Volume Discount, Volume Step, Volume Break

Refers to a change in a licensee’s running royalty rate, usually downwards, when certain sales volumes are achieved by a licensee. Occasionally, but rarely, the royalty rate steps up, i.e., a low initial rate is charged to allow the licensee to partially amortize investments (e.g., specialized plant, training, and equipment) necessary to exploit the license, or no royalty might be due on a limited, specified number of prototype and demonstration units. See Escalator Clause, Kicker.

Term posted by Origin on in Uncategorized.