Re: Negotiating a percentage

Subject: Re: Negotiating a percentage
From: Stan Brown <stbrown -at- NACS -dot- NET>
Date: Wed, 17 Jan 1996 01:33:55 -0500

Emily Skarzenski <eskarzenski -at- DTTUS -dot- COM> writes:

>Since this will be the first time he's ever commissioned
>documentation, I figure he may have sticker shock when he sees my
>estimate. I'm thinking that perhaps I could lower his up-front
>investment in documentation by accepting a piece of the profits in
>exchange for some (or all) of the cost of the doc.

>Emily Skarzenski
>Deloitte & Touche/ICS - Chadds Ford, PA

I had a similar experience (as a programmer, not a writer). The agreement
was to charge 50% of my usual fee and take a royalty on each unit sold, to
make up the rest of my fee. I wanted to help these people out, without
taking too bad a bath if the product didn't pan out.

The product _didn't_ pan out, and I never saw a nickel of royalties. I know
they sold at least a few units, but for the amount of money involved I
decided not to go after them legally. But I would be extremely reluctant to
get into such an arrangement again.

May I suggest you consider carefully the absolute minimum you'd be willing
to accept for the job. Get at least that much as a regular payment, and
take the rest in royalties. Remember: no matter how good the product, if
it's not marketed well it will probably fail. (Indeed, most new products
_do_ fail, even when marketed by large companies with lots of experience.)
You have to face the very real possibility that you'll never see any money
from the non-traditional part of your arrangement.

Another point: you used the word "profits" rather than "sales". I don't
know whether that was intentional, but I would urge you very strongly _not_
to make your compensation depend on profits. As you should know working for
an accounting firm, a clever but completely honest accountant can easily
come up with just about any desired figure for net profits. If you do
decide to take a portion of your fee based on product performance, you're
in a much better position to collect if your portion comes out of gross
sales, as a percentage of the sale price or a fixed dollar for each unit
sold.

Regards,
Stan Brown, Oak Road Systems Cleveland, Ohio USA +1 216 371-0043
email: stbrown -at- nacs -dot- net Web: http://www.nacs.net/~stbrown


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