Business Quandry - Thoughts
Discussion
We are happy to do a website for free on a revenue share over 12 months rolling basis however we charge for the design if required and this latest opportunity does need a decent designer circa £5k.
Brand owner does not want to pay a designer although they understand they need one and without one the site would not be as lucrative as it could be. (which is very lucrative we would hope for mid 5 figures year one).
Query is we would be in for the labour rate of the site, its a risk we are prepared to take but the designer is a hard cash payout that could be higher than £5k and we have less appetite to risk this as well.
Options I see are to absorb it, to knock it back and possibly lose the opportunity or to get the first £xk takings on the website which would happen but is messy.
Anyone think of any other options - their margin is a few hundred % av order value guesstimate £75
-- Please dont say revenue share is a mugs game etc its our mo and its starting to work very well on the 2 clients currently live.
Brand owner does not want to pay a designer although they understand they need one and without one the site would not be as lucrative as it could be. (which is very lucrative we would hope for mid 5 figures year one).
Query is we would be in for the labour rate of the site, its a risk we are prepared to take but the designer is a hard cash payout that could be higher than £5k and we have less appetite to risk this as well.
Options I see are to absorb it, to knock it back and possibly lose the opportunity or to get the first £xk takings on the website which would happen but is messy.
Anyone think of any other options - their margin is a few hundred % av order value guesstimate £75
-- Please dont say revenue share is a mugs game etc its our mo and its starting to work very well on the 2 clients currently live.
the margin can't be more than 100% so is it a mark-up of 3-4 fold of the price? If so, it sounds like you expect there to be about £25,000-30,000 or so in profit. If you're confident and know they will pay as agreed then it sounds like it could be worth taking the risk if you're getting a decent %.
Present them with some options:
1. No design is commissioned, reducing the potential in both you and the clients opinion. As such, you require a higher revenue share in pertuity to compensate for your investment (in time).
2. A design is commissioned and paid for by the client. You agree to your original revenue share offer.
3. A design is commissioned and paid for by you. You require a higher revenue share in pertuity to reflect the additional risk you have taken in funding the design.
4. A design is commissioned and paid for by you. You require a substantially higher revenue share until the cost of the design is clawed back, at which point you revert to a lower revenue share.
I would present 3 as the preferred option, with the aim of settling somewhere between 3 and 4. Both are common in other risky capital intensive industries.
It really depends on how confident you are on the success of the project, is £5k a lot of risk for the return?
1. No design is commissioned, reducing the potential in both you and the clients opinion. As such, you require a higher revenue share in pertuity to compensate for your investment (in time).
2. A design is commissioned and paid for by the client. You agree to your original revenue share offer.
3. A design is commissioned and paid for by you. You require a higher revenue share in pertuity to reflect the additional risk you have taken in funding the design.
4. A design is commissioned and paid for by you. You require a substantially higher revenue share until the cost of the design is clawed back, at which point you revert to a lower revenue share.
I would present 3 as the preferred option, with the aim of settling somewhere between 3 and 4. Both are common in other risky capital intensive industries.
It really depends on how confident you are on the success of the project, is £5k a lot of risk for the return?
RM said:
Good sensible stuff and -
It really depends on how confident you are on the success of the project, is £5k a lot of risk for the return?
£5k isn't such a big deal however that's on top of the free scratch build website plus we run the risk of the client being a "can we just add" monster.It really depends on how confident you are on the success of the project, is £5k a lot of risk for the return?
I think we will fund it as on Thursday night we put a holding page up to capture emails for the launch and we've got 500+ sign ups - how can it fail (famous last words)
JP great idea we should hit 600 today and I'll explain the traffic - in the nineties it was a huge brand and still has a lot of net related search traffic worldwide.
The relaunch is pretty serious and we wanted to ring fence cash for a designer so the relaunched brand wouldn't look out of place with newer fresher brands.
I think a piece offered to the initial sign ups could be even £15 easily covering any bill.
Thanks guys
The relaunch is pretty serious and we wanted to ring fence cash for a designer so the relaunched brand wouldn't look out of place with newer fresher brands.
I think a piece offered to the initial sign ups could be even £15 easily covering any bill.
Thanks guys
DSLiverpool said:
-- Please dont say revenue share is a mugs game etc its our mo and its starting to work very well on the 2 clients currently live.
Nothing wrong with revenue share, works well for me too 
gets round the "All SEOers are crooks" impression that some folk have thanks to all the spam merchants out there.Anyway..
How about finding a different designer that would be interested in a revenue sharing deal - perhaps for a limited time. That way you get them on board for any amends etc too.
Or as others have suggested, operate it for a while with 'tired' or template graphics, if it's that moribund, you should be able to jolt some life back into it fairly quickly (even if less than potential), that slower start then provides funds for the design refresh and also gives a chance for you to shake any bugs out of the client's backend/logistical procedures.
DSLiverpool said:
on Thursday night we put a holding page up to capture emails for the launch and we've got 500+ sign ups - how can it fail (famous last words)
500+ signups from just random traffic searching on a defunct brand? That's awesome! There's clearly traffic to be had for the grabbing - go for it! Pot Bellied Fool said:
How about finding a different designer that would be interested in a revenue sharing deal - perhaps for a limited time. That way you get them on board for any amends etc too.
Great call, we are using a designer for a sports brand and this is a casual clothing brand we are going to have a chat.My concerns would to two-fold; can I trust the business I'm dealing with to be honest about the revenue and, why is that business willing to give away what is presumably more than the going rate to get something for no up-front cost? Suggests to me the business might not have the cash to do it. If they haven't raised the cash to spend £5k on a website, why not? Surely a brand with some residual good-will (600 enquiries!!) should mean people falling over themselves to fund the startup properly?
janesmith1950 said:
My concerns would to two-fold; can I trust the business I'm dealing with to be honest about the revenue and, why is that business willing to give away what is presumably more than the going rate to get something for no up-front cost?
The guys are massive marketeers who love promoting the brand, they last had huge success pre internet and want to partner with people they trust (us) to take it forward online. Trust is mutual, happy to fly that kite.janesmith1950 said:
Suggests to me the business might not have the cash to do it. If they haven't raised the cash to spend £5k on a website, why not? Surely a brand with some residual good-will (600 enquiries!!) should mean people falling over themselves to fund the startup properly?
They spent a real fortune buying the brand back, it has to work and they (like myself) see a partnership has better success potential than giving cash to an agency. They were pleasantly surprised by the sign up as were we.DSLiverpool said:
They spent a real fortune buying the brand back, it has to work and they (like myself) see a partnership has better success potential than giving cash to an agency. They were pleasantly surprised by the sign up as were we.
If they have spent a fortune on buying the brand back, why can they not find a measly 5k for a designer?Gassing Station | Business | Top of Page | What's New | My Stuff