Shark Tank Royalty Calculator
Enter the investment, royalty per unit and expected sales. See how much royalty the investor receives and how long it could take to reach a repayment cap.
A Shark can offer money without taking a bigger piece of the company. Instead, the entrepreneur might have to pay the Shark something every time a product is sold. That is where a royalty starts to matter.
This calculator keeps those numbers together. Enter the investment, royalty on each unit, monthly sales and the amount at which the royalty stops. You can then see how many units have to sell, how much the Shark receives each month and roughly how long the payments would continue if sales stayed at that level.
Calculate a Royalty Deal
Use the terms from a pitch or try your own numbers.
Royalty Results
How Does a Shark Tank Royalty Deal Work?
A royalty is tied to sales rather than ownership. If a Shark receives $1 for every unit sold, one sale sends $1 to the Shark. Sell 10,000 units and that becomes $10,000 in royalty payments.
Some royalty deals stop after a certain amount has been paid. Others can continue for much longer, and the exact terms matter. This calculator is built for the simpler version where there is a royalty per unit and a clear payment cap.
A Simple Royalty Example
Suppose a Shark invests $100,000 and receives $1 per unit until total royalty payments reach $200,000.
If the company sells 5,000 units each month, it would take about 40 months to reach that $200,000 cap, assuming sales and the royalty terms stayed unchanged.
The Investment and Royalty Are Different Numbers
This is an easy part of a royalty deal to mix together. A Shark might invest $100,000, but that does not mean the royalty automatically stops when the Shark has received $100,000 back. The agreement might say $150,000, $200,000 or another amount entirely.
So the calculator gives the investment and the royalty cap separate boxes. The investment tells you how much money went into the deal. The cap tells you how much royalty has to be paid before that particular royalty obligation ends.
Sales Can Change the Repayment Time a Lot
The royalty per unit can stay exactly the same while the timeline moves quite a bit. At $1 per unit, selling 5,000 units a month creates $5,000 in monthly royalties. Selling 10,000 units would make that $10,000 instead.
That means a business selling faster can reach the royalty cap faster too. But the calculator is only using the monthly sales number you enter. Real sales can rise, fall or move around from one month to another, so the time shown here is an estimate rather than a promise.
What About Royalties That Never Stop?
Some deals do not have a simple repayment cap. A royalty might continue for as long as a product is sold, or the amount per unit might change after the Shark receives a certain amount back. Those deals need a different calculation.
For this tool, the stopping amount is important because it gives us a finish line. If a deal has no cap at all, you can still calculate the monthly and annual royalty from sales, but there is no fixed number of months until the royalty ends.
Try a Real Shark Tank Royalty Offer
Kevin O’Leary made royalty offers to Scrub Daddy. Aaron Krause did not accept them, but they are useful examples of how a per-unit royalty works.
Scrub Daddy: Kevin’s First Royalty Offer
$100,000 investment with $0.50 per unit until $100,000 was repaid. Enter your own expected monthly sales to test the timeline.
Scrub Daddy: Later Royalty Offer
$100,000 investment with $0.25 per unit until $100,000 was repaid. The offer also included a lower continuing royalty afterward, which this simple cap calculator does not model.
Shark Tank Royalty Calculator FAQs
How do you calculate a royalty per unit?
Multiply the royalty paid on each unit by the number of units sold. A $1 royalty on 5,000 monthly sales produces $5,000 in monthly royalty payments.
How do I calculate how many units are needed to reach a royalty cap?
Divide the total royalty cap by the royalty paid per unit. A $200,000 cap at $1 per unit requires 200,000 unit sales.
How long would it take to pay $200,000 at $5,000 per month?
At a constant $5,000 per month, it would take 40 months to reach $200,000.
Is a royalty the same as giving a Shark equity?
No. Equity is ownership in the company. A royalty is a payment tied to sales or another agreed measure. A deal can contain either one or both.
Can this calculator handle a royalty forever?
It can calculate monthly and annual royalty payments, but a perpetual royalty has no repayment end date. The estimated payoff period only applies when you enter a defined royalty cap.
More Shark Tank Calculators
Need a different part of the deal? Try another calculator.