Royalty Agreement With Imaginary Figures
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FAQ
Royalty agreements generally are one of two types. The fixed price per unit agreement pays the licensor a set price for every one of its products sold by the licensee. Often, this type of agreement is used when the licensor's product is one that will be a small part of a larger product produced by the licensee.
The average royalty percentage applied to licensed services varies between 2-15 percent of the total buy, depending on the attractiveness of the property. Another (easier) way to work licensed service deals is to charge an annual fee for the licensee's right to use your intellectual property.
The way a royalty is calculated depends on the license agreement relating to the intangible in question. Usually, it is calculated as a royalty percentage a portion of the gross or net revenue gained through the exploitation of the licensor's IP. It can also be expressed as a fixed value.
A 'reasonable royalty rate' is an estimation of damages in patent infringement cases. It is often referred to as established royalty that a licensee would pay for the rights to the patented invention in a hypothetical negotiation.
It makes sense for the publisher to pay the author on the basis of what he receives, but it by no means makes it a good deal for the author. Example: 10,000 copies of a $20 book with a 10 percent cover-price royalty will earn him $20,000.
