Here are some things to consider. First, you probably want to determine what the cash rental rate in your area would be to have something to compare to. You likely don't want to pay more than this rate. Depending on your budgeted costs and revenue from marketing, this could be an issue.
To evaluate paying 40% of your profit as pasture rent versus paying, say, the cash rental rate for your area, it is important to carefully define with the lessor what "profit" is. Would this be a return after cash costs or a return to ownership and management? In the first case, the return would be higher (so would the pasture rent). Further, would there be an "opportunity" cost of the pasture rent included to calculate the return? If there isn't and this is one of the larger costs for this budget, it would substantially increase the return and therefore the pasture rent.
Also, the revenue side of the profit equation will depend on what time of the year, market conditions, etc. when you sell the steers. So, the lessor of the pasture will have a stake in how the steers are marketed. Will the lessor have any input into this decision or the marketing methods used?
Another factor to consider is the extent to which you will have to provide documentation on your costs and revenue to "prove" your profit to the lessor.
