Splitting profits for a clothing store

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Hey everyone,

I am setting up a clothing store for a client of mine. We have decided to split
the profit for every sold shirt. I use dropshipping (Printfull) and the site is made with Shopify.
I am having a few questions about how to structure a site like this?

1. If there is no direct way to split the profit. How do we go about splitting it?

2. Does the client receive all the payments or do I?

3. If the client does receive all the payments, should he pay my percentage every 1st of the month for example? This could result in a mess, some people are really forgetfull and I'll have to check up everytime. On the other hand, he doesn't really trust me if I receive all the payments.

Any ideas? Would mean so much to me!
Thanks
#clothing #profits #splitting #store
  • Profile picture of the author JGetson
    "splitting the profits" changes the relationship from client /service provider to partnership.

    IF neither of you trusts the other (as you post implies)... any partnership is doomed from the beginning... and if so, then charge your client for the service you provide and get on with your own business while he runs HIS clothing "store"

    if you simply want to collect a "royalty" on each sale while the other guy collects the rest and covers all the actual costs one option would be to set up a master (multi-tier) affiliate program in one of several configurations
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  • Profile picture of the author KenW3
    Splitting profits implies a partnership - don't do it. He has a business. You have a business. Keep them separate. This means no profit analysis. Either sell on a commission, a flat fee by price range, or (for drop shipping) have him provide a wholesale / retail price list to you that includes his mark-up (for those products you will represent).

    The company making the sale receives the payments. If he is handling orders through an online store you built for him and it shows his business name, he makes the sales using his credit card merchant account. If you are running the store under your business name and representing products from another business, then you use your merchant account.

    A model similar to eBay drop-off stores would probably work for you. If you search for eBay drop-off stores, there are instructions, franchise descriptions, and sample contracts online you can adapt for your own purposes. The better model, however, would be to handle this as drop shipping while keeping both your companies separate with no bookkeeping reviews or audits needed.

    P.S. Online clothing stores have a lot of returns from fit problems and color differences - it's a difficult niche.
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  • Profile picture of the author atulsha
    there are similar kind of people offering partnerships in return for a percentage of profits on freelance also. I haven't seen many people even bothering with these offers as there is no certain way of knowing how much your client is making.
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  • Profile picture of the author agmccall
    this is a question for your acountant. It will probably be set up in a way that separates the expenses based on who paid them then a monthly or quarterly check is cut form the business account.

    but like I said this is a question for your accountant and you should probably also get a lawyer involved.

    al
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    • Profile picture of the author atulsha
      Originally Posted by agmccall View Post

      this is a question for your acountant. It will probably be set up in a way that separates the expenses based on who paid them then a monthly or quarterly check is cut form the business account.

      but like I said this is a question for your accountant and you should probably also get a lawyer involved.

      al

      Very Interesting. What do u suggest if

      1. Both parties reside in different countries
      2. Income from the site isn't big enough to hire a Chartered accountant and have balance sheet etc done as a legal requirement
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  • Profile picture of the author Splatterfox
    Originally Posted by konradg View Post

    Hey everyone,

    I am setting up a clothing store for a client of mine. We have decided to split
    the profit for every sold shirt. I use dropshipping (Printfull) and the site is made with Shopify.
    I am having a few questions about how to structure a site like this?

    1. If there is no direct way to split the profit. How do we go about splitting it?

    2. Does the client receive all the payments or do I?

    3. If the client does receive all the payments, should he pay my percentage every 1st of the month for example? This could result in a mess, some people are really forgetfull and I'll have to check up everytime. On the other hand, he doesn't really trust me if I receive all the payments.

    Any ideas? Would mean so much to me!
    Thanks
    1. This is more complex then you might think: there are product costs, shipping costs, marketing costs, server/store costs, fees, chargeback costs and more. You will have to keep track of everything, do constant adjustments and maybe you receive $1,000 in month 1 and would have to pay back $300 in month 2 because he barely made sales but got a ton of refunds. So such a construct is really complicated.

    2. Of course he does, if he owns the store and processes the payments.

    3. Look at 1 again.

    Like the other guys said, such a thing is pretty complex and I wouldn't recommend to go that way (from personal experience). Especially when it comes to pure profits it becomes really annoying. Maybe you could talk about a (much lower) percentage of gross sales, which is easier to adjust and measure all the time.

    However, all in all I'd recommend some fixed payments, eventually with a small variable part. If you want it 100% clear you could start a 50/50 company together and put it as the site owner.
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  • Profile picture of the author yukon
    Banned
    You're going to get hosed on the money part. The client is obviously broke.
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  • Profile picture of the author Mooredesigns
    Build another store that sell shirts that are printed with standard equipment. Then, post the items on eBay and share the profits.
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