Compendium Token
Revenue Share, Explained: How One Payment Splits Between Several Parties
What a commission base actually is, why net beats gross, when commission should accrue, and the rounding problem that quietly breaks most revenue-share systems.
Revenue share sounds simple until you write it down. "You get twenty percent" raises three questions immediately: twenty percent of what, measured when, and split how if more than one party is involved. Getting any of them wrong produces a partner relationship that ends in a spreadsheet argument.
Twenty percent of what: net, not gross
Commission at Compendium is calculated on net revenue — what actually arrived after payment processing costs — not on the gross invoice amount.
The reason is arithmetic rather than stinginess. Card processing takes roughly 2.9% plus a fixed fee before the money reaches us. Paying commission on gross means paying a share of money that was never received. On thin software margins, a program that does that consistently pays out more than the revenue it generates, and then gets cancelled — which serves nobody, least of all the partners who built their business on it.
Measured when: at payment, not at signature
Commission accrues when an invoice is paid. Not when a deal is signed, not when an invoice is raised.
This is the single biggest source of clawbacks in commission programs. Accrue at signature and you will pay out on deals that never fund, then spend the following quarter reversing them out of partner balances. Accruing at payment means a failed card creates no commission at all, so there is nothing to reverse. Partners get a smaller number sooner and a stable one, which is a better trade than a larger number that might evaporate.
Split how: shares must total 100%
A referral code can carry several legs — the referrer who introduced the firm, an introducer who made the connection, the house. Each leg has a share, and the shares must total exactly 100%.
Our engine refuses to pay a split that does not total 100%, rather than normalizing it. This is deliberate. If someone edits a split and leaves it at 90%, the failure modes are: pay 90% of the commission and silently underpay a partner for months, or refuse and make somebody fix it. Only one of those is discoverable before it becomes an invoice dispute.
The rounding problem nobody mentions
Here is the bug that quietly breaks revenue-share systems. Take a commission of $130.65 split 60/30/10:
- 60% of 13,065 cents = 7,839.0
- 30% of 13,065 cents = 3,919.5
- 10% of 13,065 cents = 1,306.5
Round each share independently and you get 7,839 + 3,920 + 1,307 = 13,066 cents. You have just distributed one cent that does not exist. Round each down instead and you distribute 13,064 and one cent goes missing. Either way the ledger stops balancing, and at scale you are reconciling a drift nobody can explain.
The fix is largest-remainder allocation: compute the exact shares, floor them all, then hand out the leftover cents to whichever legs had the largest fractional parts, in a defined order. The legs then sum to exactly the commission, always, and the same input always produces the same allocation. In the example above the correct answer is 7,839 / 3,920 / 1,306.
Recurring versus first-payment
A referral arrangement can pay on the first invoice only, or on every renewal for the life of the account. Both are legitimate and they suit different partners: one-off suits a broker who introduces and moves on, recurring suits an implementer who stays involved with the customer.
One order pays once
Attribution is unique per order at the database level. Payment webhooks deliver at least once and sometimes more, so a system without that constraint pays some partners twice and, once someone notices, tends to overcorrect into paying nobody. The constraint makes both failure modes impossible.
Common questions
Is commission calculated on gross or net revenue?
Net — the revenue actually received after payment processing costs. Paying a percentage of gross means paying out a share of money that never arrived, which makes a referral program cost more than it generates.
When does referral commission accrue?
When the invoice is paid, not when the deal is signed or invoiced. That means a failed payment never creates commission, so there is nothing to claw back later.
How is rounding handled when a commission splits between several parties?
By largest-remainder allocation. Exact shares are computed and floored, then leftover cents are allocated to the legs with the largest fractional parts in a defined order, so the legs always sum to exactly the commission amount and the same input always yields the same result.