Consonance handles four types of escalators: sale value, units, date, and discount.
Types of escalator
- Unit escalators are based on how many copies of that product have been sold.
- Date escalators are based on the date the sales are made.
- Discount escalators are based on the channel’s discount rate, and can only apply to products in channels that are calculated using discount/net receipts. Discount escalators can be additive or multiplicative.
- Sale value escalators are based on your default currency total.
Escalator levels
Escalators are applied at the work, the default product level, the masterchannel level or the channel level.
Date escalators
Most likely, date escalators are set on the product default level, meaning that any sale in any channel will escalate depending on the date.
Discount escalators
Most likely, discount escalators are set at the channel level, for example: certain special sales with a particular retailer are at an unusually high discount and the normal rates do not apply.
Unit escalators
Most likely, unit escalators are set at the masterchannel level, as there may be sales to exclude from the escalator. For example:
Sales in the masterchannels UK Sales and Export should count towards the unit escalator, but sales in the Rights masterchannel should not. In this case, do not specify the escalator at the default product level.
The unit escalator would be specified at the masterchannels of UK Sales and Export, but not for the Rights masterchannel.
Sale value escalators
Most likely, sale value escalators are set at the product level, because any sale income will probably count towards the aggregated total. You are able to set a sale value escalator at the masterchannel level as well.
Here are some worked examples of how the sale value escalators work.
| Sale value threshold | Royalty rate |
|---|---|
| up to £9,999.99 | 25% |
| £10,000 - £19,999.99 | 35% |
| from £20,000 | 50% |
Sale value escalator rates are cumulative
Meeting the Step 1 threshold means the 25% base rate is added to the 10% escalator to total 35%
Meeting the Step 2 threshold means the 25% base rate is added to the 10% first escalator and the 15% escalator to total 50%
| Previous sales value | New sale value | Expected amount | Notes |
|---|---|---|---|
| 1 | 9,998 | 2499.50 | |
| 9,999 | 2 | 0.35 | It is 10,000.00 that triggers. (£0.999999999999999 25%) + (£1.000000000000001 %35) = £0.25 + £0.35 = £0.60 |
| 15,000 | 6,000 | 2250.00 | (5000 35%) + (1000 50%) = 2250 |
Escalator set up
Start with a base rate 5%, then add a step value and a percentage increase.
To emphasise, the step is the agreed amount when the royalty rate changes, and the percentage is the amount it changes by. For example:
If the royalty is agreed as: 7.5% base rate, 10% after 1 Jan 2020, 12.5% after 1 Jan 2021 you enter:
- Step 1: from (date): 2019-12-31
- Step 1: % pt increase: 2.5
- Step 2: from (date): 2020-12-31
- Step 2: % pt increase: 2.5
Escalator set up, multiplicative (discount only)
Start with a base rate 5%, then add a step value and a factor increase.
To emphasise, the step is the agreed amount when the royalty rate changes, and the factor is the rate it changes by. For example:
If the royalty is agreed as: 7.5% base rate, 4/5ths of the prevailing rate after 55% discount, 3/5ths after 65%, you enter:
- Step 1: Discount from list price : 55%
- Step 1: factor: 0.8
- Step 2: Discount from list price : 65%
- Step 2: factor : 0.6
Minimum and maximum rates
Most royalty specifiers do not need to detail the minimum or maximum royalty rate. These fields are most useful when using multiple types of escalator that could change the base rate more than desired.
For example, a date escalator increases the base rate by 3% and a quantity escalator increases by 3% but the maximum increase agreed is 5%, whichever threshold comes first.
The minimum and maximum royalty rate fields will appear when editing a royalty specifier that has any existing escalator data. The fields are unnecessary if no escalator data exists because the royalty rate will remain at the base rate as specified.