Recently I saw something mentioning the Selden Patent fee, or royalty was 5 percent of the listed retail price of an automobile.
I was curious what this would have meant to Ford, who famously fought, and finally won, the Patent case. 1907 was also the second year of six cylinder car production in the U.S., so I compared the cost of A.L.A.M. (Association of Licensed Automobile Manufacturers) fees with Ford's six cylinder car (Model K) as well as Models N and R.
Had Ford been a "member", the fees paid per model would have equaled:
Model K - $63,980
Model N - $156,420
Model R - $93,632
Total fees: $314,032
Had Ford retail prices remained the same, along with sales, instead of showing a profit of 1.3 million, Ford would have fallen below the 1 million mark paying the royalty.
I don't know the margins made with the Model T, but considering the future volume of cars sold, I can see why Ford and the A.L.A.M. fought this out. Had Ford been required to repay missed royalties by the time the suit was settled, it would have been a huge amount.
I know several on this forum are quite knowledgeable about the Selden Patent. Please add to this thread with any observations or more information. My numbers are estimates, based on the "5%" number, and Fiscal Year 1907 Ford Gain/Loss audit report, N. A. Hawkens accounting, courtesy Benson Library, Accession 1938.
A little more info, and a few corrections to the spreadsheet (if anyone's interested):
(Ford sales are Fiscal Year 1907, Oct 1 1906-Sept 30 1907, according Ford Mo. Co. audit report)