Help! - Royalty based image sale

[afors]

Hi, I am new to this forum.

I run my own small landscape photo business in Scotland.

I have a question with regards to pricing. I have an image
that a local business is interested in using as a header for their email
newsletters. They are also interested in using it to produce (or I guess having me produce) cheapish prints to sell to their customers. Being a hotel, they have a throughput of approx 18,000 guests a year, even assuming only 5% of guests buy one, that could still translate into significant royalties.

I currently have the print available as a £45(GBP) ($90 US) mounted print only.

The manager wants to work on a royalties based system. (I get the impression he'd be happy to have me give him the image for nothing and just pay me royalties).

Not sure how to handle this.

How do I price this potential sale? and what kind of license do I agree with them for the image usage/printing/sale, and what royalty fees are common?
Are there any other options open to me? Any suggestions greatly appreciated.

Thanks in advance

Alan