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I'd love your input on how to reference the royalty payment in an artist contract. I'm green at contracts and don't want to include unnecessary details but don't want to omit information if it is important.

We will be paying 5% royalty on net sales. My question is, do we need to itemize in the contract the actual deductions we'll take off gross sales? Our deductions would include:

- taxes
- credits
- returns
- quantity discounts
- shipping

Thanks so much!
 

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I'm not an attorney, nor am I an accountant, so this is just my personal opinion.

I would list in the contract those items that will be deducted from the gross sales figure to arrive at the net sales figure. I say leave as little room for confusion as possible.

When I've sold shirts for local musicians, I usually give them a flat rate royalty payment per shirt -- usually $5. Since I do my own books, I just needed to simplify things. However, I think your method is preferable.
 
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