Transfer pricing is the pricing of services or goods exchanged between related entities within a company or group of companies. Royalty range transfer pricing is a form of transfer pricing where the consideration paid is based on a royalty range, rather than a single fixed price. 

This method is often used when the transferred goods or services are difficult to value, or when the related parties are not able to agree on a fixed price. Royalty range Transfer Pricing Analysis works by setting a range of royalty rates that are applicable to the transfer. 

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The royalty rate will vary depending on the profits generated by the transferred goods or services. Generally, the royalty rate will increase with the level of profits generated. This method allows for the parties to share in the profits of the transfer, while also providing a degree of certainty for both parties on the pricing.

When using royalty range transfer pricing, the parties must agree on the range of royalty rates that will be applied to the transfer. Generally, the royalty rate will be set as a percentage of the profits generated by the transferred goods or services. 

It is important to set the royalty rate range that is fair and reasonable to both parties. In addition, the parties must also agree on how the profits from the transfer will be determined. 

This is typically done through a calculation of the arm’s length transfer price, which is the price that would have been agreed upon between unrelated parties. The arm’s length transfer price is then used as a basis for determining the profits generated by the transfer.