How merch deals are structured
Advance, royalty or profit share: what’s the difference?
A merch deal is one of four arrangements: a print-on-demand platform that charges for each item it makes, a merch house that pays a royalty and may advance part of it, a done-for-you partner that takes a share of the profit, or doing it in-house and keeping all of it. They differ in who pays for the stock, the work and the advertising, so a percentage from one cannot be set against a percentage from another.
Four ways to do the same jobs
Whoever runs it, merch is the same handful of jobs. Somebody designs the range of products, pays for it to be made, sells it online and at shows, sends it out, answers the customers and tells people it exists. A merch deal settles who does each job, who pays for it, and how the money that comes in is divided.
This chapter sorts the deals into four arrangements. An act can open a store on a print-on-demand platform. It can license its name to a merch house for a royalty, often with an advance against it. It can hand the whole operation to a done-for-you partner for a share of the profit. Or it can run everything in-house.
They can be combined. A licence names the channels and the territories it covers, and says whether it is exclusive. The guide for musicians used below treats the rights for touring, for shops and for the online store as three separate deals. So where a licence leaves online sales out, an act can have a merch house on tour and run its own store.
Third-party estimateTwo law firms’ guides to merchandise licences, from 2022 and 1998, and a music rights company’s guide for musicians. · Source: Morgan Lewis, Merchandise License Agreements, McLane & Wong, Merchandising, Exploration, Merchandise Economics · checked
| The job | Print-on-demand platform | Merch house | Done-for-you partner | In-house |
|---|---|---|---|---|
| Design | The act | The company, or the act’s own designer | The partner | The act |
| Stock made before it sells | None is made | The company | The partner, where any is made | The act |
| Packing and posting | The platform, charged on each order | The company | The partner | The act, or a warehouse it pays |
| The online store | The act, with the platform’s tools | The company, if it holds the online rights | The partner | The act |
| Advertising | The act | Not stated. Ask | Set by the contract. Ask | The act |
| Selling at shows | The act | The company, or the venue for its fee | Depends on the partner | The act |
| Paid by the act up front | Nothing, or a monthly plan | An advance may be paid to the act | Nothing | Every cost |
| How the act is paid | The retail price, less the platform’s price | A royalty, or a share of net profit | A share of the profit | All of the profit |
A tick marks a job the company does and pays for at the outset. Under a share of net profit, that cost may then come off before the act’s share is worked out. A dash marks a job the act does or pays for itself, and where a company’s page is silent on a job, the cell gives it to the act. The done-for-you column follows Divini’s published terms and the one line Fanjoy’s About page gives. A contract may differ.
Divini’s own dataA summary made for this chapter. The source for each arrangement is under its own section, below. · checked
A print-on-demand platform
A print-on-demand platform prints an item after a fan has ordered it, and posts it to them. The act sets the retail price. The platform charges its own price for the item and the postage, and the act keeps the difference. Printful, one such platform, writes it as a sum on its pricing page: profit is the retail price less Printful’s cost.
Filed or disclosedAs disclosed on the company’s own pricing page. · Source: Printful, Pricing · checked
So the platform is paid for each item it makes, and takes no percentage of what a physical product sells for. Printify says it earns a margin on the price it charges for fulfilment, which is making, packing and sending an order, and has no platform or listing fees. Fourthwall, which supplies the store as well, says physical products never carry a platform fee, though digital products on its free plan carry one of 5%. On Fourthwall the act pays the card processing fee on each order, which it gives as 2.9% plus 30 cents on a domestic card and 3.9% plus 30 cents on an international one.
Filed or disclosedAs disclosed on each company’s own pages. · Source: Printify, Pricing, Fourthwall help, Transaction fees · checked
That price covers a stated list. Printful gives it as production, a quality check and fulfilment, with a reprint or a refund if the item is made wrongly. Printful and Printify both say an item is made only after it is ordered, so no stock is paid for and none is left unsold. Fourthwall adds customer support for the products it makes, and collects and pays the sales tax as the merchant of record. Each of the three has a free plan, and an optional paid one that lowers its prices or adds services.
