12. Frequently asked questions

Is it better to negotiate a royalty on future profits, or on sales?

A technology licensor generally prefers to base the royalty on sales, which are an objective and easily verifiable element, whereas a licensee will prefer to base it on profits, in order to ensure the profitability of the operation.

When the invention makes it possible to reduce the manufacturing costs of an existing product, how can the value of the invention be assessed?

In this case, the relevant basis for calculation is the savings achieved rather than sales, and the licensee may be required to pay back up to half of the savings achieved thanks to the invention, depending on the difficulties involved in implementing the technology.