Subscriber MC writes: “I would like you to address the subject of getting people to pay you royalties. I assume this can become a problem for many direct response copywriters.”
A royalty is a fee paid to copywriters based on the performance of the promotion they wrote.
There are all kinds of arrangements. But the most typical online is a percentage of net sales, which is often 2-3%.
For direct mail, the royalty is a fee paid per package mailed, usually 2 to 3 cents.
But really, you and the client can negotiate whatever the two of you can agree to.
For instance, one client agreed to pay me a flat cash bonus of $6,000 if my DM package beat his control, which it did.
Another offered a flat royalty of $3,750 every time they mailed the package.
Many clients, especially small and amateur, offer to pay you a percentage of sales in lieu of a fee.
These deals you should stay away from, because you are betting on something you have no control over.
For instance, what if the client picks the wrong mailing list, changes your copy so that the promotion doesn’t perform, or never runs the promotion? It happens.
The preferred arrangement among top copywriters and top clients is the writer’s usual flat fee PLUS a bonus royalty.
Why would a client pay you both your regular fee and a royalty on top of that?
Some clients pay the royalty on top of the regular fee because they think it motivates the writer to do a better job.
Others do it because they want the writer to have a financial incentive to keep his promotion as the control by doing tweaks and updates for no additional fee.
Notice that above I referred to “top clients” paying royalties.
For the most part, only direct response marketers pay royalties, because direct response is the only marketing channel where sales generated by your copy can be measured precisely down to the penny.
Most local car dealers can’t easily tell on any given day how many customers were driven to the showroom by your billboard or radio spot, so how could they pay a percentage of sales to you?
But if you write a landing page for a direct marketer selling a home study course, you know exactly the revenue it produced.
That’s why most copywriting clients do not pay royalties: they cannot measure the sales results of their advertising.
Clients who usually do not pay royalties include business-to-business marketers, Fortune 1000 corporations, brand advertisers, ad agencies, local businesses, and small businesses.
The only clients who pay royalties on a regular basis are (a) major direct marketers like Agora Publishing and Weiss Research and (b) smaller but very successful, profitable, and experienced direct marketers, mainly online these days.
Copywriter John Carlton advises marketers not to do royalty agreements with copywriters on the first job.
“It may sound great to push off part of the fee to result-oriented royalties paid later,” says John. “But you need to remember that you’re just beginning your relationship with this writer.”
It’s John’s opinion that a good copywriter will usually not even propose royalties on the first job, because he doesn’t know or trust you any more than you do him.
Bob Bly is the author of “World’s Best Copywriting Secrets” and has written copy for more than 100 companies including IBM, Boardroom, Medical Economics and AT&T. He is the author of more than 75 books and a columnist for Target Marketing, Early To Rise and The Writer. McGraw-Hill calls him “America’s top copywriter”.