Financial advice: Fair way to share profits?
 

First of all, I would like to introduce myself. I'm Toyas and I'm very happy to join GFY community. I'm developing membership site with unique take on adult comics and galleries scheduled to launch on 31st of March 2013.

I'm designing website layout and creating high quality content by myself. My friend is a webmaster putting it all together, he's responsible for the technical side. He wasn't paid for his work yet (he put 64h so far). I wanted to pay him, but he said not at this stage. He's working full time and helping me during weekends when he has time.

We will talk money soon. Unfortunately, I'm not good when it comes to the business aspect, especially profit sharing. I would be happy to start paying him now for hours worked and after site launches pay him by the hour. My plan is to improve the site constantly, so I will have more work for him than administrating. On the other hand I could pay him percentage from profits, but I have no idea how much it should be? I want to be fair to him and to myself.

I'm also responsible for marketing the website, he's helping me with this and he will do SEO.

If anyone can help me with this dilemma I will appreciate it very much.

You should have talked money from the beginning and just payed him for the hours he put in.

Would you really want to go into a partnership with him once the site is up and running? How much will he contribute once the site is finally launched and fine-tuned and you're happy with it?

Thanks for the reply, Emil.

Yeah, we should have. You live you learn. That's exactly what I'm thinking - based on the contribution I see more reason to pay him by the hour than going into partnership. As we all know the biggest amount of work is in beginning. He put in 64h, but I put zillion more pruducing content and doing research.

I was bashed out by an user in other forum, so I decided to play it safe here. It's not OK for people with years of experience in the industry to treat you like shi*.

In general, how much percentage stays with paysite owner? To my knowledge there's not much articles about it on the web.

Bump for the new guy.

The percentage split would likely be determined by how much you each bring to the table. If you do 70% of the work and he does 30% of the work then a 70/30 split would likely be fair.

However, if you and he are keeping track of the hours he is working that sounds to me like he is expecting to get paid by the hour and not a partnership.

You could always offer to pay him a small amount per hour and then offer him a profit share up to a specific amount. For example (these numbers are just for the example) instead of paying him $30 per hour for his work you could pay him $8-$10 per hour and offer him a 5% share of the profits with a $5,000 cap.

Just a thought.

At any rate you will absolutely want to have this ironed out before you launch. The last thing you need is to put it off then have the site be a big hit and him suddenly demanding 50% of the profits or if the site ends up being a flop (hopefully not) he demands a huge hourly wage for his work.