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What's a good way to arrange commisions/revenue sharing working with a start up?

I'm doing some marketing consulting work for a new audio production house, who's specialty is creating original music for use in movies, trailers, TV, etc. For remuneration, they are proposing I am paid a % of every new lead that commissions work from them. They've had some bad experiences in the past with marketing people that were paid a flat salary that didn't follow through in what they proposed.

I'm generally okay with this approach, but I am doing a fair share of upfront work in terms of reworking their acquisition strategy and marketing materials. And there's always the possibility that the revised acquisition strategy doesn't pan out.

So the question are:
- What's the best way to cover myself so I don't get burned for my upfront labor? Sweat equity?
- What's a fair commission % for each new track they produce? I'm thinking 10-15%, but I have little experience in this area.

Fortunately, the audio house is open to having a conversation about determining the fairest terms for both sides.

2 Replies

Elise Krentzel
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Elise Krentzel Entrepreneur • Advisor
CEO & Chief Creative Officer at ek Consulting, Author
When I was green I took a lot of jobs with the promise of percentages parts of the company payment later and now I don't do that nor do I have to do that. The questions for you are: do you want to beef up your resume and is this a good client that could help you in your career or not? the other consideration
is
Robert Hoskins (3,460+)
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Need a crowdfunding PR firm to plan a successful equity crowdfunding or Kickstarter, IndieGoGo campaign? 512-627-6622
People that can't pay a commission upfront are typically bad business people that have no money for a reason. Others are fraudulent operators and don't want to establish a paper trail to their bank account.

There are plenty of folks out there willing to work for free with the hopes of getting lucky by riding the coattails of a really good product or offering. But three days into a campaign that raises very little or no money and these free fly-by-nighters will drop the campaign like a hot potato. And the company really has no recourse to do anything about it because they didn't pay them any money.

In addition, companies that don't have any skin in the game, typically don't listen very well and are not the quickest people to respond with edits to a wide variety of marketing materials from website pages to press releases to crowdfunding profiles. One again, not because they are bad people, but simply because they don't have the business acumen to make good decisions quickly.A lot of these types of people claim to get burned by marketing companies, but in reality their decision making process leads to their own downfall.

With that said, it doesn't take that much due diligence to say, please show me a website you've built, a press kit that you've written or some analytic reports on how well your last 5 press releases delivered. Good marketing people will have ample analytic reports to justify their expense and a proven track record.

I like to explain it this way. Hire a person off the street, pay them $7.25 per hour x 40 hours a week x 4 weeks per month = $1,160 per month. Anyone charging less than this is simply not a good candidate.

A good marketing person should bill out at $25 to $50 an hour and most charge more like $150 per hour. But if you invest in a $100k man/woman and they generate millions of dollars of free, positive publicity and other types of exposure, then they are worth every penny.

Good marketing companies have a table full of deals they are working on. Why clear off several $2,500 to $5,000 deals per month to work for free? Is the hope of getting rich enough to make you make bad business decisions and work for free? Hopefully not.

Unless you have committed money that is put into an escrow account or you have a relationship with a crowdfunding platform that puts you in the line with the escrow fund payouts before the client gets the funds raised, there is a 99% chance you will never see a cent for your time and effort.

Only needy people work for free!! And they charge like a 35% commission. So if you do get a good marketing person and they are successful, you are going to pay an arm and a leg for their services.





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