Sounds like it must be an interesting opportunity. Congratulations and well done.

...I'm prepared to take a gamble. I would rather they paid on a percentage of gross sales...

In my other career, I've had many % of gross, and % of increase deals. The clients love the concept in the beginning, hate it later when the checks are large and continuing. Consider this at the start, and get them to as well. Get legal help in arranging this. Will they be trying to disconnect from you, attack you, etc., because you're getting paid so much? Will it be worth the fight to battle for the money if they rebel? (The answer must be Yes.)

Arrangements like this really can be excellent for both sides, but they require a mature view, and good documentation, in the beginning. Some streaming thoughts:

How will you feel if they don't sell anything?

Are you obligated to provide ongoing maintenence, support, upgrades?

Will they be obligated to provide access to financial data so you can audit them to see if they're telling you the truth about their gross sales?

Does the code and all relinquished rights revert to you if they are in default, or is this 'work for hire'?

Maybe some of this is not relevent if your time/creativity investment is smallish to you, maybe not.

Get legal advice.

There are many variations - (1) lump sum of cash up front, smaller ongoing participation; (2) stock instead of cash participation; (3) Is it all your code and they're offering to hire you in order to own and sell your code? Maybe you should be hiring them :); (4) Is the code in question trivial to you and you're just happy they're willing to do something with it? You don't have to be distrustful of them to take care of routine business arrangements like this. If they're acting offended that you are seeing to details, you have bigger problems; (5) Did I mention getting legal advice? This is a routine matter and quick use of an attorney will be most helpful.

Damn pesky business issues. However, those issues will never not exist, for any of us. You should use the legal geek, just as your client is using your specialty. (I'm not a lawyer fan by any means, but, well, y'know...)

just thoughts. HTH