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Five Ways To Find Revenue Sharing Opportunities

Posted November 6, 2009 in Business, Marketing 12 Comments »

A few weeks ago, we posted an article about how to maximize freelance income. In that post, I got an excellent question from one of our FreelanceFolder readers in the comments — they wanted to learn more about earning income through revenue sharing.

You may be asking yourself the same question.

In this post, we’ll explain all about revenue sharing and show you five methods that you can use to find and initiate revenue sharing opportunities. We’ll also help you recognize and avoid some possible revenue sharing traps.

What Is Revenue Sharing?

In most projects, you are paid for the work that you complete and that is all. When the project is over you receive your pay and go your way. You receive no more income from the project.

In a revenue sharing project, however, you participate (or share) the profits of a product or service with another individual or organization.

Often, revenue sharing is associated with a product or service that you helped to create or promote. Sometimes, however, you are offered the opportunity to receive a portion of the revenue of a product or service that you did not create in exchange for helping to market it.

Revenue sharing is becoming increasingly popular since it can lead to a freelancer receiving income even when he or she is not actually working. In some instances, you may be able to continue to receive payments for months, or even years, after your product or service is completed.

Five Revenue Sharing Opportunities

If you are interested in revenue sharing here are five opportunities that you may want to explore:

1. Partner with a client or friend — Collaborating with a client or friend on a project has the potential to result in a better end product since the project can benefit from the experience of both. Partnering can also expand your market since you and your partner can combine your networks to promote the product.
2. Affiliates and ads — Becoming an affiliate of someone else’s product or allowing advertisers on your blog in exchange for a portion of their profits is a form of revenue sharing. There’s a flip side to this type of revenue sharing. You can allow affiliates and advertisers to receive a portion of your profits on a particular product. Remember that new FTC guidelines require transparency and disclosure.
3. Pay per click or view – This is sometimes referred to as residual income. This type of revenue sharing is most frequently available to website content providers such as writers, bloggers, photographers, or graphic artists. The revenue sharing is generally based on traffic to the website where the content appears.
4. Resale marketing sites — You can market your product or service through your own site with some degree of success. If you happen to own a popular site, this could work well for you. However, for those of us who don’t own a site that is already popular it may be worthwhile to share some of the profits so that you can promote your product on an established site. eBay is just one example of such a site.
5. Find a sponsor – Even if you don’t want to go the affiliate route or collaborate with someone else, you may still be able to negotiate a sponsorship or endorsement for your product or service. Look for a sponsor who is popular with the target audience of your product or service. You may be sharing some of the profit, but in exchange your client base will be larger.

Keep in mind that all revenue sharing opportunities are not create equal. Some of them are actually little more than traps in which the freelancer does a lot of work for little or no pay.

Revenue Sharing Traps to Avoid

By carefully scrutinizing each revenue sharing opportunity, you can avoid so-called revenue sharing opportunities that are not beneficial to the freelancer.

Here are three things to watch out for:

• Free Work Scam — Intentionally, or unintentionally, some clients offer revenue sharing for work in place of a set payment. Sometimes this is an innocent offer because a client truly believes that they have the next great idea. Other times, the offer is simply a ploy to get the freelancer to work for next to nothing. With a few exceptions, I always recommend that a freelancer require an upfront payment along with a revenue share.
• Oral Agreement Only — Freelancers who enter into a revenue sharing agreement should be careful to get a contract that states the specific terms of the agreement. Getting the details in writing up front can protect you from misunderstandings later. Never accept a revenue sharing offer based on an oral agreement only.
• Marketing Requirement — Often revenue sharing offers include the implicit or explicit requirement that the freelancer help promote the product. While this is not always a bad requirement, beware of those opportunities that require you to promote a product so heavily that you fall behind on your other projects.

Have You Tried Revenue Sharing?

While revenue sharing works very well for some freelancers, it is wise to be cautious when you select a specific opportunity.

Have you participated in a revenue sharing agreement? How well did it work? Do you have any tips for other freelancers looking to increase their revenue?

Share your experiences and tips with us in the comments.

Image by uhuru1701

About the author: Laura Spencer is a freelance writer from North Central Texas with over 19 years of professional business writing experience. If you liked this post, then you may also enjoy Laura’s blog about her freelance writing experiences, WritingThoughts