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Is anyone doing a pay-for-performance model?

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JustKris

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Has anyone in the forum ever done pay-per-lead or pay-per-performance consulting before? (I mean, obviously besides MJ with limos.com, of course)

Had a client bring this up recently and was curious what people in TFF thought about it.

The TL;DR version---They sell a high-ticket platform. Right now, I'm charging a monthly retainer for consulting. But they suggested they would be open to looking at a lead-gen or percentage of sales model.

I did this in the past when I was a Slowlane employee. Basically, I pitched the owners on a comp plan that was a base salary and a % of new revenue. But I'm wondering if this is going to be more trouble than it's worth when dealing with somebody in another state.

The pros as I see it

- Potentially very lucrative
- The upside of an ownership stake without the headaches
- Longer-term revenue on current work (i.e. a payout on 12 months of service based on work I did this month.)

The cons

- Keeping track of leads/sales
- Disputes over what constitutes a proper lead/sale. "Oh, we spoke to that guy once five years ago. That doesn't count."
- It can become TOO lucrative and they want to cancel the deal.
- Depends on the closing rates of their team, not my own abilities.
- Costly litigation if there is a dispute
 
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RazorCut

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I think it’s a win win for both parties. The client knows they are paying on results and you have a vested interest to ensure you make the most of any sales opportunities plus no cap on revenue.

A lot like affiliate marketing.
 

JustKris

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I do that, yeah. Wouldn't ever change. The alternative, as I see it, lacks confidence in your own results (Or due diligence), or is short sighted

How do you structure your fee? Per lead, per sale?




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Bourbons

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How do you structure your fee? Per lead, per sale?




Sent from my iPhone using Tapatalk
Almost always start out just aiming to cover costs with a very modest profit, then we'll work to ascertain the value of the client to our partner and work to get a bigger share. Most people struggle to create a good sales funnel, whilst they may be good at their chosen profession, so we have a high value to our partners.
 

Andy Black

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I do flat fee. It’s intentional.
 

PizzaOnTheRoof

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I plan on building multiple lead gen “properties” using a pay per lead or flat rate model. Right now leaning towards PPL.

Not looking forward to tracking and playing accountant for all the leads but the model does have a higher growth potential than flat rate.

Maybe a hybrid of the two? Low cost per lead + subscription fee?
 

Tom.V

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Typically, nah.

However, if a prospect comes around that I KNOW we can blow out of the water given their market, business setup, competitive advantage, then different story. Even then, the model is akin to the story of Icarus. When you do gain traction and really start digging into it, you can quickly become the largest expense on their books which puts a big fat red target on your back. There are ways to mitigate this risk, but significant thought needs to be put into the deal structure ahead of time to make it work best for both parties long-term. At that point, might as well get equity in the company with a capped fee.
 

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