In this quick tip, James shares why 50/50 partnership deals are not always the best arrangement you can have for your business, and what he thinks is a better alternative.
James Schramko here. I want to share with you why I think 50/50 deals are probably not the best deals you could be making.
Often, as the marketer or the business mind, we see opportunity everywhere and we find all these talented experts, and we want to partner up with them and it’s super common. And I certainly did this, in the beginning, to go into a 50/50 arrangement. These sorts of partnerships are probably out of kilter. And if you have a look at how book publishing works or courses work, often the expert gets a much smaller percentage of the pie and the marketer or the business supporting it gets the much bigger percentage.
I’ve seen examples where the publisher gets more than 90 percent of the pie. So if you’re the marketer or the business person and you’re giving up 50% of the rewards to the expert, you’re probably overpaying. I know some of my clients are able to pay an expert just a few thousand dollars one time and then create content and courses off the back of that that sell hundreds of thousands or millions of dollars. I know another one who’s got millions of dollars per year product and they only get paid 7% royalty on that. So think about this, if you are the business or marketing expert, there’s a good chance that you could put your expert on a revenue share deal where they get a small percentage or you could just pay them one time.
And especially the more artistic you get, if you go into the music type industries, usually you’ll be able to pay a one-time fee because that’s still a really great windfall for someone who’s normally getting a very small percentage in royalties from a music company or a very small payment to go into a gig in a pub. If they’re gonna get $60 or $100, they’d probably be thrilled to get two or three thousand dollars to record some of that information.
So think about the split and therefore, I think 50/50 is probably not the best deal. If you want to learn more about revenue share deals or the way to structure your business, then that’s the sort of thing we talk about inside SuperFastBusiness Membership.
I’m James Schramko. I look forward to coaching you soon.
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Catch James in person when he talks about his lifestyle design method at SuperFastBusiness Live 2020