> ## Documentation Index
> Fetch the complete documentation index at: https://docs.royaltyport.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Costs

> Extraction of recoupable costs and approval requirements, grouped by cost base

<Info>
  Structured data fields are by definition an abstraction of legal language. When in doubt, use [citations](/projects/contracts/contract-details/citations), the [AI chat](/projects/ai-chat), and the actual contract text to validate the structured data against your own interpretation.
</Info>

## Overview

The Costs extraction identifies all cost provisions in the contract, including recoupment rates and approval requirements. When the contract defines cost bases, costs are automatically grouped under their respective base with a type label and definition.

## Main vs. Third-Party Costs

When a contract contains costs that are recouped from a **third party** (for example, a featured artist or side artist who is not the main assignor under the agreement), the costs section displays two tabs:

| Tab             | Description                                                                                  |
| --------------- | -------------------------------------------------------------------------------------------- |
| **Main**        | Costs recouped from the primary assignor(s) under the agreement                              |
| **Third Party** | Costs recouped from a third party (e.g. featured artist, side artist) who is not an assignor |

If the contract contains only main costs, no tabs are shown and costs are displayed as a single list.

<Note>
  Third-party costs are identified automatically during extraction. If you believe a cost has been miscategorised, use the edit icon to correct it or raise a query via the [AI chat](/projects/ai-chat).
</Note>

## Cost Bases

A cost base defines the revenue pool from which a cost is deducted. When present in the contract, each cost base is shown as a section header above its related cost rules, with:

| Field      | Description                                              |
| ---------- | -------------------------------------------------------- |
| Type       | The revenue pool (e.g., "Gross Revenue", "Net Receipts") |
| Definition | The contract's own definition of that base               |

The following cost base types are recognised:

| Type              | Description                           |
| ----------------- | ------------------------------------- |
| Gross Revenue     | Total income before any deductions    |
| Net Receipts      | Income after specified deductions     |
| Third Party Share | Portion attributable to third parties |
| Assignor Share    | Portion attributed to the assignor    |

<Note>
  If the contract does not define cost bases, costs are displayed as a flat list — the same as before.
</Note>

## What Gets Extracted

Each cost rule is displayed as a card beneath its cost base (or in a flat list when no bases are present):

| Field               | Description                                                             |
| ------------------- | ----------------------------------------------------------------------- |
| Title               | Cost category name                                                      |
| Description         | Plain-language summary of the cost rule as extracted from the contract. |
| Recoupment Rate     | Percentage recoupable from royalties (e.g., "50%")                      |
| Requires Approval   | Whether expenditure needs prior authorization                           |
| Approval Conditions | Specific requirements for approval (expandable)                         |

## Recoupment Rates

The recoupment rate indicates what percentage of the cost can be recovered from the artist's royalties:

* **100%**: Fully recoupable
* **50%**: Half recoupable, half absorbed by label
* **0%**: Non-recoupable (label expense)

## Approval Conditions

When "Requires Approval" is Yes, expand the section to see:

* Who must approve (artist, manager, label)
* Threshold amounts requiring approval
* Notice requirements
* Documentation needed

## Editing Costs

Click the edit icon to:

* Add new cost categories
* Assign a **cost base** to a new cost — select an existing base from the contract or create a new one by choosing a type (Gross Revenue, Net Receipts, Third Party Share, or Assignor Share) and an optional definition
* Mark a cost as a **Third Party Cost** — use this when the cost is recouped from a third party (e.g. a featured artist) rather than the primary assignor
* Modify recoupment rates
* Update approval conditions
* Remove costs that don't apply

<Tip>
  To update an existing cost rule, click the pencil icon next to it. The wizard opens pre-filled with the current values so you can adjust the recoupment rate, cost base, approval conditions, or description without removing and re-adding the entry.
</Tip>

## See Also

<Card title="Categorized Costs" icon="grid-2" href="/projects/contracts/contract-details/categorized-fields/costs">
  View recoupment percentages categorized by standard cost types (recording, marketing, video, etc.). Optimized for filtering, exports, and comparisons across contracts.
</Card>