Royalty Rates Defined for Consumer Product Ideas by Carrie Jeske

In the As Seen on TV category, an inventor can clear 2-4 million dollars in royalties.  In every other category, that number is significantly less. Don’t be caught in an unrealistic dream.

Let’s talk money outside of TV, if you license your product outside of TV.   That’s different then the “Make and Sell It” strategy for money making.

That’s a whole different game. If you “make” or manufacture the product then sell it and make profit on the manufacturing whole sale price less cost of goods and operational expenses.  If you license a product outside of TV you’re gonna get a higher royalty rate but may make less in the long run.

In ASOTV, royalty rates are 1% to 5% because volumes are huge.  Outside of TV you might be able to get 5% to 7%.

Maybe you get 10% if you’re lucky but that’s still gonna be a lot less cash since the sales volumes are lower. In the licensing agreements I do the things that are not TV average $20,000 to $40,000 per year in royalties.

A medium-sized deal might be $50,000. $90,000 is much better but $50,000 is more common.  For example, a 5% royalty would make about $50,000 a year at 1 million dollars in sales. That’s doable. That’s a good realistic goal.

$150,000 to $200,000 a year is more unusual. They absolutely happen, but they’re not the norm. That’s why it’s good to have a mix of singles doubles and triple successes.

Especially if you can get more of them.

Still, the As Seen On TV winners are where the big money is and the upside and the costs are lower for the inventor.

Whatever category you’re in, I think it’s best to keep costs low.  Inventing is a gamble of time and money.  Choose wisely.

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