| There are many service professionals out
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| | of the company must give you a
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| there who offer a broad range of
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| | non-executive director position, so you
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| compensation strategies for their work,
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| | have a say in company matters. Insist
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| hoping that prospects will find one of
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| | that you must be involved in every single
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| them more attractive than the others and
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| | decision and you have unlimited rights to
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| then they are more willing to engage
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| | inspect the books. Remember, you are not
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| these professionals.While some of these
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| | afully-fledged decision maker but not a
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| fee-setting methods are good for certain
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| | passive observer either.You also create
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| situations, some of them are plain duds
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| | an agreement that you are not responsible
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| and can land you in really nasty
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| | for anything that is going on in the
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| situations.So, let us review here some
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| | company, and you take no responsibility
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| pricing methods service professionals
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| | for the company's debt either now or in
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| use, and we look at both the pros and the
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| | the future. You just use your director
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| cons of each method. Some methods are
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| | position to make certain that some anal
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| great but the problem lies with their
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| | retentive cost conscious bean counter
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| interpretation.Let's start with a common
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| | doesn't undermine your lead generation
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| belief. Many professionals guarantee
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| | initiatives by cutting budgets. Let me
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| results and try to use this guarantee to
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| | know if you need some help in this
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| entice clients from competitors. This is
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| | area.Equity/Stock PositionI would avoid
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| the same as guaranteeing to your spouse
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| | this method like the plague. Let's face
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| that your marriage is for life and
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| | it. Some 98% of all businesses fail
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| nothing can end it except death.So, the
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| | before their tenth year in business. So,
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| essence is that we cannot promise
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| | if you enter a stock option agreement,
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| definite outcomes, unless we control
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| | you have only 2% chance of emerging as a
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| every aspect of the client relationship.
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| | winner being rewarded for your expertise.
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| And there are just a very few
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| | I may not be a mathematical genius, but
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| professionals who can do that. They are
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| | even I know that if I have only 2% chance
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| gravediggers, embalmers, autopsy doctors,
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| | of reaping the rewards, I had better not
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| and other professionals whose clients are
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| | take 100% risk. It is just not a sexy
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| fairly cold and fairly horizontal. When I
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| | ratio.Also, when business owners offer
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| was a gravedigger and embalmer, I was in
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| | you something in the future, they try to
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| charge and my clients were pretty
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| | abdicate the risk onto you. At the same
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| passive. They gave me the right to make
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| | time, just take a quick look at the cars
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| key decisions.Personally I believe it is
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| | they drive and the homes they live in.
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| unethical to guarantee outcomes when you
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| | They don't want to sell their cars in
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| work collaboratively WITH clients.It may
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| | order to inject some money into their own
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| work a bit better when you work as an
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| | businesses. They ask you to inject your
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| outsourced labourer and are expected to
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| | own money as a "partner". They are having
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| produce results FOR your client.So, let's
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| | a great time, while you are hoping and
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| see these fee-setting methods.Flat
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| | praying that you see some money for your
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| Negotiated Fee (Project Fee)In this
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| | work.But then you could start the same
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| method professionals usually calculate
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| | business as a competitor, push that idiot
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| how many hours it will take to do the job
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| | out of the market and then you keep 100%
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| and how much you have to fork out on
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| | of the profits. It is a lot better
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| materials, and quote a price accordingly.
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| | deal.Especially high-tech leeches have
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| But from the client's standpoint the "I
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| | been famous for this before the dot com
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| run a team building workshop for you" is
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| | blast, but even now. They know they can
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| as useful as a chiropractic clinic en
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| | have a great life using some venture
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| route to the gallows. Clients want to
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| | money. We just must make sure we don't
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| reduce talent attrition, boost sales
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| | descend to the stupidity level of some
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| (strategy) and the way (tactic) to
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| | "investors", and don't invest our
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| achieve it is improving team performance.
