Ever Been Paid with Business Equity or Profit Sharing?

Replies to This Discussion

Permalink Reply by Torkil Johnsen on October 6, 2009 at 12:20pm

Thats sign #5 in the list of the pesky client characteristics.

Permalink Reply by Danny Englander (highrockmedia) on October 6, 2009 at 11:38pm

I have had this offered to me so many times, I have lost track. It's quite annoying & insulting after a while and I have one client in particular who likes to offer this up to me on a regular basis.

I have never taken the bait from him over the years and that I know of, he has never hit any of his "develop this for me for free and you will share in the profits" with other developers he works with.

Permalink Reply by Rastin Mehr on October 7, 2009 at 12:52am

We never accept equity or shares in a startup. We tell them we have companies and projects of our own and cannot afford taking more responsbility.

We have wittnessed several times for startups to go under. In fact being a startup already puts the client in the high risk category and we make sure for every development stage we charge them in advance. We also preserve the right to study and questions the business development aspects of their project as well as the software development. If we see that a startup client is doing the wrong things at our expense we try to detect the warning signs and avoid doing business with them all together.

Consider this, if we blindly follow their plans and things fail, even if we get paid, we can never get that 2-3 months of our lives spent on a failed project back.

Permalink Reply by Jen Kramer on October 10, 2009 at 10:42am

If you do not value your own worth, no one else will either.

You have a rate that you charge for your work, which is probably based on your skillset, cost of living, overhead, and a bunch of other factors -- see http://freelanceswitch.com/rates/ for a fabulous rate calculator.

When you drop your rate, you devalue yourself. If you have a non-profit rate, make it clear that you have a non-profit rate, and that you only offer that rate to selected non-profits you wish to help.

When you give it away for free, it had better be a gift, otherwise you consider yourself to be worth nothing. Make sure you make it clear that you are giving this away for free, that it would normally be worth $XXX, and why you're giving it away for free.

"Revenue sharing" is a huge insult to your abilities. You have control of such a tiny piece of the puzzle of that startup -- you're not management, or driving the strategy of a project. The website is a piece of a puzzle in a startup business. It is never the be-all end-all of everything, even for web-based businesses. If the strategy is not right, the site will fail.

The big key is to remember that you are NOT a button-clicker. That is NOT how you make your living. You bring bigger skills to a project than knowing which buttons to push. Whether those are project management, content writing, design, or development skills, they are valuable to your client. If anyone could build a website, anyone would. (And have you seen those sites, when anyone builds them???)

Let them hire the son of the nephew of the cousin of the CEO who will do it for 95% less than what you're charging! They get what they pay for. Until we dig our heels in as freelancers, we will continue to be jerked around. You're worth what you charge! Don't compete with the button clickers!

Jen

Permalink Reply by Royce Harding on October 10, 2009 at 10:53am

In general I take the cold hard cash up front, but I've also volunteered for charity projects and donated my services.

I've also answered a few local Craigslist ads that looked like an interesting equity/profit sharing project - it would have to be an application that I really wanted to be involved with that I thought had mass market appeal. Unfortunately, none of those have gotten passed the initial email or 2 stage. I guess most of those types of ventures are just someone that wakes up in the morning with an idea and not much else.

Permalink Reply by Amy Stephen on October 18, 2009 at 6:53pm

Nathan, will you please open a new discussion for this topic in the Business Group if you want to continue discussing this topic, and then link back to this discussion? We are closing the forum on the home page to simplify.

Thanks!