Tiered royalties
Configure tiered royalty rates in contracts based on units sold or total net receipts earned.
Tiered royalties allow you to vary the royalty percentage based on sales performance — either by units sold or total net receipts earned.
Tiers are configured within contract rules. Each rule can specify which tier applies and the conditions for that tier.
How tiers work
Tiers let you create escalating (or de-escalating) royalty structures. Common scenarios include:
- Escalating royalties — Lower rates initially, increasing as sales grow (rewarding success)
- Advance recoupment — Different rates before and after an advance is earned out
- Volume-based pricing — Rates that change at specific sales thresholds
Tier calculation types
When setting up tiers, you choose how the tier thresholds are calculated:
| Type | Description | Example |
|---|---|---|
| Units sold | Tier changes based on number of copies sold | “After 1,000 units, royalty increases to 15%” |
| Total net receipts | Tier changes based on total royalties earned | “After $5,000 earned, royalty increases to 20%” |
Setting up tiered royalties
Tiered royalties are configured in contract rules:
- Go to the contract and create or edit a rule
- In the rule’s action, set the royalty percentage for that tier
- Add a condition to specify when this tier applies (e.g., “Units sold is greater than 1000”)
- Create additional rules for each tier, with appropriate conditions and priorities
Tip: Use rule priority to ensure tiers are evaluated in the correct order. More specific tier conditions should have higher priority (lower numbers).
Example: Escalating royalties by units sold
For an author contract where royalties increase as sales grow:
| Rule | Condition | Royalty | Priority |
|---|---|---|---|
| Rule 1 | Units sold > 5000 | 15% | 1 |
| Rule 2 | Units sold > 1000 | 10% | 2 |
| Rule 3 | (no condition - fallback) | 5% | 3 |
In this example:
- First 1,000 units: 5% royalty
- 1,001 to 5,000 units: 10% royalty
- 5,001+ units: 15% royalty
Example: Tiers by net receipts
For a contract where royalties change based on total earnings:
| Rule | Condition | Royalty | Priority |
|---|---|---|---|
| Rule 1 | Total net receipts > $10,000 | 20% | 1 |
| Rule 2 | Total net receipts > $2,500 | 15% | 2 |
| Rule 3 | (no condition - fallback) | 10% | 3 |
Legacy units and royalties
If you have historical sales data from before using Royalties HQ, you can record this on each title format:
- Legacy Units Sold — Historical unit sales count
- Legacy Royalties Earned — Historical net royalties
These values are included when calculating which tier applies, ensuring accurate tier progression for titles with existing sales history.