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| | hard-earned money and talents in these
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| But how you improve team performance is
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| | lunatics' adventures.But if you feel
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| absolutely irrelevant. If it is a
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| | passionate about what the company does,
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| workshop, be it a workshop. If it is
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| | go for it, but demand a non-executive
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| removing some team members, that is fine
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| | director position on the board. Again,
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| too. If it is feeding them some pancakes,
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| | accept no responsibility against losses,
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| that works too. The means are irrelevant
| |
| | but make sure your voice is heard and you
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| as long as they are legal, moral and
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| | are involved to a certain extent in
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| ethical.If you can say that that let's
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| | running the show.CommissionsThis is a
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| work together to reduce annual talent
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| | fixed percentage of profits on specific
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| attrition by 25%, that is a valuable
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| | sales and it
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| proposition. Can you see the difference?
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| | sucks.Imagine that your efforts result
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| If it takes 10 minutes to remove some
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| | in $1 million in monthly sales. Great.
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| prima donnas from the team and improve
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| | You estimate a great commission
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| performance, why the cricket would you
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| | cheque.Then comes the business owner and
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| bother to run a workshop? The real
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| | announces that using this $1 million he
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| performance improvement takes place right
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| | wants to buy a new house and a new
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| after removing the troublemakers.You
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| | Ferrari. All in all, after all that hard
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| can't improve the overall performance of
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| | work the $1 million is gone and you are
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| the fire brigade by running workshops on
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| | there with pennies in your pocket because
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| the physics of fluid dynamics. Hey, they
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| | your commission is payable on profit.And
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| don't need to know that aspect of
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| | since you have no say in company matters,
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| water.Since this approach is about
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| | all you can do is to grit your teeth,
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| working hours, there is a tendency to
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| | tighten your belt ready to face some
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| include heavy reports and tonnes of
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| | starvation and look forward to the next
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| unnecessary memos in the
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| | month, being terrified of the boss' next
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| agreement.Monthly RetainerThere is a huge
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| | whimsical decision.Besides all that, this
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| misunderstanding here. For many service
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| | compensation method is highly unethical.
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| professionals, retainers mean a certain
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| | It forces you simply to sell more not to
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| number of hours of pre-paid manual
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| | improve the client's condition. It's
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| labour. However, I believe that buyers
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| | short-term focused with no regards for
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| use service professionals for what they
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| | long-term strategy.Imagine that you go to
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| know, that is, brain power, and not for
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| | the store to buy a simple computer for
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| what they can do in the form of manual
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| | word processing, but the sales clerk is
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| labour (brawn power).Just imagine a
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| | trying to sell you a top-of-the-range
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| financial advisor. She takes care of your
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| | all-bells-and-whistles computer. He
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| assets for a certain annual fee, but if
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| | doesn't care what you want or need. He
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| you try to convince her that "Hey, I'm
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| | cares about what he needs: More sales to
|
| too busy, here is some money, go to the
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| | be able to pay the mortgage.Some people
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| bank, stand in the queue and pay off my
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| | may say they don't do this. Look, we are
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| VISA card, since I pay you anyway", she
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| | humans. If the road is clear and there
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| may recommend you a check-up from the
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| | are no cops around, we all exceed the
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| neck up in the local mental hospital.Also
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| | speed limit. All in all, when the
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| make sure you get paid in advance and
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| | temptation is there, we can easily fall
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| provide unlimited access to you. You also
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| | for it. So, the best bet is to remove the
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| have to stipulate who exactly has access
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| | temptation itself.Do you remember - from
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| to you. There is no point in charging one
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| | the movie The Exorcist - when the young
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| single fee and allowing a whole
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| | priest, Father Karras is preparing to
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| corporation to call you whenever they
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| | meet the possessed girl, and Father
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| need your help.Again, your retainer is
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| | Merrin, an experienced exorcist, warns
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| compensation paid to you for access to
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| | him, "Fo not listen to anything the demon
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| your smarts and talents for a
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| | says. He will mix lies with the truth to
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| pre-specified period of time. The
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| | confuse you."The commission structure is
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| retainer is not a pre-paid hourly rate
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| | the same. It mixes so many lies into the
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| that is drawn against as dispensed
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| | equation that the good intentions just
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| billable time. You are not a human
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| | vanish. Just keep away from
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| vending machine.There is no project in
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| | commissions.Oh, one more little thing. As
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| retainer agreements. There are no
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| | a service professional you are supposed
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| specific objectives. The emphasis is on
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| | and expected to be unbiased. When your
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| having access to your smarts and counsel.
