Per-unit royalty

Per-unit royalty: A per-unit royalty is a royalty set as a fixed amount for each royalty-bearing unit sold — a stated sum per piece, pair or set — instead of a percentage of net sales. The royalty for a period is net royalty-bearing units multiplied by the per-unit amount for the category, so the unit count carries the calculation the way net sales does under a percentage rate: returned units reverse, gratis units follow the agreement's gratis clause, and price, discounts and markdowns do not change the amount owed. A variant charges the greater of a percentage of net sales and a per-unit floor on each unit, which protects the licensor when the realised price falls. Per-unit terms sit on the rate card alongside percentage rates, and can apply to one category inside an agreement that is otherwise percentage-based.

Agreements use a per-unit term where a percentage of price would move with something the licensor does not want its royalty to track. Low-price, high-volume goods are one case: a percentage of a low wholesale price is small, volatile and eroded by allowances, so a fixed amount per unit gives both parties a predictable number. Heavily promoted and bundled goods are another: where a unit is sold inside a gift set, at a deep promotional price, or through a channel with an unusual price structure, a per-unit amount avoids a dispute about what the unit's price was. Per-unit terms also appear where the licensed element is one component of the product — a character on a toy, a crest on a set of glasses — and the price reflects far more than the licence. The risk moves to the count: what counts as a unit (a pair, a set, a case of four) has to be defined in the agreement and resolved in the product master, and a unit-of-measure mismatch between the order system and the agreement misstates every line the mismatched unit appears on.