Flipping From Pay Per Performance Model To Up Front Fee. The Complete Method

I was reminded of this from reading a post here;

http://www.warriorforum.com/offline-...sed-model.html


Guys and Gals;
I originally got this approach listening to a CD by Dan Kennedy. No idea which one. But I use it, and it works like gangbusters.

You can either use this as an approach or as a close. It was intended to be used as an approach, but I have used it mostly as a way to justify my price.
Here goes;

"If I could increase your customer flow, would you be willing to pay me 30 cents for each dollar in profit I bring you, for the first year?".

You can ask that many different ways. Usually, this is broken down into a few thoughts. But it's all in that sentence.

then I get the figures from them. The client must give you figures to work with, or it all falls apart. I keep the figures at the low end, very conservative.

The figures you want are;
What they did in business this year (or a monthly average)
What they did in business last year (to set the trend in increase or decrease)
What percentage is profit

OK, now you can both do the math and see what they will likely do next year in business, if the trends hold. You are selling Percentage of increase in income above the trend.

Then you ask questions about what they are doing online, and establishing that what you offer will increase their sales. This all has to be established using their figures, not yours.

Then they tell you the increased income range they think you'll help them create. Make it a minimum and maximum for the year, not one figure. Then take the minimum, and let them tell you that they would gladly pay you 30% of that figure for that increase.

Let's say the 30% figure is $15,000. Now, to them...the sale is closed. They have already agreed to pay you about $15,000 over the next year.

But you don't want that.

Why? Because if you really generate huge increases in income for them, every month they are writing you bigger checks...and everything you did for them is already done...maybe months ago. So they start resenting writing these checks. Maybe they start making demands outside the agreement. Maybe they try to lie about the business coming in. Bad things can happen.

So.....
You offer them an alternative to that $15,000 minimum they would be paying you. Offer them the same work for only a fraction of the figure they give you. My figure is $4,000. I'll even finance the $4,000 over four months to make this happen. Then there is a small monthly charge.

The most important part here is the transition from $15,000 someday...to $4,000 now. If it doesn't sound reasonable to the client, you lose.

So I say "Bob, I think I have an even better way to save you some money.
Your increase in income is all in the future. My work is nearly all done upfront.
To help both our cash flows, here is the idea all my clients, so far, have gone with...." And then I just explain the $4,000 now instead of $15,000 in a few months. And I even offer to finance the $4,00 over a few months. And at the end "Which plan do you like better?"

There have been times when I know I could have quoted an upfront fee of $20,000 and they would have said "Yes". The only thing stopping me is a ..what do you call it....oh yeah, a soul.

Of course, your percentages and fees would be completely different. But the approach works like gangbusters.

Have I ever had someone stick with the "Pay as you earn" program? Once. And it was doomed at the start. No money now, no ambition, I gave up after a few weeks.

But I've sold more than 20 clients on this idea. Mostly it was not the approach I started with, but I used it after we established a customer value, and how much they expected to earn from my efforts. It just fit right in.

If I started the approach with this idea, I would make sure the prospect is qualified and growing. It works well with any business where the business is owned by one person. I haven't tried it from the front of the room speaking...but I might. I hope this helps someone.