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| | compensation is directly attached to the
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| The value of the retainer agreement is
| |
| | outcome, you will be everything except
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| not a function of your physical presence
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| | unbiased, thus you automatically become
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| either. It is the client's responsibility
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| | useless.It reminds me of the police force
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| to contact you whenever your advice is
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| | in the old communist Hungary, where the
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| sought.Fixed Fee With Exposure
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| | cops were paid bonuses based on the fines
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| OpportunitiesThis is when clients say
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| | they collected. Guess what? They
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| "Although we pay you only peanuts but you
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| | ruthlessly fined every warm body with a
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| will get millions of dollars worth of
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| | pulse. And the sad thing was that they
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| media exposure." This is retarded.Imagine
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| | made up rules on the fly as they found it
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| going to Safeway (Grocery store chain in
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| | most beneficial to themselves. And when
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| North America, the UK and maybe elsewhere
| |
| | the poor victims tried to argue their
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| too) and refusing to pay full price,
| |
| | sides of the story, the cops often just
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| arguing that "I offer you exposure by
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| | beat up their victims. It happened to me
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| carrying my groceries in your shopping
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| | a few times too. Then they forced me to
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| bags". What do you think would happen?
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| | sign a document that I had fallen down
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| The cashier would call the nearest
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| | the stairs. Then they dumped me in a dark
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| lunatic asylum to book me a place.Push
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| | alley and that was it.BarterIn this setup
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| back to buyers and tell them that unless
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| | you are supposed to exchange services,
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| they only want "exposure to value" not
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| | but there is a problem here.Let's say
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| the value itself, they had better cough
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| | that you are a private tutor and your
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| up the dough. Imagine, you go to a
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| | client is a car mechanic. So you teach
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| restaurant starving, order teriyaki
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| | his kid and he fixes your car. Is that
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| elephant tail, and the waiter does a nice
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| | fair? On the surface it is. But let's dig
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| PowerPoint presentation on how teriyaki
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| | a bit deeper.The mechanic fixes your car,
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| elephant tail is cooked. Then he happily
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| | which is a rapidly depreciating liability
|
| brings you your discounted receipt. You
| |
| | anyway.However you are tutoring the
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| have just been exposed to value but did
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| | mechanic's daughter, so she can get
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| not get it. You are still starving. How
| |
| | better grade, she can go to a better
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| would you feel? Still starving? Then
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| | university, she can get better
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| watch the presentation again and pay the
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| | recognition as a professional, so she
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| discount rate again.You offer real value,
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| | doesn't have to slog her way through all
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| so you must only accept real dough.
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| | the drudgery her parents went through.
|
| Wherever in the world you live, I find it
| |
| | All in all, you offer the mechanic's
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| hard to believe that the reining currency
| |
| | greatest asset (her daughter) an
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| is called "exposure". But check it with
| |
| | opportunity to become all she can be and
|
| your mortgage company. I may be
| |
| | achieve more then her parents have ever
|
| wrong.Cost-Based FeesThere is a problem
| |
| | achieved.Is this barter equal? Not
|
| here. In this braindead situation you are
| |
| | exactly. Who is offering more value in
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| supposed to be paid based on your costs.
