Can both sides accept this revenue share?
Compare each party's contribution with its next-best alternative.
The question
RelayCart and RouteLink are considering a first-year launch. The proposal pays RouteLink a share of all partner-tagged software revenue. The decision is before signing and before launch costs are incurred.
| Value | |
|---|---|
| Partner-tagged paying accounts | 120 |
| Incremental paying accounts | 80 |
| Annual revenue per account ($) | 1200 |
| RelayCart delivery cost per account ($) | 240 |
| RelayCart launch cost ($) | 30000 |
| RouteLink cost per tagged account ($) | 180 |
| RouteLink launch cost ($) | 12000 |
| RouteLink alternative contribution ($) | 6000 |
Invented assumptions. Commission applies to all tagged accounts. Both launch costs are avoidable before signing; RelayCart has no additional alternative beyond its direct-account baseline. Taxes, financing, churn and later years are excluded.
| Transfer | RelayCart gain vs baseline | RouteLink gain vs alternative | |
|---|---|---|---|
| 25% share | 36000 | 10800 | -3600 |
| 30% share | 43200 | 3600 | 3600 |
| 35% share | 50400 | -3600 | 10800 |
A transfer reallocates the same $7,200 of modeled joint gain. At 25%, RouteLink has positive accounting contribution but loses against its $6,000 alternative.
“Can both sides accept this revenue share?”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Choose the right baseline
What would you do here? Open the move you’d make.
Treat all 120 tagged accounts as new business.
Tempting, but it misses something. Forty accounts are already in the direct-channel baseline.
Measure RelayCart's change against the 40-account direct baseline.
The strong move. This counts the added revenue and the full partnership cost.
Ignore commission on the 40 existing-route accounts.
Tempting, but it misses something. The proposed contract pays on every tagged account.
See how a strong candidate says it
“Only 80 of the 120 expected tagged accounts are incremental. The other 40 would buy directly.”
Why it works: Commission attribution and causal contribution are different.
Step 2: Include the partner's alternative
What would you do here? Open the move you’d make.
Call the deal acceptable because both contributions are positive.
Tempting, but it misses something. RouteLink would earn $3,600 less than its alternative.
Exclude the alternative because no cash is paid for it.
Tempting, but it misses something. The partner still gives up a better use of its capacity.
Compare RouteLink's contribution with the $6,000 alternative.
The strong move. Participation depends on the next-best option, not zero.
See how a strong candidate says it
“At 25%, RouteLink contributes $2,400 but gives up a $6,000 alternative.”
Why it works: Positive accounting contribution can still be a worse use of constrained capacity.
Step 3: Find a feasible offer
What would you do here? Open the move you’d make.
Offer 30% and explain the conditional economics.
The strong move. Both parties gain $3,600 against their alternatives.
Offer 35% because the partner asked for more.
Tempting, but it misses something. RelayCart loses $3,600 against its baseline.
Keep 25% and argue that the partner should accept growth.
Tempting, but it misses something. The stated alternative still dominates the offer.
See how a strong candidate says it
“Under these assumptions, the participation interval is 27.5% to 32.5%.”
Why it works: A share outside that interval leaves at least one party below its alternative.
Step 4: Keep the value claim conditional
What would you do here? Open the move you’d make.
Promise that 30% guarantees a successful alliance.
Tempting, but it misses something. The demand and delivery assumptions are not proven.
Tie the offer to a measured pilot and defined operating commitments.
The strong move. The parties can check the assumptions that make the share work.
Hide the baseline to simplify the negotiation.
Tempting, but it misses something. That removes the reason the economics are credible.
See how a strong candidate says it
“The 30% offer depends on incrementality, cost and capacity assumptions being credible.”
Why it works: A model identifies conditions; it cannot certify demand or willingness to accept.
The answer, in short
- Decision
- Offer 30% only with credible delivery and incrementality evidence.
- Because
- The modeled gain is $3,600 for each party against its alternative.
- What would change it
- Incremental demand or delivery cost moves the participation constraints so no share works.
Common traps
- Confusing tagged with incremental customers.
- Comparing the partner with zero when it has a better alternative.
Check your answer
- Did I charge commission on the agreed base?
- Did I include each alternative once?
- Does the transfer cancel from joint value?
- What assumption could erase the feasible interval?
Last reviewed Nov 10, 2026