If you are the creator of a product of any type you may want to consider product licensing instead of simply selling all rights away to a company. The difference here is that product licensing gives a company or individual a specific time to use your product for a contracted amount. You can negotiate the amount and time before you sign the agreement but once it is signed by you and the interested part, the negotiation is over until the time expires.
There is no easy way to negotiate a licensing agreement since every need is different. You want to set your time limit and price based upon the needs of your client and not some pre-conceived notion of what is a fair and equitable agreement. Licensing agreements do not have a one size fits all-the products will be different and thus the time and price will also be different. It is essential to know when to negotiate for a higher fee and when to stay within the range the client originally offers.
You may choose to use a lawyer to negotiate your product licensing agreement, and though that is a wise decision to make, if you are new, you may not have the financial means to hire a lawyer. For those who are unable to afford a lawyer to draw up the agreement, you can purchase software or you can hire someone to prepare the agreement for you. The important issue is to make certain the person preparing the agreement, whether yourself or someone else, has your best interests in mind. If you contract someone to do the work for you make certain they are experienced in preparing product licensing agreements and are aware of the legal ramifications involved in the transaction?
The product you are licensing has a large impact on the terms of your licensing agreement. The higher the potential for future earnings, the more you want to charge for licensing your product. For example, if you own the rights to a collection of music that has the potential to bring in a large cash flow, you want to charge more for that license than you would for a new artist whose potential sales are unknown. The same methodology is true of an author-established authors who license their books rather than accept royalties or sell their rights will charge more than a new author or one who does not yet have a record of high sales.
Always look toward future income when setting your terms for licensing your product. It's important to understand the potential loss you may suffer if you charge too low for licensing and sales go quite high. You cannot always predict what sales will be but if you consult with your attorney or an economic expert you can get some idea of where you should draw the line and how you should negotiate your product licensing. Avoid overcharging but protect your future sales as well. If you aren't sure, you may want to consider a short-term agreement that will be open for renegotiation soon.