RoyaltyStat Blog

Royalty Rates Large & Small

Posted by Ednaldo Silva

The claim that comparable royalty rates can’t be found is not well-informed, and needs revision.

RoyaltyStat has a larger number of unredacted license agreements than the number of listed companies available to find comparables among distributors, retailers, or service providers. RoyaltyStat contains over 16,995 unredacted license agreements, and this count increases by over 1,200 new agreements per year.  (See

An unredacted license agreement contains a disclosed royalty rate, whereas a redacted agreement has no disclosed royalty rate. 

The quartiles of a large sample (count = 13,337) of license agreements based on net sales, excluding related-party agreements and agreements in the metal & mining and oil & gas (natural resources) industries, show a 5% median royalty rate. 

The blue rosetta on the chart below represents the median. As royalty rates based on sales > 20%, the data become sparse and outliers emerge. Up to 10%, the data cluster show a solid basis of license agreements to determine arm's length royalty rates or to create safe harbors.



Published on Feb 12, 2016 4:03:39 PM

Ednaldo Silva (Ph.D.) is founder and managing director of 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:

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Topics: Royalty Rates