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Object documentationPrice Agreements

 

Price agreements, known as variable royalties, are used for exploitation-dependent calculation of license fees. No fixed amount is recorded for the license fees to be paid. These are calculated from the percentage or quantity-dependent condition and the values collected in the acquisition or sales contract. In the case of license acquisition contracts, these are the values collected in the settlement data collector; in the case of license sales contracts, these are values entered in the license confirmation. Evaluation is first performed in the settlement document for the acquisition contract. An evaluation is performed once confirmations have been received in the sales contract.

Note Note

The user interface does not refer specifically to conditions and price agreements. These are technical objects in the system that require different Customizing.

End of the note.

Structure

You record price agreements at item level by adding new royalties to the royalties rates within a rights and royalties or royalties scope in license contracts. An inheritance from the royalties item(s) to the associated billing request item(s) takes place here.

If no price agreements have been recorded for a contract item, price agreements for the higher-level item (access sequence to condition records 1700 IPM: Item-specific) apply here instead.

Scales

You can record scales for price agreements. You can maintain interval, from- and to-scales here. You can also set the scale retroactivity type for a scale if royalties are to be recalculated retroactively after a change in the scale level. For more information, see Scale Retroactivity.

Example Example

To-scale: You record a scale, which grants a 10% license fee for box office revenues of less than $20,000 and 12% license fee for revenues from $20,000.

Quantity-based interval scale: You want to divide the values confirmed into several intervals and apply a different percentage to each interval. You define an interval scale that guarantees a license fee of $5 for book sales of up to 100 units and then $6 for each additional book sold thereafter.

End of the example.
Price Agreements for License Acquisition

Price agreements can be percentage or quantity-dependent.

The percentage license fee is calculated on the basis of the revenues achieved. Sales can originate from:

  • Revenue generated from license sales contracts

  • Sales and Distribution (SD) product sales

However, pricing can be determined from:

  • License sales contracts

  • Confirmation data

  • IR billing

  • Paid values for license sales

  • Revenue recognition data for license sale

  • SD product sales billing data

Revenues achieved are collected in the settlement data collector. A single settlement record, which contains the net value, is placed in the settlement data collector for each sales transaction.

A quantity-dependent license fee can be recorded in addition to the percentage license fee described above. Exploitation success is measured according to the quantity sold, audience figures or even ideal success, such as the number of Oscars for a film.

Price Agreements for License Sales

Price agreements can be percentage-based.

The percentage license fee is calculated on the basis of the confirmation data.

Example Example

Box office takings for a film, which are calculated from the sales volume minus the advertising costs are used as the basis here.

End of the example.

Confirmation data is recorded in statistical conditions and first contain their value as a result of confirmations from rights exploitation.