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.
- Sale value escalators are based on a particular currency total.
Escalators are applied at the default product level, the masterchannel level or the channel level.
Most likely, date escalators are set on the product default level, meaning that any sale in any channel will escalate depending on the date.
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.
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.
For more fine-tuned control, you can set channels within a masterchannel to inherit the escalator from the masterchannel level. Not every channel in the masterchannel has to inherit the escalator, but you would need to set whether each channel inherits or not. For example:
The same UK Sales masterchannel above has a UK Gratis channel which should not count towards the unit escalator total. Every channel within the UK Sales masterchannel should be set to “Inherit”, except for the UK Gratis channel.
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%|
|£10000 - £19999.99||35%|
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|
|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