| |
| | this equation? I vote for the tutor in
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| As a service professional, you can offer
| |
| | spite of the fact that teachers earn a
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| advice worth of thousands of dollars in
| |
| | tiny fraction of what car mechanics
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| ten minutes at very low costs. So, why
| |
| | earn.I know people who barter their
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| should you be penalised just because your
| |
| | professional services for computer parts,
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| overhead costs are so low?When you were
| |
| | groceries and other tangible bits and
|
| in the phase of collecting your
| |
| | bobs. That is, they turn their own
|
| knowledge, you paid both for your
| |
| | services into cheap commodities by
|
| schooling and your education. (The older
| |
| | bringing them down to the level of a bag
|
| I get the more I realise the difference
| |
| | of potatoes or a hard drive.Can you
|
| between the two.) Nobody came to you
| |
| | imagine the lawyer saying, "Replace my
|
| saying, "Let me help you to pay your
| |
| | computer's hard drive and in return I get
|
| tuition because a few years later I want
| |
| | your uncle out of prison." Something is
|
| to hire you and need you to be as
| |
| | seriously wrong with this picture.Hourly
|
| knowledgeable as possible".Contingency
| |
| | FeesThis is concentrated stupidity of the
|
| FeesThe mistaken idea behind this payment
| |
| | highest degree. It is basically giving
|
| method is that every dollar your
| |
| | your life away piecemeal. And I don't
|
| expertise brings to your clients'
| |
| | care how high your hourly rate is, it is
|
| businesses, they pay you a
| |
| | just plain negligent to tie your income
|
| percentage.Once I had a woman who wanted
| |
| | to such a finite entity as time. If your
|
| to hire me to help her with weight loss.
| |
| | value is simply the function of the time
|
| (I am a certified personal trainer and
| |
| | you spend in your client's company, you
|
| coach some businesswomen over weekends on
| |
| | may just turn into a lapdog, and at least
|
| fitness and lifestyle issues. You can
| |
| | you will be more highly appreciated.There
|
| call it a paid hobby.) But instead of
| |
| | are so many problems that it is just hard
|
| paying me my normal fees, she wanted to
| |
| | to express in one short article, but here
|
| pay me for the lost weight. I told her
| |
| | are some.First here is an exercise for
|
| that it was up to her how well she would
| |
| | you. Average North American consultants
|
| adhere to the programme I design for her,
| |
| | invoice some 1,144 hours a year. Multiply
|
| and she would start shaping up
| |
| | this number by your hourly rate, and what
|
| accordingly. She insisted on the pay for
| |
| | you are staring at is the absolute
|
| performance (lost pounds). So I had no
| |
| | maximum you can earn.Per Diem
|
| option but to tell her that I could push
| |
| | fees......inflict an artificial upper
|
| her to the brink of certain death to
| |
| | limit on your earning potential...make
|
| achieve maximum weight loss, but that
| |
| | your income subject to "going" or
|
| would not achieve what she was seeking.
| |
| | "competitive"(ly low) rates...present you
|
| Although she saw the point and was
| |
| | as an expense, an impediment...damage
|
| willing to accept my normal fees, but I
| |
| | your market positioning and create a
|
| decided to reject her as a client. A
| |
| | space for price objections...force
|
| troublesome prospect most often becomes a
| |
| | clients to make too many budgetary
|
| bat out of hell (hello Meatloaf!)
| |
| | decisions, and create too many yes/no
|
| client.How stupid do you think a mother
| |
| | situations...do not require your clients
|
| would be if she paid a babysitter for the
| |
| | to fully commit to the project, because
|
| poundage of flesh she has to babysit?
| |
| | they know they can end it anytime...lock
|
| Just a thought.Business owners all over
| |
| | you into a "commodity trap". You are just
|
| the world are pounding on their chests
| |
| | one of the crowd....take your focus away
|
| that they have no money to waste and they
| |
| | from creating and delivering value
|
| only pay for performance. This statement
| |
| | because you always try to sell more
|
| is also bullshit. They have already
| |
| | deliverables and tasks regardless of
|
| wasted a boatload of money on their own
| |
| | improvement in the client's
|
| stupidity and underperformance, called
| |
| | condition.SummaryThe way I see the
|
| "figuring it out", instead of hiring some
| |
| | situation is that it is me who takes a
|
| help.Far too many business owners call in
| |
| | risk by running in my own business. I am
|
| external advisors too late. Just imagine.
