Why Agencies Can't Do Rev-Share Deals with Startups

https://www.linkedin.com/pulse/rev-share-agencies-like-getting-married-first-date-melinda-byerley?trk=pulse_spock-articles&trk=hp-feed-article-title-share

by melindajb • 11 years ago

1 2 11 years ago

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paulhauggis• 11 years ago

It's all about risk. Many startups have either a non-existent or a non-proven business model. Why would they want to take the risk that they would never get paid?

A good friend of mine ran an SEO agency and had revenue-sharing relationships with a few companies. What ends up happening is that as soon as they start making real money, the company looks at the percentage of money the agency is getting as a liability (why should I be paying them this much??) and either wants to fire them (after the agency did all the work to get them the revenue) or pay them just a flat rate (which is typically much less than what the services are worth or what was being paid before).

So it's a lose-lose for the agency. It's much better just to charge for services.

melindajb• 11 years ago

that's pretty much a synopsis of the article, thank you! :D

Why Agencies Can't Do Rev-Share Deals with Startups

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