My friend recently came to me with a dilemma... he created a website for a client but on an agreement that he would not be paid in full. The website is soon to be online and is expected to earn revenue through advertising.

Now my friend has worked out his input in hours for the website and has his fee ready, but he will be taking the remainder of it from the revenue generated by the site. He asked me if I had any idea what kind of percentage he should charge on this revenue, in order to make up his fee. My friend doesn't speak good English hence my posting on his behalf.

I'm not really sure if this has an answer and it's a bit out of my ballpark but any help is appreciated.

If the client is paying in installments with ad revenue, I think that it's fair to charge interest as well. Nothing exorbitant, maybe around 3% - 5% APR. The interest equals roughly the amount of a savings account APR and is a show of good faith by the client who is paying over time.

So using $2000 as an example, the total charge for the year 2008 plus 5% interest would equal $2100. Sliced up monthly, the payments equal $175/month. The payments can be prorated based on the amount of time it will take for the client to pay back the commission.

In the future, unless the contractor has a stake in the success of the business, or is VERY sure about the potential ad revenue, I would shy away from making these kinds of arrangements.