So, what are royalty charges in construction?

In the construction industry, it is common for assets and intellectual property rights to be licensed.

Assets that are often licensed include trademarked designs, patented technologies, innovative systems and new products. In exchange for their use, a licensee must pay royalties to the designer or inventor. These are usually a percentage of sales, paid on an ongoing basis. As an example, a licensee may pay a licensor 8% of gross revenue for rights to manufacture and sell specialist adhesives.

In this article, we’ll cover what a construction royalty rate is, examples of license deals in the construction industry, and how to find real construction royalties using the RoyaltyRange database.

The new report is available for free download the University of Cambridge Judge Business School website.

What is a royalty charge in construction?

A royalty charge is a payment that a licensee makes to a licensor in exchange for the use of their licensed asset. In construction, this asset could be a new technology, product, system, material or design, perhaps incorporating intellectual property assets like patents, know-how and trademarks.

Royalty charges are usually agreed as a percentage of sales generated by the licensed asset. In some circumstances, they are set as a fixed price. Royalties are charged on an ongoing basis.

The amount that the licensee must pay is outlined in a royalty agreement. This agreement also specifies how the licensee may use the licensed asset, where they can use it, and for how long.

Examples of license deals in construction

The construction industry is full of fresh inventions and intellectual property. It is an industry of constant improvement and innovation. New products, materials, systems and technologies are always being developed to help builders work faster, more efficiently and with greater accuracy, while ensuring the buildings they work on are safer, stronger and of a higher quality.

For the designers and inventors of these assets, there are a number of reasons why licensing deals are attractive. One reason is that it can mean they don’t have to handle the manufacturing and sales side of things – they can simply develop the design and license it to another party who will commercialize it. Another reason is that they can earn good royalties by allowing other building companies to benefit from their creations. These companies may build the asset into their own service offering. Licensing lets inventors reach new markets and increase their profits.

Here are some examples of situations where a construction asset has been licensed:

• A designer licenses their trademarked designs for a stone cladding and curtain wall system so that other organizations can benefit from the system, in exchange for royalty payments.
• An inventor licenses their intellectual property rights for their environmentally safe sealants and adhesives so that another company can take care of their manufacture and sales.
• The inventor of a new patented technology, which involves concrete interlocking modular blocks, licenses their patent to construction firms in exchange for royalties.

Do you want to see some real construction royalties?

If you are negotiating royalty rates or analyzing transfer pricing, you need to know what other companies are charging for comparable license deals.

The good news is that it’s really easy to find the latest royalty charges in construction.

Simply search the RoyaltyRange database for real construction royalties for:

• Building and insulation materials
• Building tools
• Concrete
• Construction materials
• Curtains, blinds, shutters and awnings
• Doors and windows
• Industrial adhesives
• Road construction materials
• Stone treatment
• Stone wool
• Window coverings

Find benchmarks and royalty charges in construction today

There are a few ways that you can use the RoyaltyRange database to find construction royalties.

You can:

• Request a one-off search for construction royalties: Filter your search by IP type, keyword, etc. The results are shown in an easy-to-read report. Cost: €500 (+VAT).
• Download a readymade royalty report for a specific construction category: Get pre-prepared reports instantly for your chosen category. Cost: €500 (+VAT).
• Order a benchmarking study: Get an in-depth analysis and comparison of the royalty rates that match your search criteria. Cost: €2,000 (+VAT).
• Download a readymade benchmarking study for construction: Start using our pre-prepared construction industry benchmarking study instantly. Cost: €1,500 (+VAT).

You’ll find the search/purchase forms for each of these services at the bottom of this page.

If you’d like to speak to a member of our team about which service you need, get in touch.