Money Making Webshop
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- ilovemywork
Hello all! So imagine you having engineered a online shopping system wich works great for both html- as flash. Imagine clients not having the money or willing to pay. What would be a new and interesting option is asking them a percentage of the total ordered amout, so not for profit but lets say 10% of each euro they make in turnover. Each bag sold in the shop is 30 euro's, then 3 euro's mine. Each week their are sold over 200 bags at this point so ill make 600 euros per week on this commision only. Is 10% too less, because i want it to be profiting for both the client as myself. Discuss.
- Blofeldt0
10% sounds good. How long are you planning to run the deal for?
- xrusos0
10% is a number pulled out of your butt.
you need to have data to back that up. what is the profit margin per bag? is it 10% of their profit?
so if a bag sells for 30, but costs 20 to make, 5 to pay salaries, and 2 to pay electricity/utilities/other expenses for operation, then profit is only 3.
so do you get 10% of 3?
hard game to play there because profit margins can be manipulated if its in their best interest...
"o i'm sorry, we gave everyone a raise, so our margin fell 30%. so now you only get 10% of 2. bummer."
best practice in this type of plan is to charge per unit - no matter what the margin is. but in order to figure out how much to charge for, you need to understand what their profit margin is.
- socialpest0
would you take 10% forever? if so that sounds pretty good - as long as they are selling 200 a week... this seems quite high for a new online store... does that mean you would be running thier online operations - if that's the case 10% sounds low. How about you keep the site and act as any other shop would and give them 50-60%?
- ilovemywork0
Thanks all. The deal for all clients including this first one runs for the time of this shop being online. This can be from 1 month to years. I dont get 10% of the profit. I get 10% of the total turnaround. So iff they sell this bag for 30 euro's my company (me) gets 3 euro's. We only handle online technology, not shipping or anything else.
- ilovemywork0
Their products to answer your question are being sold true a other website right now. This is a succes however they want the shop being their own label and not as a part on the other site. On the other site they sell the 200, so their taking their business to me now.
This brand has over 200 dealingpoints in europe. So its wellknown and very populair.
- ilovemywork0
but IS 10% a good deal then?
- whiteSneaks0
i would consider 10% of the revenue more than generous. if it works out you are getting quite a deal. just make sure to draw up a contract outlining your resposibilities and theirs.
- kbags0
1- How much time have you spent developing? 1 month? 6 months? 2 years?
2- How much do you anticipate in monthly revenue based on 10%? 200 units x 3%?
3- Determine for yourself, based on your typical development rates, if the anticipated payback for your time is quick enough at 10%. If payback is expected to be 1 week and it took you years to develop, you're either really good or you are too high. Conversely, if payback is 1 year and it took you two weeks to build the thing, your percentage may be too low.
- ilovemywork0
Well actually I just spoke to an NTer emailing me about this subject. He's saying im better of starting out on 30 to 50% of the total income untill my 8000 euro's of develloping costs are made back. For them i do lower to 10% for the rest of the time this shop being online. Brilliant idea!