Offering Profit Sharing Instead of Straight Fees

Offering Profit Sharing Instead of Straight Fees

This got me thinking as I noticed a lot of small businesses that were seeking to hire people to help them on projects offered to pay them a percentage of the profits they received versus a more traditional route such as hiring the contractor for a specific fee to complete a task. In many ways it can make more sense financially to do that because there is less risk for the business. For example, if the client doesn’t pay then I would imagine they wouldn’t just dive into the red as normally the contractors would till have to be paid their rate.

It makes you wonder as the contractor though whether or not you should ever accept that kind of arrangement. I suppose it really depends on how fresh you are in the industry and how casual you are. For example, if it was people I knew that were just doing a project on the side and thought gathering a bunch of people to do the job could be an easy side gig then I think profit sharing there would make sense.

On the other hand, if it is a person just simply trying to cut down on their expenses to pay you less than you are worth as they wouldn’t be able to afford you otherwise then that is a different story. Especially if they are trying to take more of the profits in an uneven way.

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