A business owner wants to make a print edition of my web site. He wants to make an informal booklet that would be laced with advertisements. He would take care of all the publishing, marketing, and printing. All I have to do is put content on my web site. The booklet would be sold to distributors for $3.00 and to consumers for $9.95.
I would get 50 cents per book and 10% of all advertising revenue. Does this sound like a reasonably fair deal? Am I being ripped off?
Sounds to me like you firts have to know his production and shipping costs. If they are high it might be a good deal. But if he's getting all that cheap he may be getting the lion's share.
He says it costs between $1.00 and $1.50 to produce a booklet, and there is approxiamately $10,000 startup costs.
If all his numbers are accurate,
He sells each booklet for $3.00.
$1.00 to $1.50 goes to publishing, and 50 cents goes to me.
This leaves him $1.00 to $1.50 per booklet. And I suppose
a lot of that money goes to marketeing and distribution.
Another issue is do any of his numbers seem suspicious?
Would he really sell to a distributor for $3, if the expected retail price was $9.95?
Just a rough analysis:
If he sells it for $3.00, costs him $1.50 to produce and send, and pays you $.50 leaving $1.00 left (i.e. expenses per copy are $2.00).
Therefore, he gets to keep 33% of the sale price as profit and you get approx 16.67% of the sales price.
You have to decide if that's enough of a margin for you. If you can live with those numbers then try it.
Wholesale pricing depends on the industry and the item. Some items routinely wholesale for about a third of their retail price, others only have a margin of 20-30%. Can't say if it's valid for your field or not.
Do the numbers add up? ...Without knowing at all what the content you're handing over is...yeah, mostly they seem to. Problem is the ultimate value of your content (or whatever you're giving him to publish) might skew everything.
Ask yourself (or share with us) why your content is worth anything. Then ask (or share with us) what your content is worth. Then ask (or share with us) how much you're willing to risk on getting that last figure out of it - these numbers might help you make a decision.
$.50 doesn't seem like a lot, but (from your description) you don't have to do anything and he's taking the risk in publishing, marketing, etc. $10k is a reasonable estimate for a small print production run of a small booklet.