What is a common Rev Share model? We are starting a new product and have a limited budget for development. Is there a standard/recommended formula for determining "share value" that we can use to determine how much to give as compensation for where funds don't cover full development? Also what are the pros and cons to rev share models.
The standard Rev share model is "you pay me for my time, and you recoup your costs from sales". Everything else is totally fringe, i.e. not common.
Good developers either have their own proejcts and look for investors, or dont see a reason to spedn time with yet another unfunded startup intead of having an interesting project paying them a lot of cash money as contractor without taking any risk.
Especially - if you dont have money for pthe product, how about marketing? You will jsut dump the poject, and the developer is left with a share of nothing. Which somehow does not pay the rent.
Sorry not to answer your question, but I advice against rev sharing for development.
Here is a good argument over at Hacker News about why you as a founder should learn to code yourself.
If you don't and you do this you're likely to end up being worse off. Let me explain why:
The developers want to get paid, right? If you're able to pay them now, and you settle for a rev share, they're going to want a bigger up side on success. If they think there's a 50% chance the project will make no money, they'll want to make at least double the money for the rev share ($1000 secure money ~= $2000 with 50% chance of being lost).
So, basically your scenarios are
So... I advice strongly to learn to code yourself unless you've got the money to pay for development. And it comes with some other great benefits too, that will surely help you in the long run.
Best of luck!