Can Somebody Help Me Do the Math?

[Jadendreamer13]

I want to globally change my royalty amount so that I will actually receive a 10% royalty after third party sellers and Zazzle take their share of my profit.

Math was never my best subject. So what should I set my royalty at to achieve my goal?

Thanks so much!

[Cat]

Hmmm... well, I suck at math too, but I think it's a somewhat complicated question because as you raise your royalty the price goes up too. So earning the same amount as you earned before is not the same thing as earning 10% on a higher price. Am I making sense? 

[Jadendreamer13]

Yes, that makes sense. I want to make my best educated guess. Hopefully, folks who are more mathematically inclined than I am can offer me additional insight. My math skills are rudimentary. Thanks, Cat. ❤️ 

[Lais]

I don't know what happened to my original answer, maybe Zazzle's AI believed that my text was AI-generated just because I am a mathematician and I explain things in a certain way that all mathematicians do and AI mimics that!

Anyway, when I have some time, I will write a formula for you, the formula will depend on the category of the products, but it will not be complicated. 

[CLC]

Hi....you need to basically double your royalty to make close to the same as you did before, you still won't make quite as much but when you get a None sale it will make up for it.

[Cat]

OK, well I asked my math guru. I was hoping there would be a simple equation that we could plug in our old percentage and have it pop out a number, but it ended up being too complicated for that. The long & short of it is that if you want to get the same AMOUNT for a 3rd party sale that you would have gotten before on a "none" (if you were at 10% before) you need to set your royalty to 18.99%. 

The way to calculate it is to use Zazzle's royalty calculator. Plug in your old percentage (in your case 10%) and write down the amount of royalty it says you'll get. Then adjust the percentage until it equals double that amount - it will subtract the excess royalty fee as part of its calculation so you don't have to worry about that. It's best to do this on a fairly pricy item because on cheaper things you get rounding errors. You can start by doubling it - that will give you more than the amount you were getting before, but you can keep adjusting from there.

I wish there was an easier method - and I'm sure there is, but it's not a simple algebraic equation because of the condition (the excess royalty fee) - at least we couldn't figure one. If somebody else has a simple equation I'd LOVE to know what it is.

[Jadendreamer13]

Thank you, again, Cat. And thank your friend. 🙂

[Cat]

You know what... hold the phone, there is something else to consider. I was basing this on my own sales which are all in the wedding department, so all 3rd party sales have a 50% marketing fee. If you're selling clothing, or accessories, or anything not in the weddings, invitations or stationery departments, then the marketing fee will vary between 35-45 percent. This means that it's not possible to come up with a single percentage that will give you the same payout on a 3rd party sale as you got for an unreferred sale at your old 10% royalty. 

For Clothing (35% marketing fee) you need to set it to 15.33%
For the 40% departments you need to set it to 16.36%
For the 45% departments you need to set it to 17.61%
And for Weddings, Invitations & Stationery (50% marketing fee) you need to set it to 18.99%

You can find the marketing fee percentage for each department here: Zazzle Ambassador and Creator Royalties and Referrals – Zazzle Help Center

Sorry for the confusion!

[Jadendreamer13]

That’s super helpful, Cat. Would it be prudent (and easier) for me to set my royalty rate globally to 20 percent?

[Cat]

That's your call. You might want to play with the royalty calculator a bit and see how it will impact the price the customer pays. Plus, I have no idea how (or if) royalty settings impact marketplace visibility, so that's something to consider as well.

[Lais]

Hi, @Cat . Can you tell how did you get to these numbers? Because mine are different, maybe I used the wrong formula 😐 (I hope not, because I can no longer edit my comment). 

[Cat]

Oy Vay! Well, I think we're answering different questions. Your formulas (if I understand them correctly) calculate what percentage you need to set in order to get 10% of the net price after all of the fees are deducted. My numbers are the percentage you need to set in order to get the same AMOUNT as you would get at 10% with no fees (when the referrer is "none".)

Since the net price goes up when you raise the percentage, 10% of the amount paid in your scenario ends up being more money than 10% of a "none" in my scenario. For example, for a sale of $100 with a referrer of "none" and a royalty of 10% you'd get paid $10. So, I was trying to figure out what percentage you'd need to set in order to get $10 on a 3rd party referral, not 10% of the new price (because the new price will be more than $100.) 

Anyhow, I just used an iterative method with Zazzle's royalty calculator in order to reach my numbers, because I couldn't figure out how to calculate that with a formula - it started seeming like you'd need a program or algorithm to do it, and I actually started to try to write one, but since we don't actually know Zazzle's base price (we can only estimate it from the royalty calculator) I decided that I just didn't have all of the information I needed in order to do it. 