| |
| | willing to take this risk knowing that I
|
| What is the point in hiring the best ship
| |
| | am the owner and the ultimate decision
|
| consultants to save your sinking ship
| |
| | maker of this business.Whatever happens
|
| after she hit an iceberg and is already 9
| |
| | in my business, I am single-handedly
|
| 10 under water?My view on contingency
| |
| | responsible for the results.But while I
|
| payment is that I don't want to take 100%
| |
| | am willing to take this risk in my own
|
| risk and then be rewarded with a 10% of
| |
| | business, I am not willing to assume risk
|
| the rewards, while the business owner is
| |
| | in other people's businesses. Yes, I
|
| having a great time, knowing that she
| |
| | guarantee my work but I cannot guarantee
|
| abdicated all the responsibility to an
| |
| | results, simply because I am not the
|
| external helper.This also reminds me of
| |
| | decision maker.Here are some questions to
|
| how so many professionals live their
| |
| | consider:Can military generals guarantee
|
| lives. They are willing to sacrifice
| |
| | victory? No.Can airline pilots guarantee
|
| their own health for the sake of chasing
| |
| | safe arrival? No.Can surgeons guarantee
|
| more business, and from their 50s they
| |
| | survival for their patients? No.Even
|
| spend all their hard-earned money on
| |
| | Harvard Business School cannot guarantee
|
| remedial measures to re-build their
| |
| | that, after completing their MBA
|
| health. Does it work? No. You simply
| |
| | programme, you will have a guaranteed
|
| cannot put in what is not there. Once
| |
| | position at McKinsey & Co. or any one of
|
| your health is gone, it is gone forever.
| |
| | the large accounting firms. But I have
|
| It is so simple.All right, business
| |
| | also heard that you have to pay the -
|
| owners may cry that they are only willing
| |
| | obscenely expensive - tuition in advance
|
| to pay for results. Then how come that
| |
| | with no guarantee for getting a job at
|
| they have been paying themselves for
| |
| | all. How is that?As a service
|
| years and years for their own mistakes
| |
| | professional, all you can do is to bring
|
| and underperformance? Maybe they should
| |
| | a lot of your past experience to your
|
| pay back all that money and now there is
| |
| | engagements to improve the client's
|
| money for a competent advisor.This method
| |
| | condition. The client must take
|
| doesn't work in consulting, which is all
| |
| | responsibility for getting the greatest
|
| about collaboration. It is about WE
| |
| | possible result from your advice.In my
|
| create something amazing here, not YOU do
| |
| | view the best way of setting fee is based
|
| this and I do that. The synergy lies in
| |
| | on perceived value. Yes, you can stick a
|
| "we" not in "you" and "I".But for example
| |
| | price tag against tasks (conducting
|
| if you do lead generation FOR a client
| |
| | workshops) and deliverables (business
|
| and you are in 100% control of the whole
| |
| | plans), but they are just that, prices.
|
| lead generation process, then contingency
| |
| | Just as beauty is in the eye of the
|
| may work out. Nevertheless, you still
| |
| | beholder, value is in the eye of the
|
| have to demand a certain "setup" fee
| |
| | buyer.So, everything you do should
|
| payable in advance. Also note that you
| |
| | revolve around perceived value as
|
| don't get paid for the sales, but you get
| |
| | received by the client. Hint: It does not
|
| paid for the sales leads. Converting
| |
| | make 20 times more money to make a
|
| those leads into clients and customers is
| |
| | Ferrari as it takes to make a Ford.Ford
|
| not your problem.If you are a DJ and play
| |
| | sells four wheels, some upholstery, an
|
| a popular song, you have to pay royalty
| |
| | engine and a radio for $20,000, while
|
| on the song even if the whole room is
| |
| | Ferrari sells success, style and prestige
|
| empty. It is your responsibility to bring
| |
| | for $400,000. Go figure.Organisational
|
| in people with pulse and money not the
| |
| | Provocateur Tom "Bald Dog" Varjan of
|
| musician's.The other place when
| |
| | Dynamic Innovations Squad helps providers
|
| contingency compensation works is joint
| |
| | of professional services to achieve the
|
| ventures (JV). However, if you JV with a
| |
| | income and lifestyle levels they desire
|
| company, you are a partner. And advisor
| |
| | through high-trust high-impact client
|
| is an advisor, not a partner. The owner
| |
| | relationships.
|
