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A license is permission for another company to make or sell the thing that makes you special, as its own product, for a payment on each unit and a set of terms. The thing stays yours. The customers do not. A room multiplies the licensee's forecast by the rate, calls the result free money, and argues about whether the rate is high enough. That is not the comparison. Each unit the licensee takes from you costs the margin on the unit it replaced rather than the royalty, and where the licensee sells in your market that is most of its units. This pack turns it into two multiplications and a subtraction. What the license pays a year is the royalty on every licensee unit, plus what rides along, less what running it costs. What it takes is the licensee's units that would have been yours, at what one of your own units earns you. The rate at which the two are equal is the break-even royalty, and how far the rate on the table clears it is a distance a board can watch. The second distance is the break-even overlap, the share of the licensee's customers that can already be yours before the license takes more than it pays, and the Model tab sweeps it from none to all, because the same license lands in a different column for every licensee. It stops on two halts: no one has counted where the licensee's customers would come from, and no one has asked what rides along. Both accept a deliberate zero, and each zero is its own reading: a licensee whose customers were never yours, and a license on which nothing rides.
What is the Licensing Decision Strategy Pack
The Licensing Decision Strategy Pack is a complete decision-support kit for one question: should you license the thing that makes you special, and to whom? It is built around one organizing claim: the royalty is not the decision, because a license earns on the licensee's sales and pays for it with your own, and the two numbers that decide it are where the licensee's customers come from and what rides along. Sixteen files carry it: the foundations, a concept deck, a scored decision wizard, a license model blank and worked, the moves at each reading, nine sourced licenses, a fit worksheet, a roadmap template, a practitioner manual, a field checklist, and an orientation page.
The test that runs through every file
The royalty is not the decision, because a license earns on the licensee's sales and pays for it with your own, so what decides it is where the licensee's customers come from and what rides along. It is the argument in the deck, it becomes the wizard’s axes, it drives the model’s inputs, and it reappears as lines on the checklist. That is what makes 16 files a product rather than 16 documents.
The model resolves to one number you can negotiate with: The break-even royalty — the rate a licensee must pay before the license earns more than it takes. It ships blank and worked, and every input is a named cell rather than a figure buried inside a formula, so the number arrives with its assumptions attached rather than on its own authority.
Why a licensing strategy is settled by the licensee's customers, not the royalty
A license is permission for another company to make or sell the thing that makes you special, as its own product, for a payment on each unit and a set of terms. The thing stays yours. The customers do not. A room multiplies the licensee's forecast by the rate, calls the result free money, and argues about whether the rate is high enough.
That is not the comparison. Each unit the licensee takes from you costs the margin on the unit it replaced rather than the royalty, and where the licensee sells in your market that is most of its units. The share of its sales that would have been yours exists nowhere until someone matches its named accounts against your own list, because no one counts another company's future customers. What you earn on each unit it sells beyond the royalty is booked in another ledger, and the team pricing the rate has usually never seen it. So the room compares a royalty to nothing, and signs or refuses on the classification.
This pack turns that into arithmetic. What the license pays a year is the royalty on every licensee unit, plus what rides along, less what running it costs. What it takes is the licensee's units that would have been yours, at what one of your own units earns you. Then the whole decision reduces to one figure: the break-even royalty, which is the rate at which the two are equal, and how far the rate on the table clears it.
Should we license our technology, and to whom
| The reading | What it means | The first move |
|---|---|---|
| Those customers were never yours | The overlap is zero, deliberately, and the license costs no sales. | Write the territory or the field of use that makes it true into the contract, so it stays true when the licensee grows. |
| The license pays for the sales it takes | The royalty and the ride-along clear the overlap, and the distance is stated. | Put the break-even overlap in the contract as a limit and in the review as a condition with a date. Protect what rides along. |
| The license takes more than it pays | The commonest reading for a licensee in your own market. | Say both numbers in the same sentence. Take the break-even royalty to the table, change the licensee, or change the overlap. |
| You are giving it away | The rate is zero, and what rides along carries it or nothing does. | If something rides along, protect it in the contract; it is the business. If nothing does, ask what the gift is for. |
Three of the nine sourced licenses won, three lost, and three ended somewhere between, and the winners did not have the higher rate: Android charged nothing and Coca-Cola charged a dollar. Same license, different licensee, opposite answer, which is why the question is to whom.