Filed or disclosedAs disclosed on each company’s own pricing page. · Source: Printful, Pricing, Printify, Pricing, Fourthwall, Plans and pricing · checked
None of the three pricing pages includes design work or an advertising budget in its price. Fourthwall’s page puts the seller’s part as “designing products and promoting your shop”. The platforms supply tools, such as Printful’s design maker and Fourthwall’s shop builder, and Printful’s top plan, for large brands, offers a store built and managed by its own staff. Otherwise the designs, the store’s pages and prices, and the buyers are the act’s to find. So the difference the act keeps is a margin on each item, before its own costs and its own hours.
Filed or disclosedAs disclosed on each company’s own pricing page. · Source: Fourthwall, Plans and pricing, Printful, Pricing · checked
A merch house: a royalty, often against an advance
A merch house, which the trade also calls a merchandiser, works under a licence. The act grants it the right to use the act’s name, picture and logo on products. The company then makes the goods, moves them and sells them, and pays the act a royalty.
How the royalty is counted depends on where the goods are sold. On tour, one guide written for musicians says, it is usually a share of net profit: sales, less manufacturing, card fees, freight, sales tax or VAT, and the venue’s hall fee. The guide puts the act’s share at 75 to 80% of that. In shops the royalty is a percentage of the wholesale price, which is the price the shop pays, and it is 30% in the guide’s example. Where the online store is licensed, the same guide puts US royalties at 25 to 35% of the retail price on average.
One clause concerns the hall fee. The guide says a merch company will often cap the hall fee it is prepared to bear. Its example is a cap of 20% and a venue that charges 30%: the other 10% comes out of the act’s share.
Third-party estimateA music rights company’s guide, published in September 2021 and revised in November 2022. · Source: Exploration, Merchandise Economics · checked
An older article by a music lawyer counts the royalty differently again: usually 30 to 50% of gross sales, or a flat fee for each item sold.
Third-party estimateWritten in 1998. · Source: McLane & Wong, Merchandising · checked
An advance is money paid to the act before the goods have sold, set against the royalties to come. The company keeps the act’s royalties until the advance has been earned back, which is called recoupment. In merchandise licensing generally, one law firm writes, advances and guarantees are typically not refundable: if sales do not earn the amount guaranteed, the company takes the loss.
Third-party estimateA law firm’s guide to merchandise licences, from 2016. · Source: Gerard Fox Law, Merchandise Licensing Agreement: Royalties Discussion · checked
A tour merch advance is different. The guide for musicians says it is more often than not returnable or recoupable: it has to be paid back in full, and some companies charge interest on it. It also comes with conditions. The tour has to start within a set time of signing, commonly about three months. And the act has to play an agreed number of shows, each to an agreed number of paying people, which is called the performance minimum. If either is missed, the company can cancel the deal and ask for the advance back.
Third-party estimateSource: Exploration, Merchandise Economics · checked
The licence runs for a term. The 1998 article gives it as usually one year, or until the advance is recouped, and says an act should keep the right to repay the advance so that slow sales do not prolong the deal. After the term the company will usually want a sell-off period to clear the stock it has already made, generally six months in that article, and, the article says, should have no right to make more.
Third-party estimateA music lawyer’s article from 1998, and a law firm’s from 2022, which describes the sell-off period and gives no length. · Source: McLane & Wong, Merchandising, Morgan Lewis, Merchandise License Agreements · checked
Some merch houses belong to record companies. Warner Music Group’s annual report describes a division, WMX, that creates artist merchandise and sells it online, through retailers and on tour. The report also says that many of the company’s recording contracts are expanded-rights deals, in which it shares in the touring, merchandising and sponsorship income of those artists. For an artist signed on those terms, merch income is already shared under the recording contract.
Filed or disclosedAs disclosed in the company’s annual report, filed on 20 November 2025. · Source: Warner Music Group, annual report on Form 10-K for the year to 30 September 2025 · checked
Others are independent. Sandbag, founded in 2002 with offices in the UK and Los Angeles, lists touring, retail, licensing and a fully managed online store, with warehousing and customer service. Neither Warner’s filing nor Sandbag’s site gives a royalty rate or the size of an advance, or says how an act is paid. That is why the figures in this section come from guides and not from the companies.
