Minimum guarantee shortfall calculator.
A minimum guarantee shortfall is the gap between the contractual royalty floor and what your sales actually earned. Enter the MG, rate, year-to-date net sales, and run rate — see the projected shortfall or surplus before settlement does. No signup, no email.
The inputs above, explained.
Minimum guarantee (MG)
Contractual royalty floor — the minimum amount the licensee owes for the period regardless of actual sales.
Royalty rate
The percentage applied to net sales to calculate earned royalties. Licensed apparel rates typically range 8–20%.
Net sales
Gross sales minus contractually allowed deductions — the base the royalty rate applies to.
True-up
Adjustment to a prior-period calculation — returns lag can move earned royalties and shift an MG position after the fact.
More calculators and related resources.
Royalty calculator
Gross sales, deductions, rate, and advance balance to net royalty due — the base calculation.
Advance recoupment calculator
Remaining advance balance and months to earn-out at your expected run rate.
MG vs. advance — the guide
The contract mechanics behind this calculator — how MGs and advances interact, and the audit findings each produces.
How MG shortfalls work
What is a minimum guarantee (MG) shortfall?
A minimum guarantee shortfall is the gap between the contractual royalty floor (the MG) and the royalties a licensee actually earned over the guarantee period. If cumulative earned royalties fall short of the MG at settlement, the licensee pays the difference — the shortfall — to the licensor.
How do you project an MG shortfall?
Project earned royalties for the full guarantee period: earned royalties to date plus (expected remaining net sales × royalty rate). If the projected annual earned royalties are below the minimum guarantee, the difference is the projected shortfall. Projecting monthly turns a settlement surprise into a budgeted payment.
Does an advance count toward the minimum guarantee?
It depends entirely on the agreement. Some contracts treat the advance as a prepayment that counts toward MG satisfaction; others hold the MG and advance as separate obligations. Misreading this interaction is a common royalty audit finding — confirm the contract language per agreement.
What happens if sales exceed the minimum guarantee?
Nothing additional is owed on account of the MG — the guarantee is a floor, not a cap. The licensee simply pays earned royalties as calculated. Once cumulative earned royalties pass the MG, the guarantee is satisfied for the period.
This projects one MG. Royalty Reporting tracks every MG position continuously.
Per-agreement MG registers, run-rate projections that update with every sale, and shortfalls that show up in the forecast — not at settlement.