Contract or Profit-share?

[O-Town]

Hello all,

It is a pleasure joining this great group!

I am currently starting a website that is an advertising medium for local hospitality businesses and have found a great web developer.

The developer said he would be interested in profit sharing of some sort or was open to doing everything based on contracts.

He will be doing ongoing work for us in maintaining the site and future developments.

Your opinion and expertise is key here; should we share profits or just hire on contract? We have never been in this type of situation and are not sure what the pros and cons of each would be.

Would having him sharing profits keep him dedicated to his work? Are there any other options?

How would I put the profit sharing into my books?

Sorry for all the questions, I really don't know what to do.

Thanks so much, it is truly appreciated!

Marco

[jasaunders]

People do better work when they can reap some of the rewards from their efforts. Therefore, you may get a web developer who is morei nterested in doing things well and helping you out.

On the other hand, you need to balance what the web developer's efforts are worth.

It's a basic finance problem. Determine how much you would need to give away in one case and how much you would pay for a contracter in the other. Determine which project has a higher NPV. Is the difference in NPV worth having a developer who "may" do better work? That's a subjective decision you will have to make.