Sometimes when you put together a revenue share deal, the person paying you might start to resent sending those big payments down the track. They kind of forget how much value you brought to the table. I got asked about this in a recent training call, and I recorded the answer for you here.
They can buy you out when they feel like they can go without you. And by the way, I think the retainer really enhances that resentment. That was one thing that I noticed when I was doing my research on revenue share deals, the retainer element does make it job-like and builds resentment faster than performance-only. But definitely put a buyout clause in there so that when they’re fed up with paying the fee, they can just buy you out.
Like shares or properties or choosing a car to drive, there’ll be good ones and bad ones. You really have to set your filters carefully. And over time as you build your portfolio, you’ll learn which ones suck and which ones are awesome. My best rev share deals are 20 times better than my worst. And you know, over time I’ll just make sure I’m really careful with my portfolio. I’m really slow to add them now because I’ve got 11. And I know that I will reach a limit to what is an acceptable number of people to partner with and do a good job. Maybe it’s 15 or maybe it’s 20. But that’s probably about it.
For me, the way that I do it and what I’m doing for those really work for me now. And there is training on revenue share deals inside SuperFastBusiness you can watch. There’s a live monthly training we did and then there’s this presentation from Charley from SuperFastBusiness Live in 2019, I think, and that would be a good starting point. But I’m happy to answer questions about it. I’ve done heaps of revenue share deals for students and I’m writing a book about revenue share deals. I think it’s the easiest way to go into business with very low risk for you and keep a customer for way longer than their usual breakpoint.
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What would you suggest is a fair buy-out clause buy-out clause should they no longer want to pay a percentage of revenue?
How about 24 times the average of the last six months’ royalty payment?