Royalty Rate Guidance for Licensing Technology
When your client asks you about royalty rates for licensing their technology you need guidance and we have it. 5% of net sales may be the most commonly negotiated royalty rate but its not always the correct answer. Consider that:
Biolargo, Inc. entered into a license agreement with Clarion Water in which it granted an exclusive license to commercialize a water treatment technology for a 10% royalty of the licensee’s net sales revenue and 40% of all sublicensing fees.
Grant Life Sciences, Inc. is developing protein-based screening tests to screen women for cervical cancer and pre-cancerous conditions that become cervical cancer. The tests detect the presence of certain antibodies that appear only when cervical cancer or certain pre-cancerous conditions are present in the body. The technology was licensed for 1% to 3% of sales.
Lowrance Electronics, Inc. is the world leader in the design, manufacture, and sales of sports fishing sonar (also known as fish finders) and global positioning systems. It recently licensed some of its technology for 10% of sales.
5% of sales is not always the right answer!
Royalty rate guidance is available from Royalty Rates for Technology, 7th Edition. It has more technology royalty rate information than any other publication. The book describes the technology involved in every deal reported and identifies the licensor and licensee and all compensation terms for each deal.
Royalty Rate data is provided for:
Aeronautics & Defense, Agriculture, Automotive, Chemical, Communications, Computer Hardware, Computer Software, Construction, Electrical & Energy, Electronics, Entertainment, Food & Beverage, Franchises, Fuel – renewable, Glass, Semiconductors ,Household Products, Internet, Mechanical, Medical, Photography, Sports, Toys, and Waste Treatmen
Click here to learn more and see the Table of Contents for Royalty Rates for Technology, 7th edition.