Don’t agree, that type of thinking is for bonus payments.
You would have to analysis every product individually to set targets and that would then need to be addressed every year.
Where would you start? Say Olay is falling is sales 5% a year, do you say:
Ok last year result anything above we get? or
Assume another 5% slide because you tell me that’s what is happening
What about price rises
Advertising spend
New lines being introduced/sub products
Would you do the same thing with SK2. But wait a minute, Stempower no longer exists, RNA has no sales are PG just replacing stempower or expecting an increase as it is much better product.
It gets very messy and judgmental.
Royalties are a simple thing. You sell my product you give me a % less agreed expenses.
Wand sale easy straight obj get %
Wand in a set Obj get %
Wand in a giveaway OBJ gets % PG where’s the cost
No wand no %
Net sales are the most common measurement for royalty payments. In a net sales license, the royalty rate is multiplied against the net sales. The big issue when negotiating net sales is what deductions should be included in the definition of net sales. Obviously, the more deductions there are, the less money the inventor will earn. It is generally acceptable for net sales to include deductions for shipping freight, taxes, credits, returns and discounts made at time of sale. It is less desirable deductions for sales commissions, debts, uncollectible accounts, promotions, marketing and advertising. (this I lifted from below)
http://www.nolo.com/legal-encyclopedia/royalties-deductions-the-give-take.html
Have a read to get an overview, it talks the talk if you have never dealt with royalties before
Obviously we are not privy to the contract terms nor should we as they are corporate secrets. If it does get out all future contracts with other parties will be tied to the PG deal rather than being possibly bettered.
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