Question
Good evening
Thank you very much for your previous advice. I would like to ask about license royalty rates. In the course of our considerations of expanding into the EU market, we would like to discuss licensing options with our business partners there.
When going into licensing negotiations, how do we determine a reasonable royalty rate? Which approach would the prospective licensee employ? So far we have only been distributing our products directly to end-users.
We are a small company operating out of Tokyo. We develop software solutions that create top-speed, highly efficient software interfaces between smartphones and IoT Devices.
Answers: 3 public & 0 private
The general answer to this question from a pricing perspective is to ask yourself the following questions:
1. What is the cost of the alternative solution from a competitor (data sources mentioned by Simon and Blair could help you there)
2. What is the commercial benefit your customer can gain with your solution (10% of that benefit is generally considered a maximum fair share)
3. What is the cost for your customer to develop a similar solution by themselves.
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