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Profit sharing experience
Posted by on December 3, 2020 at 10:59 amI have a potential client who wants to work with me via profit sharing. They are a brand new site with no historical e-commerce data. My guess is that it would take between 3-6 months of SEO work to start seeing a few hundred visits to their site monthly.
I charge $2k a month for SEO, but they can’t afford that. What would be a good counter? Has anyone been in this same scenario that they believe they can help a site grow, but are unsure how to price the contract via profit sharing? Should I do a small base salary and 10% of SEO earnings? My feeling is that I won’t make anywhere close to $2k a month until past month six, so it feels like a bad deal for me at the start
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4 Replies
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Do you think they can make it big?. Also, how much are you dependant on making money off of this? Are you handling any projects other than this?
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I would not work with them. If they don’t have buffer for Optimizing they should not be in the business
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That would be a hard pass for me. The economics don’t really make sense. If it takes 6 months to start turning a modest profit, it is improbable you’ll see $2k a month from that, and you’ll have already lost out on $12k of potential revenue. E-commerce sites fail at well over 80%, and the probability that you would ever receive anywhere near your going rate is very low.
Another factor to consider with profit-sharing arrangements is the transparency of the books. Before entering into an arrangement like this, I would require unfettered access to the books as part of the contract. It’s nearly effortless to hide profits in a standard P&L statement.
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If you think it’s a winner of a business and you can make it work, offer them a partnership i.e. you take an ownership share in the business.
Otherwise, run the other way.
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