The 2016 Royalty Rate Industry Summary is an annual analysis of royalty rates from the IPSCIO RoyaltySource® database. It provides benchmarks for licensing rates covering 15 industries from over 30 years of data. Average and median royalty rates (based on a percent of sales) by industry are presented as part of this Report.
This Report also contains interquartile range (IQR) measures. These measures are often considered when testing inter-company pricing — using the “arm’s length” standard under the United States Transfer Pricing Regulations (Section 482 of the Internal Revenue Code).
6,667 selected observations from 15 industries were analyzed. There are fewer transactions in the summary than the total number of transactions in the IPSCIO RoyaltySource® database for several reasons. First, only technology licenses from public sources are included and trademark license transactions are eliminated. Second, some transactions do not fit in the 15 industry groupings chosen to report. In other words, the totality of IPSCIO RoyaltySource® transactions cover more industries than the 15 reported. Other transactions are eliminated because they have a royalty base of something other than a variation of sales. Also, transactions are occasionally moved from one category to another as additional information is obtained and the database is refined.