Essentially, they want me to launch the same service branded for them (data, customers, servers, etc are mine, but the branding is theirs) but sharing the profits (they do the marketing, etc).
Is this wise? What kind of revenue split is normal for these kind of arrangements?
Do they want just a version of the product that has their branding front and center, but which with even a cursory scratching of the surface is your product.
Or do they want a complete white-label version including domain names (incl. backend services not shown in the browser), email, payment processing, etc, etc.
In the later case unless they are willing to pay $$$$$ up front for the development it would seem very unlikely to be worthwhile.
In the former case, you could decide if it is worthwhile for a moderate amount of development effort and perhaps even include a 'Powered by ...' link in the footer. Then offer them a 30% discount on pricing: eg. a plan that costs $300\year normally you'll sell them for $210 and require they market it at a price of at least $300 ... if they can sell it for more and capture more profit take that as a signal to raise your prices!
1. They sign a Non-compete agreement to ensure they don't become your competitor. Get a lawyer involved to protect yourself.
2. They pay a huge upfront fee. Call it "licensing" or "new reseller" fee. If they dont agree, move on. This fee should cover at least 12-18 months of average profit you make per client generally.
3. On top of the fixed one time fee, they pay you a flat fee per customer that they onboard. This could be harder to verify so the upfront fee should be your minimum guarantee.
Generally profit sharing sounds great on paper but you wont be able to track those metrics unless you are the one who hosts the software.