Ask HN: Developer wants percentage of revenue

3 points·taigeair··7 comments

Just curious about this type of arrangement. How long does it last and what happens when there is continued development?

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The question is very board and it depends on dozens of factors.

If your talking about developer 1, square 1, your the 'idea man or women' and you approach me with an idea I like it and want to work with you on it. Then I'll likely want some ownership, or revenue sharing as the product couldn't exist without my technical know how (or another developers).

I can see only positives. You don't pay when there is no revenue. You fire him when revenue gets really good. He gets cash faster than with equity, potentially no need to beg for salary raises in future.

So you're saying for revenue share, you can terminate it if he is no longer involved?

One of the main point of revenue sharing is turning it into passive income - for the rest of your life. So no one will ever sign the terms which binds this to employment termination.

That sounds incredibly scummy.. Either way I don't think anyone sane enough would sign an agreement like this.

I think it makes sense to give equity for being a part of starting something but to have perpetual 5% income seems crazy. I'm guessing, revenue share stops at some point?

5% not much if the developer is the creator and part owner of the product. The product could flop and he makes 0. Spending his time at McDonalds may be more profitable.

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