RoyaltyStat Blog

Cross-Country Royalty Rates Converge

Posted by Ednaldo Silva on Mar 23, 2016 3:20:00 PM

Cross-country royalty rates based on the licensee's sales converge to a narrow range of median values from 6% to 10%, independent of sample size. The chart below shows the sample size (count) and median revenue-based royalty rates in several countries. The royalty rates on the chart convey several licensing rights, including patent, know-how, software, and trademark.

The two search criteria used in the RoyaltyStat database of unredacted license agreements were: (i) royalty rates must be based on net sales (revenue, turnover), and (ii) they must exclude related parties. Among the top eight countries, the U.S. has the biggest number of unredacted license agreements (count is 3,202, median royalty rate is 6%), followed by Canada (847, 7%), Mexico (384, 7%), China (339, 10%), Japan (256, 6.75%), U.K. (185, 9%), Germany (121, 9%), and France (108, 7.75%).

Overall, considering 13,025 unredacted license agreements with royalty rates based on net sales, excluding related parties, the median royalty rate is 5%; the lower quartile is 3.7%, and upper quartile is 10%. Data were retrieved from RoyaltyStat on March 17, 2016.

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Ednaldo Silva (Ph.D.) is founder and managing director at RoyaltyStat. He helped draft the US transfer pricing regulations and developed the comparable profits method called TNNM by the OECD. He can be contacted at: esilva@royaltystat.com

RoyaltyStat provides premier online databases of royalty rates extracted from unredacted agreements, normalized company financials (income statement, balance sheet, cash flow), and annual reports. We provide high-quality data, built-in analytical tools, customer training and attentive technical support.

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Topics: Royalty Rates