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  1. #1
    SitePoint Zealot
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    Site development on commission only basis?

    I had a potential client who I had previously quoted approach me today asking if I would build their site on a commission only basis.

    i.e. I build the site for free, then take a cut of all sales the website makes. They said a company had approcahed them with this idea and they kinda liked it. Personally it sounds like a big can of worms, but might work for certain sites?

    Is anyone doing this currently? How do they track phone sales?

    Id be interested in peoples opinions/experiences.

    Thanks

  2. #2
    SitePoint Enthusiast SheWritesCopy's Avatar
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    Lightbulb How Much is Your Time (and Skill) Worth to You?

    You should think long and hard about this kind of deal before committing to it. People in general want something for (practically) nothing and aren't afraid to ask for it. However, business minded clients (who understand the importance and costs of building a website) won't ask the "something for practically nothing" question.

    Costs are negotiable. What might look like one huge fee to a potential client might be accepted if you'll agree to break it up into payments. Your services have value to them.

    Ask yourself a few questions:

    Is this a site that I'd like to add to my portfolio?
    How much is my time worth?
    Would I feel cheated if I never fully recovered my usual fee?
    How can I negotiate this and create a win/win situation for both of us?

    Above all else, whatever you decide GET IT IN WRITING! There is salvation through documentation. Everyone is more inclined to follow through on their end when they have made a contracted commitment.

    Hope this helps.

  3. #3
    Technically, a bit dim macdan's Avatar
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    Hi

    I don't have direct experience of this but after 5 years of freelancing I can give you my gut feel.

    Unless you are kicking your heels and don't have anything else better to do, I wouldn't touch it. I don't think this guy is demonstrating much confidence in his own business idea if he's not prepared to invest in it. It could be ages before any money is made, if at all (I'm sure someone out there has stats on the success/profitibility rate of internet startups).

  4. #4
    ☆★☆★ silver trophy vgarcia's Avatar
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    Don't do it. You're better off spending that time starting your own business. Even if your business is an utter failure, you've still been more productive than your other option

  5. #5
    SitePoint Wizard johntabita's Avatar
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    The biggest problem with taking equity instead of cash is that you must have access to the company's books in order to verify what you're being paid. Another option is that you take a smaller upfront fee and a smaller percentage of the equity. That way, at least you cut your losses a bit if it doesn't pan out.

    We've been offered this twice. Once we did it, and the second time we turned it down. The one we accepted didn't work out, and the one we turned down wouldn't have (the people who approached us sold their equity in the business for less than the cost of the site development).

    That doesn't mean that I wouldn't seriously consider it again, if the opportunity seemed promising. Taking equity can potenially be very lucrative, because you're creating a passive income. But it's a lot like cold-calling -- it works when done right, but when done wrong, it can go very badly.

    Andrew has a 3-part post on the topic in the January archive of his Down To Business blog. He brings up some good points to consider and some things to avoid. I suggest you start there.

  6. #6
    SitePoint Enthusiast Dancer555's Avatar
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    A previous employer of mine accepting an offer like this and went ahead to produce an entire flash animated website and logo. The company went no where and disbanded but in the meantime my boss still had to pay the overhead that went into the project...

    => Project Manager (Me)
    => Graphic Designer
    => Phone, Electric, Etc to run business

    My suggestion would be to run, and run fast!

    Hope the helps.
    Dancer555
    ************************
    PointVision Web Development
    Web Development for Association and Non-Profits

  7. #7
    SitePoint Enthusiast EvoVII's Avatar
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    I have to say I agree with everyone else. Even if you could help him build the best site with great traffic there are a lot of things you have no control over (ie. customer service level, shipment processing time, and product quality). I have this arrangment with one customer, but only for educational purposes (so that I can experiment with different promotion techniques and processes). You will find it hard to commit resources to a project that has no guarantee of paying for itself.

    EvoVII

  8. #8
    SitePoint Addict LittleFigment's Avatar
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    I agree with everyone here. What happens if your client gets bored and decides not to run the business any more. They didnt invest so they loose nothing and would have no problem doing so.

    If you do decide to do it get everything in writing, including specifying what access you get to his accounts, what to do if he isnt running the business properly or even if he decides to sell it.

  9. #9
    SitePoint Zealot
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    Thanks for the replies

    It is an established business (around 15 years) but just doesnt have the internet presence.

    I think it would be worthwhile if I was a little more SEO savvy. Im sure the pro SEO guys would (and do) jump at jobs like this, because they know how to bring the required traffic to make it worthwhile.

  10. #10
    SitePoint Mentor bronze trophy

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    We've been asked a few times, normally people looking for us to SEO a site for free and then something like 25% commision on all future profits. I always turn them down flat - I no nothing of these people, there is no trust and I have no idea how viable thier business plan is. You can be number 1 in Google, but if you target the wrong audience, or your product sucks, or is too expensive etc etc....

    If I had close ties to someone and knew more about their business, this would be different - in fact, I have done this in the past with close business associates, i.e. I build the site for free and take an ongoing cut - it's been very profitable, but there's no way I would do this with random clients.

  11. #11
    SitePoint Evangelist
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    If someone asks this because they need it, you should avoid it. It shows bad business planning on their part. If they got a business plan, but forgot to include the cost of getting the site done, how good business people can they be anyway?

    What you do is share their risk. And then you need to ask yourself if you really believe in the business idea, and most important if you believe in the people executing it. E.g. do they have a track record of building successful businesses?
    George Skee
    Follow me at GeorgeSkee.com

  12. #12
    SitePoint Evangelist altyfc's Avatar
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    I would be very wary of such a proposal. If you down that route, you need to be sure that everything is legally watertight. In my early days, I did a few sites for large, local tourist bodies for free, with an agreement in place that said that I got a good share of any revenue that the site generated. As soon as these organisations came to the realisation that I was making good money from it, they were eager to wriggle and change the goalposts. It's hassle, I say... just work on a more conventional basis IMO.

    Aaron


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