Many founders think the first conversation in a revenue share contract is about the fee structure. In reality, the percentage is usually discussed much later. Both sides usually need to understand where the business is today, how much growth opportunity exists, and whether the partnership is likely to work well over the long term.
After working with many eCommerce brands, we’ve found that most revenue share partnerships start by looking at three things before any revenue share agreement is finalized.
1. Evaluating the Business Stage
A new business and a growing business are very different situations.
If a brand has just launched, there are still many things the business is trying to figure out. The team may still be testing customer demand, marketing channels, and the overall growth strategy. Because so much is still being tested, it can be harder to predict future growth. At this stage, growth is possible, but there is also more uncertainty.
On the other hand, once the business has achieved product-market fit and begins focusing on scaling. The conversation will change. The product is already selling, and customers are already buying. It becomes much easier for both sides to evaluate the growth opportunity.
Because the challenges are different, the growth opportunity can look very different from one business to another. That’s why understanding the current stage of the business is often the first step. It helps both sides determine whether there is enough opportunity to justify a revenue share agreement between two companies.
2. Evaluating the Growth Opportunity
Two businesses can have the same revenue and still have very different growth potential. One brand may have a great product but weak marketing. Another may already be getting traffic but struggling to convert visitors into customers.
Some businesses need help improving retention and increasing customer lifetime value. Others may be limited by inventory, operations, or product availability.
Understanding where the biggest growth opportunity is helps both sides evaluate the business more clearly. When that opportunity is clear, it becomes much easier to determine whether a revenue share agreement makes sense and feels fair for both sides.
3. Evaluating Long-Term Fit
In revenue share partnerships, founders need to evaluate whether the agency truly understands their business and can support where the company wants to go.
As a founder, you want to know:
- Will this team be invested in my business’s growth?
- Can I trust them?
- Can both sides communicate honestly when problems happen?
At the same time, agencies that work on revenue share need to understand what it’s like to work with the founder. Even a business with huge growth potential can struggle if communication is slow, expectations are unclear, or trust is missing.
At IMP, one lesson we’ve learned is that revenue share contracts work best when both sides believe there is real growth potential and communicate openly. When those pieces are in place, the terms of the revenue share agreement become much easier to figure out.
You can also read the article “What Makes a Revenue Share eCommerce Growth Partner Work Long-Term?” for a deeper look at the lessons we have learned from working in long-term revenue share partnerships with eCommerce brands.
Stay tuned for the next articles in this series about how revenue share marketing agencies actually work.
FAQ Revenue Share Model
1. What is typically evaluated before a revenue share agreement?
Before signing a revenue share agreement, both sides usually evaluate the business stage, growth opportunity, and long-term partnership fit. A revenue share partnership works best when there is clear potential for business growth, and both sides believe they can work effectively together over the long term.
2. Why is the business stage important in a revenue share partnership?
The business stage is important because growth opportunities look very different depending on where the company is today. A business that is still searching for product-market fit often carries more uncertainty than a business that already has proven demand and is focused on scaling. Understanding the business stage helps a revenue share marketing agency evaluate whether there is enough growth potential to justify the partnership.
3. Why is long-term fit important before starting a revenue share partnership?
Long-term fit is important because revenue share partnerships require close collaboration, transparent communication, and strong alignment around business growth. Even businesses with significant growth opportunities can struggle if expectations are unclear or communication becomes difficult. Successful ecommerce growth partners typically evaluate both the business opportunity and the working relationship before moving forward.
