Turn royalty language into a formula
Translate royalty economics into a measurable base, rate, exclusions, records, and payment cadence.
Make "10% of net revenue" reportable without reopening the economics every quarter. SMART royalty build: specific base, measurable deductions, accountable report, realistic records, time-bound payment The shortcut is to rely on "net revenue" as if both accounting teams use the same definition. They usually do not. Base Define gross revenue as amounts invoiced and received for licensed products identified by SKU. The base must tie to records the licensee already keeps and the licensor can audit. Deductions Permit only taxes, refunds, chargebacks, and approved credits; exclude overhead, sales commissions, unrelated bundle discounts, and general platform costs. Deductions are where royalty…
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