Revenue Sharing Agreement Between Two Companies: What to Include, With an Example

Short answer: a revenue sharing agreement between two companies is a contract in which one company pays the other an agreed percentage of the revenue from specific sales, for a set period, in return for customers, a product or access that helps make those sales. A good one defines exactly which revenue counts, the percentage, when payment is made, how the numbers are checked and how the deal ends. Leave the first of those vague and the percentage stops meaning anything.

This is a practical guide, not legal advice. Use it to decide what you want, then have a lawyer review the agreement before anyone signs.

What is a revenue sharing agreement?

The plain meaning: two companies agree that when certain sales happen, the money is divided between them by a fixed rule. One side usually collects the payment (the seller) and pays the other side (the partner) its share. The partner earns because it contributed something to the sale: it brought the customer, its product is part of what was sold, or its content or data is built in.

What makes it different from a one-off fee is that the payment follows the results. If the sales come, the partner is paid; if they stop, so does the share. That is why it appeals to two small companies with no budget for each other: nobody pays up front, and both want the same thing.

When do two companies sign a revenue sharing agreement?

• One product sold inside or alongside another. An add-on, an integration or an embedded feature that one company's customers buy from the other.
• Reselling. An agency or consultancy sells another company's product to its clients and keeps a share of what they pay.
• Licensing. Content, data or a piece of technology used in someone else's product, paid per sale instead of a flat licence fee.
• Co-selling. Two products sold as one offer, through one checkout.
• Work paid on outcomes. A partner builds or sells something now and is paid from what it earns later, instead of an invoice today.

It is the wrong tool for a one-off deal where a partner brings a single customer (a flat commission is simpler) and for someone who will build the company with you for years (that is an equity question). The trade-offs between commission, revenue share and equity are laid out in every partnership is two decisions.

Revenue sharing vs profit sharing: which one do you need?

If you searched for a "profit sharing agreement between two companies", check which of the two you actually mean. The difference matters more than the wording suggests.

Profit sharing is the honest structure when both companies put real money into a shared project, because then both should carry the costs. Otherwise it is a trap for the partner: the seller decides what the costs are, and a profitable month can be made to look like a break-even one. There is a legal angle too. In some jurisdictions, sharing profits is one of the signs a court looks at when deciding whether two businesses have formed a legal partnership, with the shared liability that can bring. Whichever you choose, say in the agreement that you are not partners in that sense, and ask a lawyer how that works where you are.

What should a revenue sharing agreement include?

Ten clauses, in the order you would negotiate them. If the deal is an integration between two software products, there are extra clauses for support, breaking changes and data, covered in what to put in an integration partnership agreement.

1. Parties, purpose and scope

Name both companies by their legal names, and say in a sentence what each one does under the agreement. Then draw the boundary: which products or prices are in scope, and which customers. "Customers who sign up through the partner's link or integration during the term, excluding our existing customers" is a boundary. "Revenue from the partner's customers" is an argument waiting to happen, because nobody agreed what happens when one of them upgrades or buys something else.

2. What counts as revenue: gross or net

Gross revenue is everything the customer paid. Net revenue is what the seller actually keeps from it. Write down every deduction:

• Refunds and chargebacks, including any dispute fees, and what happens when one arrives after the share was already paid (normally it is deducted from the next payment).
• Taxes collected, such as VAT or sales tax. They were never the seller's money, so they are never shared.
• Payment processing fees, and any platform or marketplace fee taken before the money arrives.
• Whether revenue counts when it is invoiced or received. Received means nobody shares money that never arrived.

3. The percentage, and any tiers or caps

The percentage is the number everyone argues about and the one that matters least if the base is undefined. Two options are worth knowing. Tiers change the rate with volume, for example a higher share above a monthly amount to reward a partner who grows the deal. A cap limits the total paid per year or over the term. Also state how long the share runs: a number of months per customer, or until the agreement ends. "Ongoing" is not a duration.

4. A baseline, if you already sell to these customers

If the seller already earns from the partner's audience before the deal, a share of everything pays the partner for sales they did not create. A value-added share fixes that: the partner earns only on revenue above a baseline, usually measured over the months before the agreement started. Define the baseline as a number in the agreement, not as a method to be applied later.

5. Payment timing and currency

Say how often (monthly is common), how many days after the period ends, in which currency, by which method, and who pays transfer fees. If the two companies work in different currencies, name the exchange-rate source and the date it is read. Whether the payment itself carries VAT or withholding tax depends on where both companies are, so ask an accountant before the first one.

6. Reporting and audit rights

The partner usually cannot see the seller's payment data, so it is paid on trust unless the agreement fixes that. Require a monthly statement that shows the work: customers in scope, gross, each deduction, net and the share. Add a right to check the records, for example once a year on notice. A common pattern makes the seller pay for the check if it finds a meaningful underpayment, which keeps both the reports and the requests honest.

