Abstract:

The paper emphasize on a theoretical model for calculating royalties resulted from different types of licensing. Usually in the licensing process, firm calculate their royalties based on the licensee’s net sales, extracting the sum returned to the licensor by imposing a percentage rate. Therefore, I consider that the royalties’ calculation model below detailed will guide firms to respect their own attributions. I am proposing a theoretical model that would help determine royalties according to the type of agreed license. By monitoring the fluctuation of the net sales of the current year reported to the base year, we can determine each year’s royalty per type of license. In support of the theoretical model, I chose a case that reproduces all of the steps that need to be taken for each phase of the framework .In the end ,the model shows the amount of money that the license needs to pay for the licensor’s patent.