't have the shirts to sell. I believe some artists are paid a flat fee, some a fee plus commission, some just commission. You probably should check on copyrighting (or some other form of protection) your art so no one can say it's not yours.

Now you have to consider their overhead (what they spend on supplies, utilities, rent, etc.) What exactly is their profit from a tshirt after all that? (not including the percentages you gave). Then you have to consider taxes they will have to pay the government. Your percentage will probably be a business expense for them, but income for you. So, someone will have to pay taxes on that, most likely you. Sorry.

Do some research to see what you can find about artists selling their work for duplication. You may find you are getting a good deal, but you may also find your parents are taking advantage of you.

Answer 7

As the creator you are receiving a fair amount. Unfortunately it's the ones that take the monetary risk that profit most although there is often allot of overhead involved.

It being your parents I would think they could spare a couple of percent more for you but as I said you are getting a fair shake. I am glad to see that you are on top of things though.

Here's the good part, once you get known and in demand then you will be able to demand a much higher fee but for now just keep doing what you're doing.

It's business and sometimes it just doesn't seem fair.

Answer 8

that if this venture is successful, you would hope for an increase in commission. Leave it at that and hope they are successful in their endeavors. After all they are your parents. With discounts and overhead costs, I don't think the profit will be as great as you suspect. What you should do is to arrange a higher sales percentage with your parents for each shirt you sell yourself. That way you can start selling some shirts yourself to your friends and buddies and make a commission from sales. That way everyone in the family is making money off this venture. PS. Do you think they will really be able to sell these shirts for $60 a piece? If this is that important to you this early in the game then you may want to investigate percentages

Answer 9

No, that's pretty standard for rights to art. however, I think your parents are ripping people off by charging them $60 for a $10 T-shirt.

Answer 10

Um...yes. They are ripping you off. Why should they get 65% of your profit. I would set up a contract so that they get a large percentage until they are repaid what they invested and then after that you give THEM a small percentage because by then the business will be self-sufficient and you will have paid them back what they invested.

It's your art....you should get the money. I'd talk to someone who's familiar with enterprises/entrepreneurship (sp?) and make sure you cover your bases before you agree to this!