Commission based relationship with client?

Is this a reasonable relationship arrangement?

[instinct]

I have a relationship with a niche (print) magazine publisher who doesn't have a website presence (except for a subscribe page). In my opinion this is a potential goldmine of opportunity. They have tons of content and a very reputable name in this niche.

My question is this: Is there anyone working on a commission only basis with their clients in exchange for development, SEO and hosting?

My idea was to approach them, and offer to develop the site in exchange for a percentage (commission) of adsense and banner revenue.

Is this advisable or should I just ask for a flat fee? If a percentage is commonplace, what amount should I ask for? 20% 30% or?

Thanks all, I really appreciate any input.

[Zipperhead]

These realtionships can be interesting but require a high level of trust and constant communication which can end up being very time-intensive. You virtually need access to the clients books, otherwise it's very tempting for him to not disclose deals.

Often a combination of reduced fee/monthly retainer in conjunction with a commission will work. This protects both sides. After all, how would you feel after 3 months of intensive web and SEO and no deals have materialized yet. In terms of the cut, 20% - 30% of the net profits seems to work well.

[XtendScott]

What data can be tracked? Can you build the site to track the data? What internal data do you have access to?

That is where the trust comes in. For them, is your data accurate? For you, what if the site brings more clients than that go through the website(do they call). How do you attribute any increase? Above current trend? Above current numbers? Maybe without the web they would have a decrease rather than staying flat?

Can it be determined where the client came from? Is a new client from your work, print ad, other referral, etc.

How big is the company, and what would make it worth your while and theirs?

[cabowabo]

Another issue is since you will be doing the work on the website directly and not on a secondary domain that you own and bouncing the traffic to him is that what occurs when the contract runs out and he is making a ton of money and realizes he doesn't need you anymore and can hire a college student to maintain it for 1/10th what he is paying you. Clients are very eager to work with you when they aren't making any money, but once they do, their attitudes change and suddenly you are expendable. I have been burned on deals like this and now our contracts are bullet-proof.

Tread carefully,

CaboWabo

[Easy_Coder]

Is there anyone working on a commission only basis with their clients in exchange for development, SEO and hosting?

I've been doing this for 5 years now. I'll only take on customers with high margin products. I take percentage of each sale and it indeed requires a relationship based on trust.

[instinct]

These responses are really good food for thought. Obviously the trust issue is huge. Right now I have a very decent personal relationship with the owner, but as was mentioned - once some serious money starts flowing this can change quickly.

The company is fairly big, publishing niche magazines at least one of which is available at nearly every magazine seller here in Canada.

The magazines are all Canadian specific (the actual magazine title is: Widgets - Canada) BUT 75% of the articles would definitely have an appeal to anyone interested in the topic, not just us Canucks. Their content is truly world class.

My angle was not so much in thinking about increasing their subscription rate (although that would definitely be a consideration) - it was more in thinking I could help them gain a second revenue stream by making their content available to the world at large and then monetizing it with adsense and banners.

There are other opportunities as well - selling "how-to" videos via the website for example, but that would be a little further down the road.

CaboWabo: Is it possible for you to generally describe how your contracts are worded so as to avoid what you mentioned?

XtendScott: Great points. I especially hadn't thought about the effect the site might have increasing sales via other channels such as phone orders.

Zipperhead: I like your idea of a combined base + commission pay. Seems fairest for all.

Regards,
Instinct

[cabowabo]

Sure, our contracts mention a target number for sales by the end of the contract. If the number mentioned in the contract is met and the contract is not renewed, the owner must pay us a figure equal to 50% of what we would have earned over the next 24 months. It is "handcuffing" the owner, but it is also protecting us as well. If the owner cannot pay, the site ownership is transferred to us. This may sound harsh, but it is there for a reason. We have not had a client terminate since this has gone into place and our relationships are all very solid.

Cheers,

CaboWabo

[instinct]

That certainly does seem a bit strong, but kudos to you if it works! Great food for thought.

Thanks for the reply,
Instinct