Contract clause library

Revenue clause: Copy, customize, and use instantly

Introduction

A revenue clause defines how revenue will be measured, reported, allocated, or shared between the parties. It’s critical in agreements involving licensing, partnerships, royalties, joint ventures, or service-based compensation. Clear revenue clauses help avoid misunderstandings, disputes, or ambiguity in financial outcomes and ensure both parties are aligned on what counts as revenue and how it’s handled.

Below are templates for revenue clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.

Standard revenue definition clause

This version defines what counts as revenue and how it should be calculated.

For purposes of this agreement, “Revenue” means the total gross receipts generated by [Party A] from the sale of [products/services], excluding taxes, refunds, chargebacks, and third-party transaction fees.

This version allocates revenue between parties based on a fixed percentage.

[Party A] shall pay [Party B] an amount equal to 20% of all net revenue received from sales of the licensed product. Payments shall be made within 30 days following the end of each calendar quarter, accompanied by a detailed revenue report.

Minimum revenue commitment clause

This version requires a baseline revenue target to be met within a defined timeframe.

[Party A] agrees to generate a minimum of $500,000 in revenue from the licensed product during the first 12 months of this agreement. Failure to meet this target shall give [Party B] the right to terminate this agreement with 30 days’ notice.

Revenue reporting clause

This version focuses on timing and format of revenue disclosures.

[Party A] shall provide [Party B] with a detailed revenue report within 15 days of each month-end, outlining gross and net revenue, deductions, and breakdown by product or service line.

A variable revenue split based on performance thresholds.

[Party B] shall receive 10% of net revenue up to $1,000,000, 15% on revenue between $1,000,001 and $5,000,000, and 20% on revenue above $5,000,000. Calculations shall be made quarterly based on submitted revenue statements.

Revenue clause based on territory

Revenue sharing based on geographic origin.

Revenue derived from sales within [Territory A] shall be allocated 70% to [Party A] and 30% to [Party B]. Revenue from all other territories shall be retained solely by [Party A].

Revenue clause with quarterly true-up

Adjusts for under- or over-reporting in future periods.

A quarterly revenue true-up shall be conducted to reconcile discrepancies between forecasted and actual revenue. Any overpayments or underpayments shall be adjusted in the next payment cycle.

Revenue clause with audit rights

Allows revenue verification through audit.

[Party B] may, once per year, audit [Party A]’s financial records related to revenue under this agreement. If discrepancies exceed 5%, [Party A] shall bear all audit costs and correct payment within 15 days.

Revenue clause with license-based attribution

Revenue is tied to specific licensed IP.

Only revenue attributable to the licensed content identified in Schedule A shall be subject to revenue-sharing under this agreement. All unrelated revenue shall be excluded from calculation.

Revenue clause with service-level multiplier

Links revenue share to service performance.

If service uptime exceeds 99.9% in any quarter, [Party B] shall receive a 1.2x multiplier on its revenue share for that period.

Revenue clause with withholding right

Allows temporary withholding of payments if revenue data is incomplete.

[Party A] may withhold revenue share payments to [Party B] if complete and verifiable sales data has not been provided. Payments shall resume once satisfactory records are submitted.

Revenue clause with escrow arrangement

Revenue share held in escrow until certain conditions are met.

All revenue payments due to [Party B] shall be held in escrow and released only upon delivery of agreed milestones outlined in Schedule B.

Revenue clause with minimum payment floor

Ensures a baseline payout even if revenue is low.

[Party B] shall receive a minimum quarterly payment of $10,000, regardless of actual revenue performance. Any shortfall shall be credited against future revenue shares.

Revenue clause with bonus for exceeding target

Adds a revenue-based performance bonus.

If net revenue exceeds $2,000,000 in any fiscal year, [Party B] shall be entitled to a bonus payment of $50,000, payable within 30 days of year-end.

Gradual increase in revenue share over time.

[Party B] shall receive 10% of revenue in Year 1, 12% in Year 2, and 15% from Year 3 onward, subject to continued agreement performance.

Revenue clause with fixed reporting schedule

Clearly defines dates for revenue disclosures.

Revenue reports shall be submitted on the 5th business day of each month, covering the prior calendar month, and include itemized breakdowns.

Revenue clause with exclusions for internal use

Removes internal transactions from calculations.

Revenue shall exclude internal use, test sales, or non-commercial transactions involving affiliates or employees of [Party A].

Revenue clause tied to product lifecycle

Changes share based on product phase.

In the first 12 months post-launch, [Party B] shall receive 20% of revenue. After 12 months, the revenue share shall reduce to 10% unless otherwise renegotiated.

Revenue clause with cap on shared revenue

Places a limit on total payable share.

[Party B]’s total revenue share shall be capped at $500,000 over the life of this agreement, after which no further payments shall be due.

Revenue clause with offset rights

Allows offsetting for pre-agreed costs.

