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Licensing Precentages

Bob777Bob777 subscriber Posts: 1
edited March 2007 in Commercializing Your Invention
I am trying to negotiate a licensing agreement with a moderate-sized toy company for my patented product.  The company is interested in the product and wants me to offer a proposal.  I like what I`ve seen of  the company so far but I don`t have any idea what to ask.  Does anyone know what the standard licensing percentage is for a new toy product (or range of percentages)?  I would greatly appreciate any input.
thank you,
Bob777
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    pepperlegalpepperlegal subscriber Posts: 2 Member
    There really are no "standards"; it depends upon the product and industry.  Are you talking about a percentage of the toy company`s sale of your products?  Is the toy company packaging or bundling your product with something else?
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    Innovator7Innovator7 subscriber Posts: 9
    It is "laughable" that Bob777 asked for a number while withholding the number he knows.  Give and take is a better way.  Even if you told us the number you`ve been offered, such a percentage is always subject to negotiation, and conditions too.Royalty varies from a penny to 5% to 20%, depending on the product and volume.  Higher volume, lower the royalty.
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    Bob777Bob777 subscriber Posts: 1
    Please do not assume that everyone witholds information to gain from others.
    There truly are people who are unknowing about certain things.  Would you have responded like this if it were your son asking the question?  We really have no idea, it has not reached that part in development. Thank you for the input.Bob7772007-3-15 21:27:36
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    Innovator7Innovator7 subscriber Posts: 9
    I didn`t assume anything.  It`s usual to keep things about money (and sex) secret.  Salary.com collects stats from people who are willing to disclose their salary - anonymously of course - to get the answers back in return.  Invention marketing people on the other hand would boast their one-of-a-kind high royalty rate they presumably negotiated for their customers - keeping in mind such a success case is extremely rare if ever or real.I think a better way would be to try to get a higher royalty but then be happy with what you`re counter-offered.  It`s a matter of salesmanship and negotiation.
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    Bob777Bob777 subscriber Posts: 1
    Yes,  a percentage of the toy company`s sales, though I`m not sure whether it`s based on net or gross sales.  The company would manufacure, package, and distribute my product, presumably under the company`s name.  It`s very early in the negotiations.  I showed the toy to the company president at the toy fair in NY last month.  He was interested and asked me to submit a proposal, leaving all the details up to me.  That`s where it stands now.  Are there any sources out there that you could recommend where I might research percentages? 
    Thanks very much for your response. 
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    Innovator7Innovator7 subscriber Posts: 9
    Always base royalty on gross sales.Get a minimum yearly royalty below which contract is cancelled- because they may withholding production.Etc...
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    Bob777Bob777 subscriber Posts: 1
    Thanks for offering that very useful information, Innovator7.  I am really not a businessperson and it is most appreciated and will help.
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    ideasforrentideasforrent subscriber Posts: 3
    Hi
    I would be interested in hearing how you initially established contact with the toy company and convinced them to consider licensing your patent. I have several ideas for comsumer products that I wouldl like to do like wise but am new to this and don`t know how to accomplish what you have.
    Edward Clutterideasforrent.com  "Because an [idea] is a terrible thing to waste."
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    paradisetrvl8paradisetrvl8 subscriber Posts: 0
    Did you ever get the answer to this?  What is the royalty % on a toy?  Is there an up front licencing fee or a guaranteed min. based royalty per year?  What do those #`s look like?
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