Asphodel Kioku wrote:Is payment always made via PayPal by direct person-to-person transactions?
Paypal is a pretty fast and convenient solution; it supports international payments, and the money will be usable in your account within a day in most cases. However, Paypal charges a percentage-based fee, which means that while it is popular (and sometimes cheaper) for smaller transactions, people often turn to alternatives for larger dollar amounts (say, above $1000 or so). Wire transfers can take awhile to process (1-2 weeks in some cases), but they usually charge a flat fee, so many people prefer wire transfers for larger amounts. However, the flat fee also makes them less useful for smaller dollar amounts. (Paying a $20 flat fee on a $2000 wire transfer means you are only getting charged 1%, which is less than you would incur with a service like Paypal, but paying a $20 flat fee on a $100 wire transfer feels really bad.)
For most transactions above $1000, I've used a bank wire transfer for most domestic transactions (working as an American with other Americans), and also used international wire transfer several times. I have some international clients (mostly in Europe) who prefer using Skrill or Payoneer instead of a wire transfer.
I suppose you could also pay by sending paper through the mail in the form of a personal check or maybe something like a money order, but I've never had a client pay me this way. I think most people prefer to just have the money sent directly to their bank account without having to worry about keeping track of (or potentially losing) a physical piece of paper, and with a personal check there is also the uncertainty of waiting until the check actually clears (making sure your client's check didn't bounce).
Asphodel Kioku wrote:How does the percentage work? Does it work something like: after the game's profits reaches $100, I would pay a certain percentage of that $100 to you (and then payment would be made every $100)? Is there any other way to do this?
That's up to you and your client to decide. In my case, I have a revenue share arrangement where my share is tabulated quarterly (four times a year, end of March, June, September, and December), and from there I'm paid a percentage of the project's gross revenue. It doesn't matter if it doesn't work out to an even dollar amount; I'm just paid a set percentage, rounded to the nearest cent.
This quarterly payment schedule is "worse" for me than a monthly payment schedule, as it means that have to defer payment until the end of each quarter. (If the project receives revenue in February, I don't actually receive any of that money until April.) However, this isn't too much of a downside for me, as my personal finances are not dependent on the revenue from this project (and I think it would be pretty irresponsible for me to budget around the project, considering that there's no way for me to perfectly predict its future revenues). And even though I have to wait longer to receive my money under this arrangement, I'm perfectly fine with it, and it makes things more convenient for my client. Also, decreasing the frequency of payments means that less money gets eaten up by transaction fees.
After a certain number of years, I stop receiving a revenue share. (The date at which I stop receiving revenue is stated as part of the contract, along with all of the other details, like the percentage that I'm entitled to, and the details of the payment schedule.) This is partly because I expect the volume of income to drop off after a certain point, and it would be a real burden for my client to have to continue making payments for a couple dollars each quarter for decades after the release of the project. If I really cared about being part of the project's "long tail" and expected the project to still be generating significant revenue for the next 10+ years, I might have worked out an arrangement where I get paid quarterly for the first few years, and then maybe transition to an arrangement where I get paid annually after that; this would allow me to continue receiving income from the project without burdening the client too much, but I didn't really consider this worthwhile to include in the negotiating process. Ultimately, it's up to you and your client or partner to decide what is a desirable and fair arrangement.
On the subject of deferred payments, there's also something to take into consideration, which is the "time value" of money. That is to say, if you get paid earlier (rather than waiting until the end of the quarter), you can take that money and invest it or stick it in a savings account where it will generate interest. From a business standpoint, a dollar received in February is worth more than a dollar received in April, because the dollar that you received in February will have generated two month's worth of interest in that time. From a personal standpoint, the dollar amounts we're talking about are small enough that I don't worry about this too much, and besides that, savings interest rates are super crappy these days. However, if you are in a situation where you are trying to pay off high-interest debt (like a credit card with a high APR), having the money to make a payment to reduce that debt now
(as opposed to two months from now) before it accumulates even more interest might make a big enough difference to you to worry more about the payment schedule. Again, it's up to you and your client or partner to decide what is a desirable and fair arrangement.