… I had pitched 15%, our standard. Steve pointed at it and said, “15%? That is ridiculous. I want 50%.” I was stunned. There was no way I could run my business giving him 50% of my product revenues… I had to make the business make sense financially. I just needed to make my 15% look like his 50%. To do so, I reduced the nut to split by first deducting the cost of packaging, of technical support, the salaries for some developers on my side of the business to implement fixes, and when I still couldn’t get the math to pencil out, I added a $6 per unit ‘handling fee’ thanks to some inspiration from an infomercial on the Home Shopping Network. My new “Hollywood net” number read 50%, but fully-loaded it was pretty close to the 15% of gross I needed to make the deal work. Magic! Steve was happy with his 50% contract and the deal got inked…
What I Learned Negotiating With Steve Jobs by Heidi Roizen
See also: Five Business Lessons From Steve Jobs by Kevin O’Leary.