Filed or disclosedAs disclosed on the company’s own site. · Source: Sandbag · checked
A done-for-you partner: a share of the profit
A done-for-you partner runs the whole operation for an act: the designs, the making, the store and the customers. On the terms found for this chapter the act pays nothing up front, and the partner is paid out of what the range earns.
Fanjoy, a US company that works with online creators, describes its work as the design, production, fulfilment and marketing of merchandise. It calls that an end-to-end solution, provided “without any risk or upfront costs”. That page does not say how Fanjoy is paid.
Filed or disclosedAs disclosed on the company’s About page. · Source: Fanjoy, About · checked
Divini, which writes this Manual, is a company of this kind. Nothing is paid up front, and it is paid a share of the profit on the products it adds, where profit is what a sale leaves after making the product, shipping it, the payment fee and any chargeback. Advertising comes out of Divini’s share, within a budget written into the contract. The split, which is how the profit is divided, is set in bands, and the act’s share is higher in each band than in the one before. The percentages, the thresholds, the length of the agreement and the notice are not published: they are given in writing before anything is signed.
Divini’s own dataDivini’s own terms, as disclosed on its page on how it is paid. · checked
No other done-for-you company’s terms were found in public for this chapter. So the profit share described here rests on one company’s terms, and its percentages are no more public than a merch house’s rates.
Not publicNo done-for-you company opened for this chapter publishes a percentage. · checked
The word to pin down in a deal of this kind is profit. A share of profit is a share of what is left after the costs the contract lets the company take off first. Lawyers who write about merch contracts say the same of every net figure: the agreement should define which expenses can be deducted, and an act can negotiate a cap on them.
Third-party estimateTwo law firms’ guides, from 2026 and 2016. · Source: Hrbek Law, Merchandise Deals, Gerard Fox Law, Merchandise Licensing Agreement: Royalties Discussion · checked
In-house
The fourth arrangement is no deal at all. The act, or a company it owns, hires or contracts the people, buys the stock, runs the store and keeps whatever is left. The guide for musicians describes this as where a new act starts: responsible for the production costs, the design and the distribution, and keeping all the money from its sales.
Its price is every job in the grid above, and the loss on any stock that does not sell. The same guide says a small hired team can handle an online store’s orders while an act is small, and that the volume becomes hard to manage as the audience grows.
Third-party estimateSource: Exploration, Merchandise Economics · checked
In-house and print-on-demand overlap. An act that runs its own store and has a platform print each order is in-house for the design, the store and the advertising, and on a platform for the making and the posting.
Who pays for the advertising
On a platform, promotion is the seller’s job, as Fourthwall’s line above has it. The guides to tour deals say nothing about who pays for advertising.
For an online store run by somebody else, the public pages stop short. The guide for musicians says a merch company that holds the online rights can market the products as well as design them. Sandbag’s site offers tailored marketing plans and the “informed and intelligent use of ad spend”. Fanjoy lists marketing among the things it does. None of the three says whose money is spent, or how much.
Filed or disclosedAs disclosed on each company’s own site. · Source: Sandbag, Fanjoy, About · checked
Third-party estimateSource: Exploration, Merchandise Economics · checked
Where a deal shares profit, it matters whether advertising counts as a cost before the split. If it does, both sides bear it in proportion to their shares. If it does not, whoever buys it bears all of it. A contract can go either way, and has to say which.
Why the percentages cannot be compared
Each arrangement quotes the act a different kind of number. They are shares of different things, taken at different points, so the largest percentage is not the most money.
| Arrangement | Quoted as | A share of | Still the act’s to pay |
|---|---|---|---|
| Print-on-demand platform | The margin on each item | The retail price, less the platform’s price for the item | Design and advertising, and the store’s own fees |
| Merch house, on tour | 75 to 80% | Net profit: sales less manufacturing, card fees, freight, sales tax or VAT, and hall fees | Any hall fee above the company’s cap |
| Merch house, in a 1998 article | 30 to 50% | Gross sales | Not stated |
| Merch house, in shops | 30% in the guide’s example | The wholesale price | Not stated |
| Merch house, online | 25 to 35% on average | The retail price | Not stated |
| Done-for-you partner | A share, not published | Profit, as the contract defines it | Set by the contract |
| In-house | All of it | What is left after every cost | Every cost |
The merch-house figures are two writers’, for the United States. They are not any company’s published rates.
