I have been consulting on the side to a small software business
who has asked me to develop a new version of their product.

The client already has previous versions of the software sold
to their clients, and if I were to take this project on, I
have been offered a royalty on each copy sold.

I'm wondering what everyone thinks of this. Has anyone done
anything like this? Is there a typical percentage per copy?
What are the benefits/pitfalls.

I welcome insight into this.

Thanks