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My situation is that I have been offered a job working on a product for a small company. I'm currently working for a large corporation for a respectable salary considering my experience.

Long term I am interested in creating my own products and starting up my own company. I've been offered a job to develop a product that I would be primarily developing. I looked at the idea and I think it is a pretty good idea and has a reasonable chance of being successful. I told him that I would be interested in earning a commission from the sales of the product. Considering that I would be developing the product what percentage would be reasonable to ask?

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Depends on what salary then are paying you during production. – Loki Astari Jul 31 '12 at 4:04
Lets assume competitive with current level of experience – Jason Turan Jul 31 '12 at 4:38
Then none. If you are not willing to put skin into the game then you should not expect a pay out if it goes big. – Loki Astari Jul 31 '12 at 7:45

closed as off topic by Jim G., ElYusubov, ChrisF♦ Jul 31 '12 at 8:02

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3 Answers

up vote 1 down vote

If you're earning market rates, the typical commission is exactly none. If you're willing to accept less-than-market rates in exchange for a royalty on sales, I'd guess this would be possible, but unlikely - and you'd be exchanging some known income for something which is dependent on the market at the time the product is at a saleable state, plus the sales & marketing effort, plus an argument on how many years sales the royalty is paid out, plus an argument on how much effort you put in as compared to other people, plus the risk that you get laid off and no royalty ever paid

I can see this working if you were working on a (fixed-price) contract, but if I was the employer here I don't think I'd want to buy this level of stress - with sales staff it's expected (and there are well-known terms for this), but not dev staff.

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I thought part ownership of the products that are developed is common in the startup world, is this not the case? – Jason Turan Jul 31 '12 at 6:57
@JasonTuran You asked about commission paid to you as an employee. That's why you get this kind of answer. If you are talking about a joint venture or partnership between you and this company then it's a different story. If you are joining as a founder risking your own capital or at least time, then it's a different story. Just joining as a salaried developer rarely gets you part ownership. Sometimes gets you options. Sometimes incentive bonuses based on product performance or your performance. – joshp Jul 31 '12 at 7:12
Commissions are typical for sales staff. Startups may offer developers shares in the company in lieu of a competitive salary. The share arrangement may include profit sharing, but typically does not. – Charles E. Grant Jul 31 '12 at 7:12
@joshp Assuming that this would be a "partnership" type of relationship then what would be reasonable? – Jason Turan Jul 31 '12 at 7:21
@CharlesE.Grant How does profit sharing work? What is reasonable? – Jason Turan Jul 31 '12 at 7:21
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up vote 1 down vote

If you demand cash upfront your not likely to see any profit sharing.

Either way if you do take up the offer get a partnership agreement template and be sure to fill that in before you quit your day job.

Another workaround if the idea is really, really good. Put together a spec and put it on a website like guru.com or odesk.com and facilitate OS project development in out-of-work hours.

I am doing this and I think its a way more practical, and considering your 28 I'm guessing you need to pay rent/mortgage. This way you keep involved, dont loose a stable job in a uncertain global economy and get a share of the success/profits vs small base salary for your OOF work.

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up vote 0 down vote

A "job" where you get a share of the profits as the primary compensation is not a job, it's a partnership. It doesn't sound like you're being treated like a partner, or that you are in a position to look after your own interests as a partner would.

So I would say no way. Demand cash, up front as an expense to the enterprise, not as something promised to be paid from the profits.

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