Comments on: The problem with “revenue share”

By: Christopher

Christopher — Thu, 15 Apr 2010 05:01:01 +0000

There is a flip side to that coin. I’m a front end developer with no experience developing iPhone apps. I approached an app developer with an idea I had related to a former industry I worked in. I offered him 25% revenue, he was skeptical at first but chose to do it in the end. Now he’s making over £250 a day while I’m working 8 hours a day to provide the data for the app. I’m not complaining. It took both of our skills to realise the product.

By: dermdaly

dermdaly — Sat, 23 Jan 2010 01:44:34 +0000

HI Creativeone,
I’m not sure I understand your argument. If I had the ideas, I’d simply develop them (if I thought they were good enough) and sell them, taking 100% of the revenue.

By: Creativeone

Creativeone — Wed, 20 Jan 2010 06:22:23 +0000

It’s seems to me that as a creative force you should also give credit to those folks with the ideas after all if you had those same ideas then you wouldn’t have clients.
Next yes you can not enter into any relastionship without work, what are you bringing to the table.
SEO, Design, Testing, Coding, project management, or distribution you need to bring something other than idea concepts.

That’ my two cents on this issue

By: dermdaly

dermdaly — Fri, 16 Oct 2009 17:26:10 +0000

Hi Jake,
I agree that many developers aren’t risk takers. But that would be why you are the entrepeneur, and they are the developer for hire. I’ve shown the real practical cases why revenue share is difficult. As the ideas person, you can however improve the odds: For example if you can prove the size of the market for the app (using basic market research for example), you can give the potential sharer more confidence, and more belief in the project. I can think of two examples recently of approaches where I was offered a revenue share, and when I asked basic questions, the guy hadn’t a clue. It showed me that he didn’t think this through in any detail, yet was willing to “offer” me a revenue share to get it done. Naturally, I declined.

Many thanks for adding to the discussion.
Dermot.

By: dermdaly

dermdaly — Fri, 16 Oct 2009 17:21:39 +0000

Hi Francesco,
It depends on the situation. it is certainly less crazy in that:

It recognises the risk by paying back double if it works out
It also has some long term payback for the developer
If it is such a good idea, the ideas guy will get justly rewarded too

Of course, the final decision will be between the ideas guy and the developer.

Many thanks for taking the time to comment,
Dermot.

By: dermdaly

dermdaly — Fri, 16 Oct 2009 17:19:40 +0000

Hi Benjohn,
Collaborating is indeed great. And in your case, where you can clearly quantify everyone’s effort, then revenue share can work. Especially if everyone knows up front that there a danger of getting nothing. My post is far more about those people who think that their idea is worth more (or the same) as my time, without ever considering the risk aspect.
Thanks for your comment,
Dermot.

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By: Jake Kahle

Jake Kahle — Thu, 15 Oct 2009 23:14:47 +0000

Great post. As a former Mr. Idea with zero money, in the beginning I quickly learned that developers are not risk takers. Accordingly, for all those other poor Mr. Ideas out there, approach the industry which will benefit from your app. Offer them the rev share deal as I did successful with my casino partners.

Then, when you have your development funds, find a developer who didn’t turn you down when you were poor. Why make somebody who lacked faith in your ideas rich?

By: Francesco

Francesco — Thu, 15 Oct 2009 22:37:35 +0000

What about this revenue share model?

1) I put the idea.
2) You estimate the cost of building it.
3) “we” build it, I do the marketing/design of it and you do the coding.
4) You get all the revenues until you get twice as much the cost you had estimated.

5) After that point I own 80% of the idea and you own 20%.

Makes sense? Or is it still totally crazy?

By: Benjohn

Benjohn — Thu, 15 Oct 2009 21:45:11 +0000

Interesting stuff. Not a position I’ve yet found myself in, as I’m the iPhone developer and the ideas man. What has worked for me is employing people to help me out using a profit share. So, while I have ideas, and I can code, I’m not a good artist, writer, or musician. For my first app in the store I cut three others in to the profit, and I’m very glad that I did it. I basically split it up the 100% in terms of hours. I think this was pretty generous, but each of the people was putting in their own hours and taking on the same risk of not getting paid at all (or perhaps getting paid a lot). Anyway – it’s worked well, and I hope it is something that I will be able to repeat, as collaborating is great!