Royalty rates are a profit sharing mechanism between an IP owner (licensor) and licensee. To analyse applicable royalty rates Intangible Business researches public records or internal and external market information and then benchmarks the information to the circumstances.
Intangible Business also analyses the operating profitability of IP/ brand and the amount of turnover that can be attributed to the brand alone, excluding all other factors, such as manufacturing and distribution activities through the value chain. The stronger the brand, the higher the royalty rate it can command. Applying the right royalty rate is crucial to maintaining and sustaining profitability. This analysis also underpins our royalty audit service.
It is important to note that licensing, far from diluting brand equity, can and should strengthen brand value by extending it into new markets and introducing it to new audiences - with little direct cost.