What is in the Licensing Decision Strategy Pack
- Foundations. The framework: why the royalty is not the decision, the arithmetic of what a license pays against what it takes, the four readings, and the halts.
- Concept deck. Twenty-three slides for a board or a term-sheet review, with nine sourced licenses and what each does not establish.
- Decision wizard. Eight scored questions returning the band, the weakest answer, and either of the two halt conditions.
- License model. Eleven candidate customer overlaps across the columns, the same license offered to eleven licensees, and the break-even royalty that decides it.
- Strategies and tactics. The moves at each of the four readings, what to do when the model halts, and four ways to make the next license cheaper to judge.
- Case studies. Nine sourced licenses — three won, three lost, and three ended between — with three records read beside them.
- Fit worksheet. The single page of record: the thing on its own, the licensee, the overlap, what is on the table, what rides along, and whether the license pays.
- Roadmap template. Five phases with gates and owners, the assumptions register, a reporting change and a periodic review line.
- Practitioner manual. The thing on its own, what one unit earns, counting the overlap, costing the ride-along, the term sheet, the board paper, six failure modes.
- Field checklist. The one-pager that survives outside the binder.
- About the package. What each file does and the order in which to run them.
Who the Licensing Decision Strategy Pack is for
A chief executive with a term sheet that has been described as free money for a quarter and priced against its own sales for none of it; a chief financial officer being asked to approve a royalty against a number no one has produced; a chief technology officer or head of engineering who knows the thing leaves with the firmware and the method; a chief commercial officer whose largest rival has asked to license the product's best part; a general counsel reading a non-exclusive grant with no exit in it; a board member reading a royalty forecast with nothing beside it; a private equity operating partner underwriting a business whose earnings sit inside licenses someone else can reprice; and the adviser who would otherwise start from a blank page. It is worth buying when a real decision is in front of you. It is not worth buying to read.
An honest note on fit
This is a kit for running a decision, not a research report and not a forecast. Worked examples use an explicitly fictional company with numbers tuned to teach rather than to flatter. In the worked case a rival offers 8 percent of a $1,250 unit on 25,000 units a year, $2.5m of royalty on a line that makes $6.2m, which is the fact that gets it onto an agenda. It is not the decision: 35 percent of the rival's named accounts are already the company's, each lost unit costs $500 of margin, and the license takes $4.4m a year against the $3.0m it pays. It costs $1.4m a year and $5.3m over the term, the break-even royalty is 12.4 percent, and the case rests on one number no one had counted until the week the term sheet was priced.
The framework content is the larger share of the pack, and each page marks which is which. Four limits are stated on the page rather than worked around. The model does not forecast the licensee's volume; that figure is its forecast discounted by your own judgment. It holds the overlap constant across the term, which is a simplification worth testing where the answer is close. It does not price what the licensee learns, which is a judgment rather than a number. And it says nothing about what the thing carries beyond its margin: a standard, a reputation, or a position in a market you intend to enter.
Questions about the Licensing Decision Strategy Pack
- What numbers does the model produce?
- One headline and twelve supporting rows. The break-even royalty, which is the rate at which what the license pays equals what it takes at the overlap you have counted, and how far the rate on the table clears it. Around them: the royalty on one licensed unit, what the license pays a year and what it takes, the units it takes from you and their share of your own volume, what it earns net a year and over the term, the break-even overlap, whether the license pays, the license in years of last year's profit, and the licensee's volume against your own. The Model tab sweeps the overlap from none to all, and one row turns from Yes to No at the point where the license stops paying.
- A competitor wants to license our core technology. Should we?
