Forum Moderators: LifeinAsia
Generally, this means they have no money to put down and hope that I'll do thousands of dollars of work for free - in exchange for some profit-sharing arrangement.
I've read about other webmasters accepting some share of the website's income in lieu of payment (or payment at a discount) and I was wondering if anyone had any experience with this? I've done it once in the past and been fairly happy with it.
Here's the situation, what would be your recommendation as far as percentages I should be getting:
The website will sell a product. This product needs to be resupplied from time to time, and generates a monthly income.
Average cost of products : $2000
Residual monthly income from each product sold : $150
Anticipated average products sold per month : 5
In terms of percentages, how much do you think is fair?
Make sure you have open access to his/her books.
What are the profit margins like on the product? If they are low, I'd probably skip it.
This is just an opinion :
My income would be a percentage of the invoiced sales (probably net of tax) generated through the site.
This method may work best when sales are transacted through the website not via phone transactions.
The business should ideally not be able to convert sales started via the site into sales through another medium which also presents some issues i.e. not authorising CC payments through the site rather moving the sale off site.
I would advise against profit share, you have little or no control over costs and what goes into them. Invoiced Sales are at least a fixed point. However again you can only measure sales if sales are made via your site. There are other issues.
There are plenty of risks for both parties.
I suggest you honestly brainstorm the risks and rewards with the business owner and try to see if you can structure an agreement you both can comfortably sign up to.
It is a higher risk arrangement for both of you, more so than a simple build promote and get paid.
As such my only interest in entering such an arrangement is if the realistic renumeration I can get is significantly higher than by traditional methods.
This way there is no way the main partner can understate the sales (except if he siphons the tele-sales to another company)
There is a much greater legal and administrative burden (effectively duplicating something that already exists for both client and provider) and it is effectively similar to the web end becoming a traditional distributor unless it has real control over costs / input pricing of goods (transfer costing ring a bell :-)
Unless the seperate entity orders goods seperately from the bricks and mortar business in which case it may start at a lower volume discount on input pricing.
Interested if you can expand on why you think this model is a good one though as I am always interested to hear such ideas.
The advantage with this you dont have to worry much that the sales are correctly stated , as a partner/shareholder just get the cut from the profit booked for the entity .
The entity can order goods from the original brick and mortar company for a agreed upon price or can buy directly from its suppliers
It also allows you - who is overseeing all the info, traffic, etc. and can make changes as needed - to additional products to the site to supplement your income. And best of all, you can always continue with a new supplier if/when he pulls out.
I don't recommend partnerships anymore - I've been in three, and no matter how many creditials and experience my partners have brought, none of them have been as willing to work as hard as I do to succeed... and that has caused a rift in all 3 cases. All three ended peacefully, thank god. But now I hire people as needed - creditials be damned, so long as they can do the work and do it well - with cash, no "deals", albeit in small, careful bits - and I can tell you that I'm more profitable and sleep better at nights now...
