The 25% rule is based on observations that royalty negotiations tend to a royalty rate that equals approximately one-quarter of the licensee’s expected operating profits derived from the technology. Over the years, the rule has been generalized, and sometimes is referred as the 25% to 33% rule, depending mainly on technology, industry normal, and other relevant issues.
The 25% rule has been a useful rule of thumb for royalty determination. However, recent efforts to empirically prove its validity have been unsatisfying.

Seminar Information
Seminar Date:
May 15, 2012
The 25% Rule Still Rules: New Evidence From Pro Forma Analysis In Royalty Rates
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