Revenue Share vs Affiliate vs Equity: Which Model Fits?
Understanding the trade-offs between partnership compensation models to choose the right structure for your business.
Revenue share offers ongoing income tied to customer lifetime value, affiliates get one-time commissions, and equity trades work for ownership. Choose based on relationship length and risk tolerance. Revenue share suits SaaS and subscriptions; affiliate works for one-time products; equity fits early-stage startups needing deep commitment.
Comprehensive Comparison
| Factor | Revenue Share | Affiliate | Equity |
|---|---|---|---|
| Payment | % of ongoing revenue | One-time commission | Ownership stake |
| Timeline | Continuous | Per transaction | Exit event |
| Typical % | 10-30% of attributed revenue | 5-50% of sale | 1-10% of company |
| Risk Level | Low | Low | Very High |
| Commitment | Medium | Low | Very High |
| Best For | SaaS, subscriptions | One-time products | Early-stage startups |
| Downside | Lower single payment | No ongoing income | Illiquid, high risk |
Revenue Share: Deep Dive
Revenue share partners earn a percentage of all revenue generated from customers they refer, typically for the lifetime of that customer relationship. This creates strong alignment around retention and customer success.
- + Predictable, recurring income for partners
- + Partners invested in customer retention
- + No upfront cost for business
- + Scales with business growth
- - Lower immediate payout than affiliate
- - Requires accurate long-term tracking
- - Partner income depends on product quality
- - Can become expensive at scale
Affiliate: Deep Dive
Affiliate partners earn a one-time commission for each sale they generate. Simple to implement, easy to understand, and widely adopted across industries from e-commerce to software.
- + Simple, transparent compensation
- + Higher single payout attracts volume
- + Easy to track and attribute
- + Lower long-term cost per customer
- - No ongoing income for partners
- - Partners may prioritize volume over quality
- - No incentive for customer retention
- - Higher churn risk from referred customers
Equity: Deep Dive
Equity compensation grants ownership stake in exchange for contribution. Partners only realize value at exit (acquisition, IPO) or through dividends. Requires deep trust and long time horizons.
- + Deepest possible alignment
- + No immediate cash outflow
- + Potential for massive upside
- + Partner thinks like owner
- - Illiquid, years to realize value
- - High risk of zero return
- - Complex legal agreements required
- - Dilutes existing ownership
Decision Framework
- - You have recurring revenue (SaaS, subscriptions, memberships)
- - Customer lifetime value is high (12+ month average retention)
- - You want partners invested in retention, not just acquisition
- - You can accurately track attribution over time
- - You sell one-time products (courses, templates, physical goods)
- - Transaction value is high enough for meaningful commission
- - You want simple, scalable partner program
- - Partner retention isn't critical to business model
- - You're early-stage and can't afford cash compensation
- - Partner will contribute significantly beyond marketing
- - You need deep, long-term commitment
- - Partner prefers upside over immediate income
Frequently Asked Questions
What is the difference between revenue share and affiliate?
Revenue share provides ongoing payments based on customer lifetime value (typically 10-30% continuously), while affiliate programs offer one-time commissions per sale (typically 5-50% once). Revenue share suits subscription businesses; affiliate suits one-time purchases.
When should I choose equity over revenue share?
Choose equity when: you're early-stage and need deep commitment, the partner will contribute significantly beyond marketing, you can't afford revenue share payouts yet, or the partner prefers long-term upside over immediate income. Equity requires high trust and long time horizons.
Which partnership model has the lowest risk?
Revenue share and affiliate both have low risk for the business owner since payment only occurs when revenue is generated. For partners, affiliate has lower risk (guaranteed commission per sale) while revenue share requires betting on customer retention. Equity has the highest risk for both parties.
Can I combine multiple partnership models?
Yes, hybrid models are common. Examples: affiliate commission for first sale plus smaller ongoing revenue share, or revenue share with equity kicker after hitting milestones. Hybrid models can balance immediate incentives with long-term alignment.
Find your ideal partnership model
Prexvo connects developers with growth partners for revenue share partnerships.
Get Started