[Party A] may deduct any approved marketing or operational expenses incurred by [Party B] from future revenue share payments, subject to written approval.

Revenue clause with clawback mechanism

Allows reclaiming overpaid amounts.

If revenue was overstated in prior periods, [Party A] reserves the right to claw back any excess revenue share payments within 60 days of discovery.

Revenue clause with promotional discount adjustment

Adjusts reported revenue for discounts.

Revenue shall be calculated net of all promotional discounts and marketing rebates applied at the time of sale, as documented in Schedule C.

Revenue clause with variable attribution weighting

Weights revenue sources differently for share calculations.

Revenue from direct sales shall be weighted at 100%, while revenue from resellers shall be weighted at 70% for the purpose of calculating [Party B]’s share.

Revenue clause with cap-and-review provision

Capped initially but subject to later review.

Revenue share shall be capped at $250,000 annually, subject to review and potential adjustment upon the agreement’s second anniversary.

Revenue clause with retention holdback

Holds a portion of share for risk coverage.

10% of each quarterly revenue share shall be held in reserve as a retention holdback and released after 180 days, subject to no material breach or refund claims.

Revenue clause with late payment penalty

Imposes interest on delayed payouts.

If revenue share payments are not made within the agreed timeframe, interest shall accrue at 1.5% per month until full payment is received.

Revenue clause with transaction-level reporting

Requires granular revenue tracking.

[Party A] shall provide a transaction-level revenue report including sale date, buyer ID, product/service sold, and revenue amount for each transaction covered by this agreement.

Revenue clause with affiliate channel differentiation

Separates revenue by sales channel.

Revenue from affiliate channels shall be reported separately and shared with [Party B] at a reduced rate of 10%, compared to 20% for direct sales.

Revenue clause with subscription vs one-time split

Handles different revenue types distinctly.

Subscription revenue shall be shared at 15%, while one-time revenue (e.g., setup fees, custom projects) shall be shared at 10%, as detailed in the revenue report.

Revenue clause with attribution model for multi-touch sales

Addresses shared customer acquisition paths.

Where multiple parties influence a sale, revenue shall be allocated using a last-touch attribution model, unless otherwise agreed in writing.

Revenue clause with bonus for early payment

Incentivizes faster disbursement.

If [Party A] makes revenue share payments within 10 days of quarter-end, a 2% early payment bonus shall be applied to [Party B]’s share.

Revenue clause with currency conversion mechanism

Standardizes reporting for international revenue.

All international revenue shall be converted to USD using the exchange rate published by [Source] on the last calendar day of the reporting period.

Revenue clause with opt-out for certain revenue streams

Allows exclusion of non-core revenue.

[Party A] may opt out of sharing revenue from new, unrelated service lines launched after the effective date, subject to prior written notice to [Party B].

Revenue clause with revenue milestone triggers

Creates stepwise obligations based on revenue levels.

Upon reaching cumulative revenue milestones of $1M, $3M, and $5M, [Party A] shall trigger additional performance reviews and potential contract modifications.

Revenue clause with cost-of-sale adjustment

Accounts for sale-related costs.

Net revenue shall be defined as gross revenue less applicable cost-of-sale charges, including shipping, fulfillment, and platform transaction fees.

Reduces share percentage as total revenue increases.

[Party B] shall receive 20% of net revenue until cumulative revenue reaches $2,000,000, after which the share reduces to 15%. Once revenue exceeds $5,000,000, the share shall reduce to 10%.

Share varies based on product maturity.

During the launch phase (first 6 months), [Party B] shall receive 25% of revenue. In the growth phase (months 7–18), revenue share reduces to 15%. After 18 months, share becomes fixed at 10%.

Revenue clause with exclusive product tie-in

Revenue tied only to a specific product.

Revenue share shall apply only to sales of Product X, as defined in Schedule A. Revenue from any other products or services shall be excluded from this agreement.

Introduces a monthly limit.

Revenue share payable to [Party B] shall not exceed $50,000 in any calendar month, regardless of actual sales performance.

Revenue clause with holiday season bonus

Seasonal revenue incentive.

For sales made between November 15 and December 31, [Party B] shall receive an increased revenue share of 22%, instead of the standard 18%.

Revenue clause with referral attribution

Revenue tied to referred clients.

Revenue generated from clients referred by [Party B], as identified in Schedule C, shall be shared at a rate of 25%. Other revenue shall be excluded from this calculation.

Revenue clause with time-based minimum increase

Requires growth over time.

Net revenue must increase by at least 5% each quarter over the previous quarter. Failure to meet this benchmark for two consecutive quarters triggers a contract review.

Revenue clause with customer lifetime value trigger

Revenue share based on long-term customer value.

If the average customer lifetime value (CLV) exceeds $2,000, [Party B] shall receive an additional 3% revenue share for the next quarter.

Revenue clause with rolling quarterly average

Smooths calculation via rolling average.

Revenue share shall be calculated based on the rolling three-quarter average net revenue, updated quarterly to reflect smoother payment cycles.