- Not on the rate, and that is the whole point of the pack. In the worked case an 8 percent royalty worth $2.5m a year on a $6.2m product line costs the licensor $1.4m a year, because 35 percent of the licensee's customers are already its own and each lost unit costs $500 of margin against $100 of royalty. The rate would have to be 12.4 percent before it paid, and the same license to a licensee whose customers are not the company's earns $3.0m a year.
- We don't know where the licensee's customers would come from.
- Most companies do not, because no one counts another company's future customers. It is an afternoon with two lists: the licensee's named target accounts against your customer list, weighted by what each account buys, and checked against the accounts the licensee has already taken from you. Until it exists the rate is being priced against nothing.
- Does this only apply to technology licensing?
- No. It applies wherever the thing that makes you special can be sold inside someone else's product: an operating system, a character, a recipe, a catalog, a database, a brand, a method. Of the nine cases, three are software, two are characters, one is a bottling right, one is genetic data, one is music, and one is an operating system read from the licensee's chair.
- Are the case studies real companies?
- Yes. Nine sourced licenses: Apple and the Mac clones, Palm, Android, IBM and the PC operating system, Marvel, Nintendo, Coca-Cola's bottling rights, 23andMe and GSK, and UMG and TikTok. Each is dated and read through whose customers the licensee sold to and what rode along, and each states what its evidence does not establish. Rivian and Volkswagen, Tesla's patent pledge, and Yum China are read beside the nine and labeled as such. The worked model, wizard, and worksheet use an explicitly fictional company, labeled as such on every file.
- Is this a subscription?
- No. One payment, one download, sixteen files, yours to keep and to use inside your organization under the license included in the pack.
- What is the Licensing Decision Strategy Pack?
- The Licensing Decision Strategy Pack is a decision-support kit for one question: Should you license the thing that makes you special, and to whom? It contains 16 files — foundations, concept deck, decision wizard, license model, strategies and tactics, case studies, fit worksheet, roadmap template, practitioner manual, field checklist, about the package — built around a single organizing test: the royalty is not the decision, because a license earns on the licensee's sales and pays for it with your own, so what decides it is where the licensee's customers come from and what rides along. It is what a leadership team uses to run the decision and leave a record of what they assumed, rather than a report about the topic.
- Who is the Licensing Decision Strategy Pack for?
- Anyone who has to make this call and answer for it: an operator or owner facing the decision, the executive team running it, the board or investor testing the reasoning, or an adviser who would otherwise build the framework from a blank page. It is worth buying when a real decision is in front of you. It is not worth buying to read.
- What is in the Licensing Decision Strategy Pack?
- 16 files in Word, PDF, PowerPoint and Excel: Foundations (Word + PDF) — The framework: why the royalty is not the decision, the arithmetic of what a license pays against what it takes, the four readings, and the halts. Concept deck (PowerPoint + PDF) — Twenty-three slides for a board or a term-sheet review, with nine sourced licenses and what each does not establish. Decision wizard (Excel) — Eight scored questions returning the band, the weakest answer, and either of the two halt conditions. License model (Excel, blank and worked) — Eleven candidate customer overlaps across the columns, the same license offered to eleven licensees, and the break-even royalty that decides it. Strategies and tactics (Word) — The moves at each of the four readings, what to do when the model halts, and four ways to make the next license cheaper to judge. Case studies (Word) — Nine sourced licenses — three won, three lost, and three ended between — with three records read beside them. Fit worksheet (Word, blank and worked) — The single page of record: the thing on its own, the licensee, the overlap, what is on the table, what rides along, and whether the license pays. Roadmap template (Word) — Five phases with gates and owners, the assumptions register, a reporting change and a periodic review line. Practitioner manual (Word + PDF) — The thing on its own, what one unit earns, counting the overlap, costing the ride-along, the term sheet, the board paper, six failure modes. Field checklist (PDF) — The one-pager that survives outside the binder. About the package (PDF) — What each file does and the order in which to run them.
- How is the Licensing Decision Strategy Pack delivered?
- As a single download of all 16 files, immediately after payment, with the same link sent by email. It can be downloaded 3 times and the link is valid for 30 days. There is nothing to install and no account to keep.