What is a typical royalty percentage for a licensing agreement for stuffed toys?

There is no typical figure. You try to get as much as you can negotiate based on market demand, uniqueness of the product, and your proprietary rights. 5% of cost will be materially less than 5% of net revenue. You could be talking about 40%-50% less in royalties than you were anticipating. That fact does not make this royalty amount wrong or bad, but if you have the ability to negotiate 5% of net revenue, then 5% of cost is underselling your position. There are times when something other than net revenue or net sales is appropriate for determining royalty percentage. When your product is only a portion of what is being sold (like licensing air bag technology for a car), it may be appropriate to fix the royalty to your contribution to the bundle rather than the cost of the bundle. That said, I prefer to negotiate a flat dollar amount (e.g., $0.50/unit). Having a royalty based on cost just further incentivizes construction of a cheaper product and you may not want to further that incentive with your product. None of these ideas are intended to provide an opinion of your situation, I don't have the facts to offer an informed opinion, but these are the issues that come to mind when I think about this type of situation. Good luck, Todd