What is the royalty for software contracting?
I have a question about whether royalties are due for the type of business we operate. We are a software development company that has recently started using Unreal Engine to develop experiences for clients (education, training, in-store visualization experiences, biomedical visualizations, architectural visualizations) for which we frequently receive more than $3000.
For these projects are we exempt from paying 5% royalty on what we receive from the client? Also, if in future projects the customer wanted to provide access to one of our delivered VR experiences as one part of a sold product (or subscription-based product), would that change the answer?
I posted some relevant info I found on the faq page below.
If your work is custom work-for-hire (i.e., a one-off product for an individual client), then your work-for-hire fees are royalty free. In that case you'd owe nothing.
Then if your client didn't have any revenue for that product, there is no royalty there either.
However, if, as you say, later that product is monetized (such as a subscription), then royalties would be owed on that revenue. In that case it'd be preferable if your client became a UE4 EULA licensee in which case they could take over the royalty obligation instead of you.
answered Aug 26 '16 at 11:02 PM
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