I hope I'm making sense, this stuff makes my head spin. 

[Lais]

I get it! That makes a lot of sense! I didn't consider the increase in the price paid by the customer. 

[Cat]

Well, your system is perfectly valid, it just depends on which way you want to look at it.

I dunno. IMHO the whole way royalties are calculated is sorta crazy and bass-ackwards. It would be so much simpler and more straightforward if they'd just allow us to set a fixed royalty AMOUNT on each product rather than a percentage. Then they could simply adjust the base price to cover whatever costs they have (marketing, production, customer service etc.) and add our royalty on top of that.

I mean with this system, people are gonna adjust their royalties (which raises the price) anyhow, so I can't figure out what possible advantage all of these crazy fees and machinations confer. Seems like it just confuses people and creates an adversarial situation which is just really unhelpful and totally unnecessary. 

[NigelSutherland]

Clearly everyone is going to have to increase their commissions in order to claw back what the Zazzle changes are costing in terms of lost revenue. This in turn is going to make products in the Zazzle marketplace more expensive to customers. I fear this might turn potential buyers away from Zazzle... ☹️

[MadjackGG]

I put my royalty up to 24% when the new rates came in, and although it's hard to know the all the factors involved, so far it looks like my sales have effectively collapsed. Will be dropping it to 20% the next month to see if that has an effect.

[LJ]

I put my royalty down to 10% when the new rates came in, as they told us to, and looks like my sales have also collapsed. I put it up when I realized it has a negative effect, but updates haven’t been working for weeks now.

Sales being down is definitely a no customers issue, not a pricing or visibility issue. I think Zazzle stopped or reduced some kind of advertising since the new fees, thinking we should do it for ourselves if we want.

[MadjackGG]

Thanks for that info; sounds like the royalty rate is perhaps not so impactful on sales as are other factors.

[Caprice]

It's not your math skills, Jaden. This new stuff is REALLY complicated. My head hurt last night trying to figure out what royalty commission I would get on a product!

[Connie]

Col's Creations posted an updated calculator that takes into account the changes. You could plug in different numbers for various product prices, at various royalties until you get the amount you want. https://community.zazzle.com/t5/external-tools-materials/earnings-calculator-no-math-required/m-p/87...

[Lais]

Here we go. Let X denote the royalty you have set for your product. And let us assume that X > 10%.

When you have a 3rd party sale, you will receive:

Y = X - cX - 0.05 X,

where c is the corresponding marketing fee of the category of your product, and the deduction of 0.05 X applies because X > 10%. 

Now, let us see the tables for the different values of c.

Category: Clothing & Shoes, c = 35%. 

X	Y
11,00%	6,6%
15,0%	9,0%
18,0%	10,8%
20,0%	12,0%
25,0%	15,0%
30,0%	18,0%
35,0%	21,0%
40,0%	24,0%
45,0%	27,0%
50,0%	30,0%

Categories: Accessories, Baby & Kids, Crafts & Party Supplies, Electronics, Home & Living, Wall Art & Décor, c = 40%.

X	Y
11%	6,1%
15%	8,3%
18%	9,9%
20%	11,0%
25%	13,8%
30%	16,5%
35%	19,3%
40%	22,0%
45%	24,8%
50%	27,5%

Categories: Office & School; Sports, Toys & Games; c = 45%.

X	Y
11%	5,5%
15%	7,5%
18%	9,0%
20%	10,0%
25%	12,5%
30%	15,0%
35%	17,5%
40%	20,0%
45%	22,5%
50%	25,0%

Categories: Invitations & Stationery, Weddings, c = 50%.

X	Y
11%	5,3%
15%	7,1%
18%	8,5%
20%	9,5%
25%	11,8%
30%	14,1%
35%	16,5%
40%	18,8%
45%	21,0%
50%	23,3%

[Lais]

Going back to your initial question, if you want to earn 10% after the deductions of marketing fees and royalty fees, replace Y with 10% in the formula, we obtain:

For c = 0.35:

10%  = X - 0.35X - 0.05X

After you solve the equation, you have

X = 16.67%.

Analagously, for the other values of c, we obtain:

c = 40%, X = 18.18%

c = 45%, X = 20%

c = 50%, X = 22.22%.

[Lais]

Link to my Google Sheets with the tables. I may update it if I notice I understood something wrong in the calculation, I apologize in advance.

[Caprice]

I appreciate everyone helping on the math. But I suppose we need actual SALES in order to calculate anything...