Re: Compensation based on Percentage of total Internet sales.

> Has any member here had a potential client suggest Compensation based on a
> percentage of total Internet sales, instead of the typical hourly rate for
> entire design?

I would be very wary of something like this. My guess is that the client is
low on cash, and is inspired by the "e-commerce boom." For them, it's a
win-win situation; if their sales are small, they don't have to pay you much
... if their sales are huge, they pay you a pretty penny, but they'll have
plenty of money and won't really care.

Look at it from your perspective; if the company does well, you get paid
well ... if the company does horribly, well, pardon my language, but you're
screwed. Now, you have to look at the company's prospects -- how likely are
they to succeed, how much do they stand to make, etc. The site could be
beautiful, they could build great computers at reasonable prices, but if
they don't promote the site, they might not get enough sales. So, your pay
would be a result of many things -- their customer service (bad customer
service may  = low sales volume), their marketing/advertising budget, their
sales capacity...

I can't see a custom-built computer company jumping on the net and
generating enough sales to make this deal worthwhile. With Dell, Gateway et
al. already dominating the custom-build computer market, what would make me
switch want to buy from this company? You also get into other logistical
hang-ups: Are you paid based on total sales or profit or total revenue? If
they also sell out of a storefront or mail-order, do you get a percentage of
those sales (assuming it's conceivable someone could have seen their web
site and decided to buy from them, but not buy online)?

If you think this client will be a big player, and you have enough resources
to pad yourself in case they fall flat on their face, you might want to give
it a try. If it were me, I'd work out some sort of variable payment
scheme -- you get a normal hourly rate (possibly discounted), plus a share
of equity in the company or a percentage of sales. Again, this is just me,
and others may feel differently. Hell, if I was giving this advice a few
years ago and your client was Amazon ... well, I'd look pretty stupid then,
wouldn't I...

.jeff.

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