splitting profits with a builder/scripter? Suggestions please...

Hey everyone

Quick question for you guys. I will be entering into a partnership with a builder/scripter to create a product line based on my brand. My brand is a combat league which has a logo already, and I am the sole owner of the entire league which includes the rankings, titles, name, and events which draw people to the arena where the product will be sold. My question is what is a fair profits split on the merchandise?

Any advise would be greatly appreciated.

will customers be buying this specific product more for his work, or your league?

Consider the fact that people will be buying his stuff PRIMARILY because of it's styling... since they were already your customer to begin with. Odds are they've bought other things from you, you're not losing money by giving the artist a bigger slice of the pie.

I always use the approach of "how much of THIS PRODUCT is theirs?".. It sounds like MOST of THIS item is their work, with your "league" logo on it or whatever. It sounds like you make a cut of every item sold, regardless of which one they buy, but HE only makes a cut if they buy his items.

Being generous now could help your future together. More items from him, better items for your system, better name recognition, more customers for ALL of your items.

Sorry, I wasn't clear.

I am building/scripting nothing. It is simply my brand. Like, if the owner of the Toronto Maple Leafs hired someone to make them a product line..that kind of idea. It is my brand, my events, my league...but it is his skills as a builder/scripter. The product will essentially be "his", but without my brand and customers, his product wouldn't exist.

We will be splitting profits, what would be a fair split?

I suppose a "fair split" is exactly that which the market will bear. But that's kinda hard to determine a priori. Unfortunately, it's also pretty hard to determine, a priori, whether there is any market value to the brand, for sales of merchandise. So basically, the partnership is not distributing value at this point (unless there's objective evidence that any value exists); rather, it's distributing risk, and the reward has to be commensurate with that risk, or it's a losing proposition.

It's not quite clear what investments are at risk from either party in this venture. The scripter/builder will surely have at risk the time they spend building and scripting (call it "opportunity cost"--what could they have earned in that time if otherwise occupied), and possibly their reputation. If you own the arena, there may be some land investment at risk. Assuming all proceeds from the venture are to be split (not just merchandise sales, if there are other sources of revenue), then it would seem a split by total investment (however quantified) would be a good starting point for negotiation.

no, my fault, I just had a conversation with a weapon system developer and it was on my mind.. I went back and edited my post to reflect more closely on your post.

the phrase "without my brand, his product wouldn't exist" sounds utterly arrogant. Because someone could easily make a product line for the San Jose Sharks, when the Maple Leafs turned them down.

You better be looking at offering him AT LEAST half the profits from his work.. in fact I'd strongly consider offering him MORE. Frankly I'd consider offering him 90% of income from the object in question.

Your brand benefits from his products, therefore you benefit from his products. Above and beyond any income from the item. He has to do all the work, all you're doing is providing him the logo to slap on the t-shirts.

Your work is done already, HE has to do all the work to make the product happen.

Again, unless you're willing to tell us MORE SPECIFICS about your brand, the items being created, etc.. then there's not much we're going to be able to tell you.

IRL i've spent years doing contract software development and i can't begin to count the number of people that approached me with the line: 'I have a great idea. You write it, i'll market it and we'll both get rich'. I can easily count the number of such 'great ideas' that have even made back their costs let alone a profit: two. I long ago quit considering profit sharing arrangements and don't know of any other rl developers that do either.

But this is SL, not RL. The real answer to your question is whatever both you and your developer are comfortable with. But you might want to consider a flat fee work-for-hire contract and don't be surprised if your developer would like it that way also.

But if they are willing to do a profit split arrangement, i agree with Winter Ventura. It would seem the developer is taking the greatest risk in the form of their time and should therefor get the bulk of the profits (then again, my viewpoint is admittedly biased).

Personally, if I were you, it would depend on how much the other has to do with it.

If you make up the design, and then the other builds it to a T, and scripts it full-out.. you better be giving a good split! (In such a case I myself would offer 50% to the other)

If they're mainly doing scripts, and a little bit of building, slightly less.. if only building or scripting, then slightly less still. All depends on how involved you, and they, are with the products in my opinion.

I have a brand, anyone want to do all the building and scripting work for me, I'll even give you half the profits, after I take my expenses away of course, islands are damn expensive you know.

It would depend on how much brand loyalty there is to your brand. What are sales like for your brand? How do you measure brand loyalty? To me, that would be the deciding factor. Otherwise, I'd say 90-10, with you getting 10 since they are doing all the work! How much power the brand has will determine how much I'd be willing to share, if I built those articles, with 50% as the limit. But it had better be pretty damned powerful to give up 50% to someone who does none of the work.