They offered ten percent and no invoice. Should you pay a freelance developer in equity or cash? The work was a first version with a date six weeks out, and after that I was supposed to disappear. I sent a fee. A percent is for the person who is still in the repo the month you cannot pay them.
If the other email is a salary, that fork is a full-time developer or a freelancer. A retainer with a title and an empty repo is a fractional CTO or a freelance developer. I write a brief before I quote, and once the number is cash I say whether it is fixed price or hourly. The work I take is website work and product work, and it gets an invoice.
How to tell equity from a cash fee
The offer said sweat equity. I opened it and it was six weeks of screens. I look at the week after the launch email. If they are gone and the product still has to run on Tuesday, you bought a build. If the company stops when they leave, you are hiring an owner.
Cash
The job has a last week
- The last week is on a page, and you can pay an invoice for it
- After that week the GitHub and the domain are in your accounts
Equity
They own it after the launch
- They are still there the month the invoice would have been late
- If the company dies, they lose it too
- Month eight is still their problem
- You would not hire them for a single launch
The cut
That ten percent was for a first version with a date on it. Nobody could say who opens the repo in month four. I did not start. The agreement has to name the week the job ends, or it has to name the person who stays past it.
What a percent of the company is buying
A fee is a result you can point at. A percent is a person who keeps going after that result ships, including when it fails. Founders reach for the percent because it costs nothing this month. If the company works, that percent is the expensive line. You paid with the company.
The email had no number next to the ten percent. The work was already named. One product, one job, a URL someone can use. That is a fee. How much a first version costs is the number they were avoiding. Offering a slice of a company with no customers does not make the build cheaper. You are starting a second company in the same sentence.
Pay me when you raise
Sometimes the percent is just a delay wearing a nicer word. They will pay cash after a round that has not happened. I don't ship against a round. If you cannot pay this month, you cannot hire the build this month. The repo then sits for a quarter, and the next email has a larger percent on it. Raise, or cut the job until the invoice fits.
Advisor shares are a different email, and people staple them onto this one. A small grant for someone who joins a board call and never opens the repo can be a real hire. It is not mine. I write the product. If you need a name on the slide, put them on their own paper. Don't attach their shares to the invoice for the person who is typing.
I don't want ten percent of a product I leave in week six.
When you pay a freelance developer in cash
Pay cash when you can say the last week. Someone finishes one job on a URL that stays up. You pay for that week. You do not have to invent a company around the person who built it. If the only sentence in the email is "we might give you equity," I don't have a contract to price yet.
I move the keys the same week. Repo, host, domain, in accounts you can open without me. Who owns the product after launch is that handoff, and a percent does not do it. A percent does not put the domain in your login. If I had taken the ten percent and left the repo in my GitHub, the founder could not merge a fix in month four. The percent would not make me answer email.
Once the page exists I quote a range, in money. Fixed when done is written on that page. Hourly when the work will move while I am in it. If you already know the next year is unnamed work, stop looking at a freelance fee. You need someone who has to be there. That is a salary, or a cofounder, and I will say which before I send a number.
When equity means a cofounder
The percent is real when they stay after you cannot pay, and they lose if the company loses. A launch with a date is a fee. A fractional CTO is a different hire again, someone in the meetings while another person types. A cofounder is still there when you cannot send the invoice.
They stay when the money stops
Ask what they do in the month you miss payroll. I stop work. The person who keeps it alive because the company is theirs is the equity hire. If they leave when the invoice is late, you are trying to fund a cash hire with the cap table.
That person is also deciding what the product is in month eight, and they are the one a customer yells at. I don't price that as a milestone. Your lawyer writes the agreement. What they get, what happens if they leave, who holds the accounts. I don't scribble ten percent on a build proposal and call the scribble a company.
A percent for a job that ends is how you pay twice. You give up the slice for the six weeks. Then they are gone, Tuesday still needs a person, and you hire someone else. The slice does not come back. If the work fits in one head and then stops, pay the fee. A few of those are in selected work. Send the offer. I'll tell you if it is a fee or if you are actually looking for an owner.
