THE SHORT ANSWER
A percentage is not a price until you know the percentage of what, measured when, after which deductions, for how long and with what records. Compare the offer with a cash fee using several honest scenarios, then agree reporting, payment, audit and exit mechanics before doing the work.
“We cannot pay your usual fee, but we can give you 10% of revenue.” It sounds precise. It is not yet precise enough to value.
Ten per cent of customer payments is different from 10% of profit after salaries, marketing and overhead. A promise that lasts three months is different from one tied to the customers you helped acquire for two years. Turn the headline into a formula you can calculate from records you are allowed to see.
Finish the sentence: percentage of what?
Ask the parties to define:
| Variable | Question |
|---|---|
| Revenue pool | All company revenue, one product, one campaign or named customers? |
| Accounting basis | Orders booked, invoices issued or cash actually received? |
| Deductions | Refunds, taxes, payment fees, discounts, ad spend, fulfilment or overhead? |
| Attribution | How is a customer connected to your work, and what happens across devices or sales channels? |
| Rate and bands | Flat 10%, changing tiers or a cap? |
| Period | Which start date, end date and post-termination tail? |
| Currency | Which exchange rate and date apply? |
| Reporting | What statement arrives, how often and with which supporting detail? |
| Payment | When is your share due, and what happens to disputed or late amounts? |
If the other side can change price, bundle the product or move revenue to another entity, ask how the formula handles it.
Run three scenarios before judging the offer
Suppose your normal cash fee is $3,000 and the proposal is 10% of “net revenue” for six months. These fictional scenarios ignore tax and the time value of money:
| Six-month customer payments | Agreed deductions | Revenue-share base | Your 10% |
|---|---|---|---|
| $8,000 | $1,000 | $7,000 | $700 |
| $30,000 | $4,000 | $26,000 | $2,600 |
| $80,000 | $12,000 | $68,000 | $6,800 |
Now test timing and probability. When would each payment arrive? What happens if launch is delayed? Can you afford to receive nothing? Who controls sales, pricing and marketing after you finish?
The table is not a forecast. It shows which assumptions need evidence. A large hypothetical upside does not pay today’s costs.
Consider a floor, hybrid or milestone
Revenue share does not have to replace the entire fee. Possible commercial structures include:
- a smaller guaranteed fee plus a defined percentage;
- a recoverable advance credited against future shares;
- milestone payments plus a success bonus;
- a minimum payment if launch is delayed beyond a date;
- a cap if both sides want a bounded commitment.
Each changes risk. Describe it accurately: an advance that must be repaid is different from a non-refundable minimum, and a bonus is different from ownership in the company. If shares, tokens or another investment interest are offered, additional corporate, securities and tax questions may arise; get relevant advice before treating it as ordinary service revenue.
Make reporting part of the bargain
A formula without information is difficult to verify. Agree who sends statements, the reporting fields, frequency, correction process and how long records are kept. Discuss a proportionate right to inspect supporting records, confidentiality for customer information, and who pays for a review if a material underpayment is found.
Use a miniature worked statement in the contract or schedule:
Customer payments received: $12,000
Less agreed refunds: $500
Less payment processing at actual cost: $330
Revenue-share base: $11,170
Contractor share at 10%: $1,117
Payment date: 15 November
That fictional statement often reveals disagreements faster than another paragraph of abstract wording.
Ask how the arrangement ends
What happens if the client stops the product, sells it, changes the brand, terminates you or breaches the reporting duty? Does your share continue for customers already acquired? Must the client provide a final statement? Can either side buy out the remaining obligation using a defined formula?
Before accepting, use the broader freelance contract walkthrough for scope, ownership and liability. Revenue share answers only the compensation question. It does not tell you who owns your work, who bears expenses or what happens when the project stops.
Put your own contract in context.
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