Royalty Licensing Model

Description
This template will aid in the below analysis (sensitivity tables for PV included):

Scenario: A New Author's Debut Novel

Imagine an emerging author, Alex, who has just written her debut novel. She's been approached by a small publishing house to get her book published. The publishing house is relatively new and caters to a niche market. 

They offer two royalty models:
 - A fixed fee per sale with royalty licensing.
 - A percentage per sale.

Factors to Consider:
 - Predicted Sales Volume: The publishing house is niche and doesn't have a vast distribution network. Therefore, the predicted sales volume is moderate.
 - Retail Price Uncertainty: The retail price of the book might fluctuate based on market demand, promotions, or other factors.
 - Cost Predictability: Alex, being a new author, prefers to have a predictable and steady income from her book sales.

Analysis:
With a percentage per sale model, Alex's earnings will directly correlate with the retail price of the book. If the book is discounted heavily or doesn't sell at the anticipated price, her royalties might decrease.

Scenario B: 

With a fixed fee per sale model, Alex will earn a consistent amount for every book sold, irrespective of its selling price. This provides her with more predictable earnings.

Given the uncertainty around the retail price and the moderate sales volume prediction, Alex decides that the fixed fee per sale with royalty licensing is a better option for her. She feels this model will provide her with more consistent and predictable earnings, especially since she's at the beginning of her writing career and values financial stability.

In this scenario, the fixed fee per sale model works better for Alex due to the specific circumstances. It's essential to note that the best choice varies based on individual situations, and what works in one case might not be ideal in another.

You can perform in-depth quantitative analysis on the above scenario with this model.


This template is also included in two bundles:
- All Models Bundle: https://www.eloquens.com/tool/P8Y4TX4v/finance/financial-forecasting-models/financial-models-120-useful-and-usable-logic
- Accounting Tools: https://www.eloquens.com/tool/axKzHNRV/finance/accounting/accounting-bundle-useful-excel-templates-for-accounting-department