How to JV on a service versus a product
Hi,
I've been reading about joint ventures so I have a good understanding about how they work, except one area:
How do you create a joint venture if you're offering a service?
When you have a product, you can offer your partner a percentage of total sales that his list generates. That's because the marginal cost of producing (and distributing) a digital product is near-zero - create once, sell over and over.
With a service, you're essentially selling time - so you have to either:
1) Offer your partner a percentage of your hourly fee, which means you pay yourself less;
2) Add markup to your hourly fee so that the end customer is paying more - covering your normal hourly rate plus the partner's share.
Both of the above have drawbacks. Am I missing something? Or is this just the nature of selling services vs products?
Thanks!
/James
I've been reading about joint ventures so I have a good understanding about how they work, except one area:
How do you create a joint venture if you're offering a service?
When you have a product, you can offer your partner a percentage of total sales that his list generates. That's because the marginal cost of producing (and distributing) a digital product is near-zero - create once, sell over and over.
With a service, you're essentially selling time - so you have to either:
1) Offer your partner a percentage of your hourly fee, which means you pay yourself less;
2) Add markup to your hourly fee so that the end customer is paying more - covering your normal hourly rate plus the partner's share.
Both of the above have drawbacks. Am I missing something? Or is this just the nature of selling services vs products?
Thanks!
/James