Royalties and retainers (based on my limited experience)

Broke businesses want you to do rev share. Rich businesses want to pay flat fees or retainers. Change my mind. “Broke” and “rich” here are relative. Also, see my caveat below.

The contractor didn’t…

• Develop the product
• Create the go-to-market strategy
• Do order fulfillment
• Manage customers
• Or do a whole heap of other stuff

So why the falafel would they give a contractor who works on a small aspect of the business a percentage of the upside that the entire business creates?

Dan Ferrari recently wrote an email extolling the virtues of royalties, over and above even launching one’s own offer. And I agree with everything he said. However, one throwaway line stands out. He put it in brackets because it’s an afterthought to him. It shouldn’t be an afterthought to you. Emphasis mine:

“First – royalties (when done right, with the right KIND of projects, agreements, and clients) provide stable cash flow.”

Yes, Dan. When done right. Dan’s experience is working in the direct response, where paying copywriters royalties is a given and clients have the systems to manage rev-share agreements.

I haven’t yet worked with the types of businesses capable of doing royalty agreements right. In my experience, agreeing to a rev-share deal with a business that doesn’t know how to handle it is asking for trouble. Even if you have a contract in place.

Businesses love doing rev share deals until it’s time to cut a fat check. Then they become forensic attribution detectives and look for any reason not give you credit for a sale. Or they’ll figure out ways to pay you less than you’re owed. For example, they’ll want to pay you based on cash collected instead of revenue generated. This has happened to me and to my clients.

For what it’s worth, I’m more than happy to work on a commission-only or fee plus commission structure with honest clients. My work gets results and so I’m happy to grab my nuts and gamble. But when I say honest, I mean the type of client I can do a handshake deal with. This client is rare.

In my mind, at least, if I need a contract to keep you honest, I don’t want to do a rev-share deal with you. It’s degrading to chase people for money you earned fair and square. I’d rather charge a premium flat fee or retainer. I know I’m leaving money on the table by doing this. But I’d rather get paid a fair price and do my work in peace. Keep your upside.

If you’re an entrepreneur or work for a business that’s willing to pay a fair price for superb copywriting, go here.

Side note: This whole idea of rev-share among freelancers/consultants is getting out of hand. One time a mf tried to ask me for rev-share to design a book cover 😂🤣😭