7. Term, renewal and termination

Give the agreement an end date and decide whether it renews automatically or only when both sides sign again. Let either party leave on notice, and at once for a serious breach the other side fails to fix. Then answer the question most agreements skip: when it ends, does the share stop that day, or keep running for a while on customers who signed up during the term? Either answer is fine. Not answering is how the last month turns into a dispute.

8. Exclusivity

Default to none. Exclusivity stops one side working with anyone similar, which costs it real options, so if it is offered at all it should be narrow (one product category, one territory, a fixed period) and tied to a minimum the other side has to keep meeting.

9. IP and customer ownership

Each company keeps its own intellectual property, and each may use the other's name and logo only to market this arrangement. Then settle who owns the customer: whose contract they sign, who supports them, and whether either side may approach the other's customers directly. This is the clause that decides what each company still has if the partnership ends.

10. Disputes and governing law

Agree a route before you need one: escalation between named roles for a set period, then mediation, arbitration or the courts. Name the governing law and where disputes are heard. For two companies in different countries this is not boilerplate; it decides whose rules apply and how hard it is to collect what you are owed.

Around those ten sit the usual general clauses: confidentiality, data protection if personal data moves between you, a liability cap, a statement that the companies are independent, and signatures from people who can actually bind each company. For how the clauses differ when the partnership is between two SaaS products, see the six clauses of a SaaS partnership agreement.

A revenue sharing agreement outline you can adapt

If you searched for a revenue share agreement template, this is the next best thing: an outline of headings with the choices you have to make in brackets. It is not a legal template. Fill it in with your partner, so you agree the decisions, then give it to a lawyer to turn into a contract.

REVENUE SHARING AGREEMENT: OUTLINE
(A checklist of headings to adapt. Not a legal template, not legal advice.)

1. PARTIES
   [Company A], [address, company number] ("the Seller")
   [Company B], [address, company number] ("the Partner")
   Effective date: [date]

2. PURPOSE AND SCOPE
   What each party does: [the Partner makes ___ available to its
   customers; the Seller sells ___].
   Products in scope: [named products or prices]. Everything else is
   out of scope.
   Customers in scope: [customers who sign up through ___ during the
   term]. The Seller's existing customers are excluded.

3. WHAT COUNTS AS REVENUE
   Net Revenue = amounts actually received from in-scope customers for
   in-scope products, minus refunds, chargebacks and dispute fees,
   payment processing fees, and taxes collected (VAT, sales tax).
   Counted when [received / invoiced].

4. THE SHARE
   The Partner receives [__]% of Net Revenue.
   [Optional tiers: __% of the first [amount] per month, __% above.]
   [Optional cap: at most [amount] per [year / term].]
   [Optional baseline: the share applies only to Net Revenue above
   [amount] per month, measured over the [3] months before the
   effective date.]

5. PAYMENT
   Monthly, within [15] days of month end, in [currency], by [method].
   Exchange rate: [source] on [date]. Each party pays its own
   transfer fees.
   Refunds or chargebacks after a payment are deducted from the next.

6. REPORTING AND AUDIT
   Monthly statement by the [5th] business day: customers in scope,
   gross, each deduction, Net Revenue, the share.
   The Partner may audit the relevant records once a year on [30]
   days' notice. [If the audit finds an underpayment above __%,
   the Seller pays for the audit.]

7. TERM, RENEWAL AND TERMINATION
   Term: [12 / 24] months. Renewal: [only in writing / automatic
   unless either party gives [60] days' notice].
   Either party may end it on [90] days' notice, or at once for a
   material breach not fixed within [30] days of written notice.
   After it ends: the share [stops on the end date / continues for
   [__] months on customers signed during the term].

8. EXCLUSIVITY
   None. [Or: exclusive for [category] in [territory] for [period],
   only while [minimum] is met.]

9. INTELLECTUAL PROPERTY AND CUSTOMERS
   Each party keeps its own IP. Each may use the other's name and
   logo only to market this arrangement, as approved in writing.
   The customer contract sits with [party]. [Non-solicitation, if any.]

10. CONFIDENTIALITY AND DATA
    [What is confidential.] Data is shared only to calculate and
    check the share. [Data processing terms if personal data moves.]

11. RELATIONSHIP OF THE PARTIES
    Independent companies. No partnership, joint venture or agency;
    neither party can bind the other.

12. LIABILITY
    [Cap and exclusions.]

13. DISPUTES AND GOVERNING LAW
    Escalation to [named roles] for [30] days, then [mediation /
    arbitration under ___ / the courts of ___].
    Governing law: [country or state].

