4 ms·

I just struggled with how to best structure our company in regard to apple's financial cycle and payout for appstore developers. I bootstrapped the company's i

by pxlpshr 18y ago

I just struggled with how to best structure our company in regard to apple's financial cycle and payout for appstore developers. I bootstrapped the company's initial costs as the founder, and the partners are paid in profit share (initially 60% me / 40% them). This wasn't the best route as nothing was being reserved for the company's growth or future costs, but it got us started. Yesterday I changed the entire structure. Now everyone gets 50% of the net profits (myself included) and 15% is put into a 'founder's fund'. It's a cash parachute for me if the company crumbles, and a cash pool for bonuses, hire contract labor, marketing activities, etc. For reward incentives, anytime we hit $XX,XXX a month in sales... then half of the 15% that goes into the fund is split amongst the partners. I think this is going to work well for our virtual team and keep everyone interested in the general well being of the company and their respective projects. I still retain 100% of the company's product ip, but partners are able to publish under the company on their own.

alain94040 18y ago
Interesting. I'm exploring revenue sharing models for iPhone applications, so I'd like to know more. When you say 50% of the net profits, do you take into account any salary at all, or is everyone paid only after there are profits? You say everyone receives 50% of the net profits, and you set aside 15% for expenses. That's 65%. What happens to the rest? Thanks.
- pxlpshr 18y ago
  No salary, everyone has stake in profits. The 'creator' retains 100% of his product's ip. If a partner is no longer interested in working on a product, he loses his profit share. It's the best approach I've found for a boutique shop to minimize risk and a bunch of paperwork and headache. 4 products in 4 months by team of 3. AppStore is very hit-driven so until Apple makes some much needed changes in the economics, it could be a bumpy road for awhile. + 15% of a product's gross profit goes into the founder's fund. + the project partners split the remaining profit into equal parts (usually 50%). this is compensation. + every partner (including myself) is charged a "partnership fee" = company expenses divided by # of partners. I like this method because success in the AppStore is really dependent on releasing updates often until a very, very strong product exists that you can sell for $5.99+. That's our approach this year and profit sharing keeps the developers interested in that goal. Here's an overview of profit distribution for Jan. 09. http://www.grabup.com/uploads/3ad2c56bf88717180fa1b5c77645e353.png http://www.grabup.com/uploads/3ad2c56bf88717180fa1b5c77645e3...
  - Shamiq 18y ago
    Those expenses are sexy low. Mind disclosing what you're including in them?

by pxlpshr 18y ago

alain94040 18y ago

Interesting. I'm exploring revenue sharing models for iPhone applications, so I'd like to know more. When you say 50% of the net profits, do you take into account any salary at all, or is everyone paid only after there are profits? You say everyone receives 50% of the net profits, and you set aside 15% for expenses. That's 65%. What happens to the rest? Thanks.

pxlpshr 18y ago
No salary, everyone has stake in profits. The 'creator' retains 100% of his product's ip. If a partner is no longer interested in working on a product, he loses his profit share. It's the best approach I've found for a boutique shop to minimize risk and a bunch of paperwork and headache. 4 products in 4 months by team of 3. AppStore is very hit-driven so until Apple makes some much needed changes in the economics, it could be a bumpy road for awhile. + 15% of a product's gross profit goes into the founder's fund. + the project partners split the remaining profit into equal parts (usually 50%). this is compensation. + every partner (including myself) is charged a "partnership fee" = company expenses divided by # of partners. I like this method because success in the AppStore is really dependent on releasing updates often until a very, very strong product exists that you can sell for $5.99+. That's our approach this year and profit sharing keeps the developers interested in that goal. Here's an overview of profit distribution for Jan. 09. http://www.grabup.com/uploads/3ad2c56bf88717180fa1b5c77645e353.png http://www.grabup.com/uploads/3ad2c56bf88717180fa1b5c77645e3...
- Shamiq 18y ago
  Those expenses are sexy low. Mind disclosing what you're including in them?