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MasterM137

How is the most better way for the owner to get paid

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Hi everyone,
I have a question that has been bogling my mind...offcourse the owner needs to get the most money out of the company but i dont know how it goes so i presented 2 scenarios and i would like for you guys to tell me how you would split the money and why.

Scenario #1 :
The company had a project that generated 40.000$, there is 3 members? Most of the work have been done by the owner but the members needs to get paid of the project how would you pay the members?(remember they worked for you, they are just employees)

How i would do it :
I would take 20% from the project and split it in 3.And the result i will pay the members with. 80% is for the owner/ company


Scenario #2 :
The company generates 5.000$ from a monthly project, in this case everyone puts in equal work. just like the previous time the members needs to get paid.

How i would do it : I would give every member 10%(30% as whole) and i would give the owner the rest.



How would you split the money and if possible why split it in the way you described?
Thanks in advanced.

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If people are "just employees", then I would suspect most would expect a fix salary, known upfront, paid however much or little is made. Otherwise people will be asking why salary to profit ratio is 30/70, when they're also taking a risk.

$500 a month seems rather low, too...

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offcourse the owner needs to get the most money out of the company

This isn't always true either -- it's not uncommon for a business owner to take home a similar or only slightly larger amount to well paid employees, with the rest of the income going back into the business to cover costs (materials, staff wages/salaries, legal fees, insurance, etc.).

I'm a free lancer, but I also work casually in a local pizza shop for extra cash or when I'm going through a tough patch finding other work -- around 30% of the stores income goes towards paying for stock (food, pizza boxes, drinks, etc.), another ~30% goes towards paying staff, and other regular costs such as rent (rather high for a well-positioned business), utility bills, maintenance costs come out the the remainder, ending up leaving a profit margin of around 5% which still stays in the businesses own accounts to go towards unexpected or irregular costs (equipment breakdown, having to train new management, etc.). I'm not sure of the exact details, but rather than simply taking all the profits, the owner gets paid along with the rest of the staff each work, taking only a hundred dollars or so more than the full-time store manager, as well as getting bonus payments when certain profit goals are met.

Note that the 30% for paying staff that I listed here isn't a fixed percentage of the stores profits as it is in your own example above -- it's an ideal target number that the manager tries to achieve when creating rosters based on expected sales, and if this target isn't achieved the business may have reduced profits or even lose money. The staff are all paid fixed hourly rates.


Don't start with a flawed assumption that you should automatically get the most money just because you're the boss or founder.



If you are employing people, they would expect a proper wage or salary (potentially with benefits), and they would expect to know up front what they're earning and to have a contract putting all of the terms in writing. There may be legal requirements for how and in what amounts employees are paid where you live.

If you're not employing your workers but instead contracting out jobs, they would normally take a fixed amount of money negotiated in advance for each task you contract out to them. The amount may be a fixed total ($x for creating y models), an hourly rate for the time taken to complete the task ($x/hour, for how ever many hours are taken to create 2 pieces of music). Again, there may be certain legal requirements where you live, and again there should be some form of contract.

There may be royalties offered as well, but unless you can guarantee your profits most skilled developers or content creators won't work for royalties, or at least not royalties alone -- they might consider some form of fixed payment AND royalties.



You would probably benefit from a course on operating a business, or at least a good book on the subject. You should also definitely check any legal requirements.


Hope that's helpful! smile.png

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I should perhaps add that most business owners actually lose money during the first months or even year in some cases and in the gamedev field most startups fail completely (Which means that the owner never gets anything at all, the staff still gets payed though).

If you intend to do a revenue share deal (no guaranteed payment for the team) then everyone takes a risk and the only thing that should factor in when it comes to compensation is time spent and level of skill, This is not an approach i'd recommend unless you do it with one or two friends (If you start to involve random people or large groups then things will quickly fall apart)

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Don't start with a flawed assumption that you should automatically get the most money just because you're the boss or founder.


Quoted For Emphasis. There's really very little reason that the boss or founder should take the lion's share of profits for themselves, unless they are also making a large outlay of personal capital to get things going. As a corollary, If the boss expects to make a handsome reward from his risk, then he should also be the first to go without when expectations come up short.

In other words, the potential reward should be commensurate with the actual risk.

If you have employees on staff, then they are agreeing to work for a specific "package" of compensation -- Salary, Benefits, Stock options, Bonuses and other incentives. You implicitly owe them no more than what is agreed upon, and not a penny less.

On the other hand, if success and payment is not assured, then they are taking a risk, and by rights should reap a large benefit if things succeed. And of course the skills they bring to the effort should be considered in assigning their share of the reward. I'm not saying that a two-person partnership of people with like skills and responsibility should split the profits 50-50 -- the company (the actual company, not a proxy for the "owner" through lopsided stock assignments or other tricks) should first pay its debts in full (possibly including base salary) and then put away something for its future operations and expansion -- then split the remaining amount between partners according to their skills and contribution.

That's the MBA approach, by the way -- an entirely different and somewhat more Utopian school of thought is that the workers should be rewarded as the company is rewarded, subject to their position and tenure.

Any company would do well to remember that its success ultimately relies on the contribution of its employees -- those contributions should be recognized and rewarded. Any company which forgets this precept is subject to low morale, decreased output, a lack of loyalty, and ultimately revolt. Its in the best interest of the company to keep its talent content.

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