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Comment by belltaco | Hacker News Reader

> And in the future, Dr. Lawrence would receive $20 for every gross (144 bottles) sold. This was later amended to be based on ounces sold to equivalize different container sizes.

Since it's denominated in USD, wouldn't inflation have eaten up a large percentage of the royalty over time?

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You're correct in your baseline of thinking. If you dig into the valuation portion of the article, I explore that a bit.

International growth, strong USD, usage rates increasing. Overall, it's volumes vs inflation. Volumes have been growing faster on a relative basis.

Certainly a long-term risk; just one of many.

Additionally, the driver for the huge volume increase was partly Listerine going down market from an expensive medicine to a mass market product. $20 in 1881 is apparently equivalent to $580 now. J&J probably only get around $200 revenue for each gross of Listerine sold now (a guess based on retail prices and markups), suggesting that despite inflation the royalty is still a respectable 10% but implying the 1881 price must have been much higher, in real terms, than Listerine costs now.

That's covered briefly in the article, but basically they move such huge volumes that it's still a lot of money - and there's potential for growth in international markets.

$20 USD was a lot in 1915. The average worker probably made $400 a year back then.

At the time, the US dollar was pegged to gold.

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