Third-party estimateA music rights company’s guide and a music lawyer’s article for the merch-house rows, and the platforms’ own pages for the first. No done-for-you percentage is published. · Source: Exploration, Merchandise Economics, McLane & Wong, Merchandising, Printful, Pricing, Printify, Pricing · checked
Take the sample on Printify’s own pricing page: a t-shirt that costs $8.77 to produce and sells for $19.99. The seller’s margin is $11.22, which is 56% of the retail price, before postage, tax and the card fee. License the same shirt to a merch house at 25 to 35% of the retail price, and the royalty is $5.00 to $7.00.
Third-party estimateThe shirt’s cost and price are Printify’s own sample. The royalty range is the music rights company’s, applied to that price. · Source: Printify, Pricing, Exploration, Merchandise Economics · checked
The margin is the larger figure, and the two are not the same money. Out of the $11.22 the act still has to pay for the design and for whatever advertising found the buyer. Out of the royalty it pays for neither the stock nor the store, and the guide does not say who pays for advertising. A share of net profit on tour differs again: 75 to 80% is a large share of a sum from which the stock, the freight and the hall fee have already been taken. A done-for-you share cannot be worked on this shirt at all, because no percentage for one is published.
So the first thing to find out about any offer is not the percentage. It is what the percentage is taken from, and which costs fall to the act afterwards.
Questions to ask before signing
These apply to any company that offers to run an act’s merch, whichever arrangement it uses, the publisher of this Manual included. Most are drawn from what lawyers say a merch contract has to settle.
- What is the percentage a percentage of?Gross sales, net sales or net profit. For a net figure, ask for the list of what is deducted, and whether any deduction is capped.
- Is there an advance, and can it be asked for back?Whether it is only earned back from royalties or is returnable as well, whether interest is charged, and which conditions it carries: a start date, a number of shows, a number of paying people at each.
- Who pays for the stock, and whose is the unsold part?Including how long the company may go on selling it after the deal ends, and whether the act has to buy any of it back.
- Who bears the venue’s hall fee?Some companies bear it only up to a set percentage, and the rest comes out of the act’s share.
- Who pays for advertising, and how much?Whether a budget is written into the contract, and whether it counts as a cost before the profit is shared.
- Which rights are granted, where, and for how long?Touring, shops and the online store can be licensed separately. Ask whether the licence is exclusive, whether the term runs on until an advance is recouped, and whether the advance can be repaid early.
- Who approves the designs and the products?And who owns the artwork and the design files when the deal ends.
- Who runs the online store, and whose are the customers?Which company’s name is on the receipt, who answers the buyers, and who keeps the customer list afterwards.
- When is the act paid, and what does it see?How often, how long the company holds the money first, and whether the statement shows each product and each deduction.
- Can the accounts be audited?And who pays for the audit if it finds the act was underpaid.
- How does it end?How either side can leave, the sell-off period, and what the act takes with it.
Third-party estimateDrawn from four law firms’ guides to merchandise agreements and a music rights company’s. The question on advertising is this chapter’s own, and so is the one about whose name is on the receipt: none of the five raises either. · Source: Hrbek Law, Merchandise Deals, Morgan Lewis, Merchandise License Agreements, Gerard Fox Law, Merchandise Licensing Agreement: Royalties Discussion, McLane & Wong, Merchandising, Exploration, Merchandise Economics · checked
The question about payment matters because, between a sale and a payout, the act’s money sits with the company. One of the law firms notes that some companies pay quickly and others hold revenue for weeks. How often the act is paid decides how much of its money is with somebody else at any one time.
Third-party estimateA law firm’s guide, published in May 2026. · Source: Hrbek Law, Merchandise Deals · checked