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FOB Royalty Rates
Posted on August 30, 2010 by Lou
License agreements commonly use an FOB royalty rate to offset the difference in FOB pricing. The FOB royalty rate is usually an additional 1% to 3% higher than the standard royalty rate (for percent of net sales royalty rates).

FOB stands for “Free On Board”, and is always used in conjunction with a port of loading. Indicating “FOB port” means that the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination. The passing of risks occurs when the goods pass the ship’s rail at the port of shipment