Royalty on indirect revenue of free software

Hi, I am investigating 3D engines for use with my application, but I’m unsure of how the royalties would apply to my specific, non-game-like situation.

We currently develop and sell customized hardware. We currently provide all software for free, downloadable by anyone from our website, but this software only works with our customized hardware.

The software includes many different plugins, most of which are 2D or simulated 3D using 2D objects that use their own custom engine. But I am looking at using Unreal Engine to develop one or more 3D plugins. Again, this plugin would be completely free to download, but is useless without buying our hardware. How would royalties work in this case? Do we have to pay royalties on all our hardware sales, and track which customers are using the 3D plugin and which are not?

Looking forward into the future where we might start charging for software as well, how would royalties work in the following situations. If it makes a difference, plugins are standalone executables that communicate with the main software via various interprocess communication methods, so no Unreal Engine binaries would be distributed unless the plugin is downloaded and installed:

  1. We charge for the base software, which is useless without plugins. But any and all plugins are still free. We currently don’t have a way of tracking which customers are using what plugins. Essentially, it is one price for the software, regardless if the customer downloads and uses the 3D plugins or not.

  2. We don’t charge for the base software, but charge individually per plugin, but some plugins are still free. I would assume in this case, only 3D plugins we sell would be due royalties, and free 3D plugins are not due royalties.

  3. We charge for both the base software, and individually for plugins (where some are free and some are not). I’m guessing the answer to this will be some combination of the answers to #1 and #2.


Hi Sky,

Thanks for the email. We’re here to help.

On review of your request it seems your requirements might be best served by an Unreal Engine 4 custom license transaction. At least by way of the discussion we can better understand your application and how best to serve you.

Would you mind emailing me directly at so I can direct your query to the appropriate member of our licensing team.

All the best,