Revenue Model

How money flows through the cooperative.

Overview

Daemon operates as an employee-owned cooperative (not a nonprofit — see Legal Structure). The cooperative bills clients, pays members a salary, and distributes surplus profits annually as a dividend.

The VCG mechanism operates entirely in hours, not dollars. Money is handled separately through normal compensation structures.

The Three Layers

1. Client Billing

The cooperative bills clients at market rates, just like any agency. Rate negotiation, contracts, and invoicing are cooperative-level functions. Individual members don’t negotiate rates with clients.

2. Member Salary

Members receive a salary based on role, seniority, and market rates — standard compensation practices. The salary is earned by fulfilling the 32-hour floor. This is your job.

Salary is determined through cooperative governance, not by the mechanism.

Hourly rate for dividend purposes is calculated as:

salary_hourly_rate = annual_salary / (32 hrs/wk × 52 wks)
                   = annual_salary / 1,664

3. Annual Profit Dividend

At year-end, the cooperative’s net profit (revenue minus salaries, benefits, operations, reserves) is distributed to members as a dividend.

Each member’s share is weighted by their surplus contribution:

surplus_contribution = Σ (weekly_surplus_hours × salary_hourly_rate)

Where weekly_surplus_hours = credited_hours - 32 (clamped to ≥ 0).

Member’s dividend share:

dividend_share = member_surplus_contribution / total_all_surplus_contributions
member_dividend = net_profit × dividend_share

Example

Member	Salary	Hourly Rate	Avg Weekly Credited	Avg Surplus	Annual Surplus $
Alice (Senior)	$120,000	$72.12	37 hrs	5 hrs	$18,751
Bob (Junior)	$70,000	$42.07	35 hrs	3 hrs	$6,563
Carol (Mid)	$95,000	$57.09	34 hrs	2 hrs	$5,933

Total surplus contributions: $31,247

If net profit is $100,000:

• Alice: $100,000\times ($18,751 / $31,247)=\ast \ast$60,003**
• Bob: $100,000\times ($6,563 / $31,247)=\ast \ast$21,001**
• Carol: $100,000\times ($5,933 / $31,247)=\ast \ast$18,995**

Properties

• Salary is stable. Members get paid regardless of dividend performance.
• Surplus rewards efficiency and volume. More credited hours above 32 = larger dividend share.
• Salary weighting reflects value. A senior’s surplus hours count more, matching the revenue they generate.
• Growth incentive. As your salary increases, your surplus hours become more valuable in the dividend pool.
• No external extraction. All profit stays in the cooperative — distributed to members or reinvested.

What This Resolves

• Revenue model: Cooperative bills clients → pays salaries → distributes surplus as dividend
• Internal rate question: N/A — members are salaried, not paid per-hour
• Senior vs junior fairness: Salary handles base compensation; dividend weighting handles surplus value
• Mechanism purity: VCG operates only in hours, money is a separate layer entirely

Cadence

• Salary: Standard payroll (biweekly or monthly)
• Dividend: Annually

See: Hours and Pricing, Cooperative Structure, Mechanism Design