- Karat Weekly
- Posts
- How Much to Charge for a Brand Deal
How Much to Charge for a Brand Deal
the frameworks for calculating your rate
Christopher Ramos & Grace Lemire
May 14, 2024
Hey.
This week, we’re diving into one of the most-asked questions we get from creators–How much should I charge for a brand deal?
In today’s newsletter:
A few frameworks people use to calculate brand deal rates
How to see if your rate is on par with the market
A breakdown of YouTube’s Q1 report shows why it’s the #1 platform for creators
Frameworks for Calculating Base Rate
There are two common frameworks we see:
The 2-4% rule
The $100/1,000 followers rule
The 2-4% Rule
This states that your base rate should be 2-4% of your following. For example, a creator with 100k followers on TikTok would charge $2,000 to $4,000 per video (not including usage rights, etc.)
This can flex up or down depending on your engagement. If engagement is poor, the low end would be more suitable. If engagement is high (5%+), 4% of your following or higher would be more suitable.
*You can monitor your engagement rate by creating a free media kit in Beacons. It’ll calculate your engagement rate and update automatically.
The $100/1,000 Followers Rule
This states that creators should charge $100 for every 1,000 followers they have. For example, a creator with 100k followers would charge $10,000 per video.
Again, this would go up/down depending on engagement, usage rights, etc.
Are These Frameworks Any Good?
We dug into the base rates of several creators, as reported on Clara, and here’s what we found:
Following | Platform | Rate | % of Following (2-4% rule) | $/1,000 Followers (100/1000 rule) |
|---|---|---|---|---|
243k | TikTok | $1,000 | 0.4% | $0.004 per follower |
146k | TikTok | $1,500 | 1% | $0.01 per follower |
185k | $5,000 | 2.7% | $0.027 per follower | |
1.6M | TikTok | $5,000 | 0.3% | $0.003 per follower |
16k | $500 | 3.1% | $0.031 per follower | |
10k | TikTok | $2,500 | 25% | $0.25 per follower |
80k | TikTok | $2,000 | 2.5% | $0.025 per follower |
Here’s the thing. Brand deal rates are dependent on so many factors, one singular framework will never be 100% accurate. However, these frameworks are still good to have in your back pocket.
Based on the reported rates, the $100/1,000 Followers Rule doesn’t seem accurate. While based on a small sample, most creators are charging just pennies per follower.
The 2-4% rule seems more on par, but creators are still charging far below that. Several creators on this list could probably increase their base rate.
How to See if Your Rate is on Par with the Market
Both Clara and FYPM allow you to explore rates and reviews from creators’ past brand deals. For example, if you’re working with Garnier on a campaign, you can see what previous creators have been offered for different scopes.
Based on our experience, FYPM seems a bit more updated/recent than Clara, but it’s worth checking both platforms. It’s best to sign up for them ASAP as well, as there may be time between application and approval.
FYPM
You’ll find rates across several platforms, scopes, followings, brands, agencies, and niches. While you won’t find every brand on these platforms, it’ll give you a solid idea of what creators of similar sizes charged in the past.
YouTube’s Q1 Report Proves Itself The Prime Platform For Creators
YouTube’s first-quarter earnings of 2024 were released recently, and the numbers prove why you should make the switch to YouTube if you haven’t already.
Main takeaways: An overall revenue of $80.54 billion reported for its first-quarter, with $8.1 billion in advertising revenue reported - a 21% increase from 2023.
Viewership through TV has increased over 400% in the last three years, with platforms like YouTube TV, a cable replacement, gaining over 8 million subscribers. Making it the leader in streaming watch time, with viewers spending over 1 billion hours per day, as reported by Nielsen data.
Over 25% of YouTube’s 3 million creators earn money from shorts, which average over 70 billion daily views globally.
So what does this mean for you? As a creator, you can earn 6x more on YouTube than any other platform, with creators earning on average $168,000 per year compared to $26,000 on competitor platforms. Creators are sharing exactly how much they make on YouTube through various outlets including Adsense and brand deals.
Connected TV is the place to be! Casual viewing for content has made its way into the living room, and that means bonus monetization for your channel. Creators are reporting that over 70% of their viewership comes from Connected TV - which according to most agencies, can increase your Adsense revenue by 5 times over.
YouTube shorts is your saving grace! Should the TikTok ban take effect next year, YouTube Shorts is your top choice for a replacement. A year after the platform launched a revenue-sharing model for Shorts, over 25% of partner creators have earned money from Shorts, with continued investments being proposed by YouTube.
Quick Links
🤦🏼 New Meta Verified program that may impact IG reach for businesses and creators.
👩🏻⚖️ TikTok sues the United States over divest-or-ban bill.
📲 TikTok’s new stance on AI-generated content.
🎥 Follow this X page for UGC opportunities.
See ya next week,
Karat