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   Royalties: One More Time
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Burford Dirt
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Royalties: One More Time
« on: Mar 28th, 2006, 4:18pm »
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Hellow All,  
 
I recently read a comment by Mr. Ivy stating that historically speaking, royalties range between 1% to 5% of net sales.
 
If my licensing agreement is with a manufacturer, would the royalty be 1% to 5% of net wholesale sales or net retail sales ?  
 
Thanks.
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mike
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Re: Royalties: One More Time
« Reply #1 on: Mar 29th, 2006, 3:29pm »
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Burford,
 
I suspect that the royality in that case would be a % of net wholesale sales.  
 
I can not imagine how the licensor would be able to keep track of the retail sale price for each retailer selling the product.  
 
Regards,
 
mike
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JimIvey
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  jamesdivey  
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Re: Royalties: One More Time
« Reply #2 on: Mar 30th, 2006, 8:15am »
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From what I understand, even 2% is considered very high right now.  1% is also fairly high.  The reasoning that I hear is that a given product is covered by more patents than one would see in the past, so each patent takes a smaller share.
 
From what I understand, it's based on the amount of money received by the licensee -- not any subsequent seller.  So, I would bet that it's based on wholesale if the licensee is the manufacturer.
 
But, you must understand, contacts are as unique as the parties contracting.  You royalty will be whatever you can convince a licensee to pay.  Of course, you can say this or that percentage is "standard", but that generally doesn't matter to your licensee.
 
Regards.
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James D. Ivey
Law Offices of James D. Ivey
http://www.iveylaw.com
Burford Dirt
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Re: Royalties: One More Time
« Reply #3 on: Mar 30th, 2006, 3:35pm »
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Jim,
 
Thanks for taking the time to reply.
 
B.Dirt
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