What is a Fair Revenue Split? Five Pieces of Advice

Situation: A professional services company is constructed as a network of members. The company’s contract specifies that if a member of their network goes to work for a client – even a client that the member brought to them – the client owes the company a fee of 50% of either the member’s salary or the annual consulting revenue paid to the member. This is onerous. What is the best way to respond? What is a fair revenue split?

Advice from the CEOs:

  • This does seem like an onerous provision. It is unclear whether the bite is as fierce as the growl.
  • Consult a lawyer. If you quit the network and go to work for the client, what is the level of risk that the company will successfully sue, and what you can do to mitigate this risk?
  • If the offer from the client is appealing, quit or avoid using this company’s services. Given their cut to your revenue you will see a net gain in your own pay for services rendered.
  • If several members agree that this stipulation is onerous, team up and start your own network with better terms. This can provide you and the others with an annuity revenue stream.
  • Integrity in professional circles is everything. Whatever course you decide on, be up front.

1 thought on “What is a Fair Revenue Split? Five Pieces of Advice

  1. Prof Anjan Bhattacharjee

    The members create the rules of participation.Issue is
    how to share the revenue pool created by the members
    sharing 50% each assignment. The “Surplus” after cost
    of running the establishment, post tax, to be distributed
    in the ratios of contribution of revenues of each member.
    This will retain the individual incentives to earn revenues.
    The association is gainful for all by cross reference to
    clients needing specialisations and more earning opportunity for all.

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