14. SIGNATURES
    Signed by a person authorised to bind each company: name, title,
    date.

Worked example: what one month looks like

Two fictional companies. Fernpost is a newsletter platform. Quillbox is an AI writing assistant that Fernpost's users can switch on from inside Fernpost for €20 a month, paid to Quillbox (prices before VAT). Quillbox pays Fernpost 25% of net revenue from those customers, monthly, for 24 months per customer. In March, 200 customers are in scope:

Now change one clause at a time and watch the same month move:

• 25% of gross instead of net: Fernpost gets €1,000, and Quillbox absorbs the refunds and fees alone, keeping €2,800.
• A baseline: if Quillbox already earned €1,000 a month from Fernpost users before the deal, a value-added share pays 25% of €2,800, so €700.
• 50% of net: Fernpost gets €1,900, and Quillbox has €1,900 left to pay for the product, the hosting, the AI costs and the support for 200 customers.

Same customers, same month: €700, €950, €1,000 or €1,900, depending on clauses that look like details. The companies and numbers are made up to keep the arithmetic easy, and they are not an estimate of what any partnership earns. To run your own numbers, net or gross and with or without a baseline, use the revenue share calculator. It does one rate at a time, so for a tiered deal run each tier separately.

Is a 50/50 revenue split fair?

Only if both sides carry about half the cost and half the risk, and in most revenue shares they do not. The seller runs the product, pays for hosting and support, and owns the customer's problems; the partner contributed the customer or a component. Equal shares of revenue between unequal contributions are not equal. Work backwards instead: what does the seller need left after fees to keep serving the customer well, and is the rest worth enough to the partner to do their part? The figures that circulate in partner-programme glossaries mostly sit between 10% and 40%, and they are conventions, not benchmarks. For software deals, how much an integration partner should get is covered in integration partnership revenue share.

Should you offer revenue share or equity?

Revenue share pays for results and can end. Equity is ownership and almost never comes back. If a company brings you customers or a product, share revenue: the deal rises and falls with what it produces, and either side can leave. Equity belongs to a person who will build the company with you for years, and even then it is a bigger decision than it looks, as should you give a marketing co-founder equity? explains. When you are unsure about a new partner, start with a revenue share for a fixed term. It is much easier to give more later than to take back what you gave.

How do you split a payment automatically instead of invoicing each month?

Most revenue shares are paid the manual way: the seller adds up the month, sends a statement, and the partner invoices for its share. It works, and for a small deal between two companies that already have billing and a lawyer, a signed agreement and a monthly invoice are perfectly fine. It gets painful when the statement is late, the numbers disagree or there are several partners.

Splitting at the moment of payment removes most of that. If one company runs a platform, Stripe Connect can, at the time of writing, route part of each charge to another company's connected account. For software partnerships, Ordana generates the contract from the terms both sides agree, collects identity-verified signatures and settles the split automatically through Stripe, out of the account that collected each payment. For a widget, one product's feature sold inside another product, the sale is split at checkout: Ordana is the merchant of record, the host keeps the share the owner set (anywhere from 10% to 90%), and Ordana's 10% comes out of the owner's side. Either way each company builds its own half with its own coding agent, and Ordana never reads a repository. The mechanics of the split itself, from tagging each sale to paying each side from its own account, are covered in how to split revenue between two SaaS companies.

Common mistakes in revenue sharing agreements

• "Revenue" is never defined. Gross or net, which deductions, invoiced or received. In the example above the same month pays €950 or €1,000 on that choice alone, and the gap grows with the percentage and the refund rate.
• The scope is "everything". A share of every product a customer ever buys turns a deal about one feature into a tax on the whole business.
• No end date. A share with no duration is a share forever, and nobody prices it that way at the start.
• No rule for after it ends. Whether the share stops or tails off on existing customers is the last clause anyone writes and the first one tested.
• No reporting, no audit. A partner paid on numbers it can never check will eventually stop believing them.
• Exclusivity given away for nothing. It is the most expensive clause in the agreement and is often added as a courtesy.
• Profit sharing without cost rules. If the costs are not defined, the profit is whatever the side that keeps the books says it is.
• A deal in a chat thread. No signature, no one authorised to bind either company, and nothing to point to when memories differ.

Frequently asked questions

Nothing in this article is legal or tax advice. Agreements, tax and partnership law differ by country, so have a lawyer review your revenue sharing agreement before you sign it.

Related reading:

• What to Put in an Integration Partnership Agreement — the extra clauses when the deal is an integration.
• Integration Partnership Revenue Share: Why It Matters — why partners who are paid nothing let integrations rot.
• Revenue Share Calculator — the split per sale and per month, on net or gross.
• Revenue Share Playbooks — every guide on setting up and running a revenue share.