Revenue clause with pro-rata payment adjustment

Handles partial-period sales.

If this agreement begins or ends mid-quarter, revenue share payments shall be calculated on a pro-rata basis according to the number of days in the applicable period.

Calculates share per unit sold.

[Party B] shall receive $5 for each unit sold under this agreement, regardless of sale price or bundled pricing arrangements.

Revenue clause with milestone-based percentage increase

Share increases after reaching milestones.

Upon reaching cumulative revenue of $3,000,000, [Party B]’s share shall increase by 2%. A further increase of 2% shall apply after $6,000,000 is reached.

Revenue clause with defined cost recovery period

Party recovers costs before sharing begins.

[Party A] shall first recover $100,000 in development costs from net revenue. Thereafter, [Party B] shall be entitled to a 20% revenue share.

Revenue clause with aggregate revenue ceiling

Total revenue subject to share is capped.

Revenue subject to sharing shall not exceed $10,000,000 in aggregate. Beyond this threshold, all revenue shall remain solely with [Party A].

Different share based on customer category.

Revenue from enterprise clients shall be shared at 15%, while revenue from SMB clients shall be shared at 20%. Client categories are defined in Schedule B.

Revenue clause with equity alternative option

Allows opting for equity in lieu of revenue.

In lieu of revenue share, [Party B] may elect to receive equity equivalent to the forecasted value of its share, subject to mutual agreement and execution of a separate equity agreement.

Revenue clause with prepayment offset

Prepayments deducted from future revenue share.

Any advance payments made to [Party B] shall be offset against future revenue share until fully repaid, with offsets applied at a rate of 20% per quarter.

Revenue clause with early exit clawback

Protects against premature termination.

If [Party B] terminates this agreement within the first 12 months, any revenue share received shall be subject to partial clawback based on time elapsed.

Revenue clause with customer satisfaction dependency

Revenue share tied to satisfaction score.

If average customer satisfaction scores fall below 80%, [Party B]’s revenue share shall be reduced by 5% for the following quarter.

Revenue clause with inventory-adjusted calculation

Accounts for unsold inventory.

Revenue share shall be based only on paid invoices, excluding booked sales that remain unsold or unpaid at quarter-end.

Revenue clause with annual cap reset

Resets share cap annually.

The revenue share cap of $500,000 shall reset at the beginning of each fiscal year. Unused cap amounts shall not carry over.

Revenue clause with retroactive rate adjustment

Allows backdated share rate change.

If revenue exceeds forecasts by more than 25%, the revenue share rate shall increase retroactively by 2% for the full quarter in which the target was exceeded.

Revenue clause with channel partner opt-out

Allows exclusion of partner sales.

Revenue generated through third-party channel partners may be excluded from revenue share upon mutual agreement, documented in Schedule D.

Revenue clause with variable margin impact

Revenue share impacted by margin level.

If gross margin falls below 20%, [Party B]’s revenue share shall reduce by 3% for the affected period to maintain financial balance.

Revenue clause with refund reserve

Creates buffer for refunds.

[Party A] shall withhold 5% of gross revenue share each quarter in a refund reserve account. Unused amounts shall be released after 120 days.

Excludes bundled sales from sharing.

Bundled service packages offered at discounted rates shall not be subject to revenue share unless itemized revenue can be clearly attributed to shared products.

Revenue clause with distributor override

Overrides for revenue generated via distribution partners.

For sales through authorized distributors, [Party B] shall receive a flat override commission of $3 per unit sold, instead of a percentage-based share.

Revenue clause with contract renewal incentive

Boosts share if contract renewed.

If this agreement is renewed for a second term, [Party B]’s revenue share shall increase by 2% starting in the first quarter of the renewal period.

Revenue clause with quarterly profit safeguard

Share drops in case of losses.

If [Party A] reports a quarterly net loss, [Party B]’s revenue share shall be suspended for that period and resumed in the next profitable quarter.

Revenue clause with shared cost deduction formula

Deducts pre-agreed shared costs from revenue.

Shared operational costs listed in Schedule E shall be deducted from gross revenue prior to applying the revenue share percentage.

Revenue clause with alternative payment method clause

Flexibility in how revenue share is paid.

Revenue share may be paid via bank transfer or applied as service credits to future invoices, as selected by [Party B] each quarter.

Revenue clause with service level dependency

Share depends on SLA performance.

If SLA compliance falls below 95%, [Party B]’s revenue share shall be reduced by 10% for the applicable quarter.

Revenue clause with tech integration bonus

Extra share for integrating systems.

If [Party B] integrates its systems with [Party A]'s core platform, an additional 5% revenue share bonus shall apply for the next two quarters.

Revenue clause with first-sale premium

Bonus share on initial customers.

[Party B] shall receive an additional $500 bonus for each of the first 20 customers acquired under this agreement, payable alongside regular revenue share.

This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

Last updated 18 Apr 2025