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So there's some sort of difference in the neurological makeup of developers and business owners around the phrase "you don't have to pay me." Developers think
by patio11 14y ago
So there's some sort of difference in the neurological makeup of developers and business owners around the phrase "you don't have to pay me." Developers think that proposition decreases risk. Business owners think exactly the opposite. It suggests that there's such significant project risk associated with employing you that the market forces you to self-indemnify for that risk upfront, which virtually no other service provider they use does. (Separate from what your client thinks of it, it also puts your paycheck at the mercy of clients' ability to e.g. follow through on your recommendations. Clients generally earn the results they get from working with outside consultants, just like they earn the results they get from working with their own employees. The ones who do everything in their power to make engagements a success tend to do better than ones who... don't. You probably still want to get paid when they... don't.)
I'm not totally opposed to some sort of variable payout mechanic to pricing, but the vast majority of my engagements are structured "I work X weeks at $Y per week." By the time I've sold you on the engagement, I should have been able to sell you on X$Y being an acceptable price to pay for the risk-discounted probability space of all possible outcomes to the engagement. (n.b. If you do variable payouts for anything, you need to figure out how to transfer a large percentage of the upside from the client to you for the math to work out.)
If I personally was selling you an engagement, and you said "What happens if this doesn't lead to an improvement in the business?", the very next words out of my mouth will be "It is entirely possible that this engagement will not lead to an improvement in the business. The vast of my engagements have been successes. Some of them, like the ones we talked about earlier, were incredible successes. Let's talk about ways we can be more likely to make this engagement successful. If you do not believe that this engagement is likely to be successful, we will not do this engagement." (I'd also independently decline an engagement where I thought it wasn't likely to be a win or would meaningfully damage the business in event of a failure. I typically work for companies with revenues in the eight figure range -- if they set fire to my entire paycheck, nobody goes home hungry.)
As to what you personally could offer for risk reducers, absent a history of doing exactly this thing before, I might suggest reaching back into your portfolio of other things you have done and showing off ones which demonstrated likelihood of success. In my first few consulting engagements, my main portfolio piece was "similar work which I did for my own business worked out well, as evidenced by a few years of blog posts; here's a few I like." After the first few engagements, well, BCC was no longer the most credible piece of evidence I could point to.
- polyfractal 14y agoGreat, thanks Patrick. I didn't even realize that I was self-indemnifying my abilities up front with a phrase like "for free"...but in retrospect it is exactly that. If I'm confident in what I can do...why the need for offering free services? Thanks for the advice, I'll try to put this into practice. :)
- clebio 14y agoEverything you mention rings true with my experience in the business world (such as the difference in mindset of engineers versus management types). In construction, variable payout can be managed by meet-versus-exceed of customer want date. Have you seen that used in your area, or have an opinion for or against? Thanks for such excellent free advice.
- pknerd 14y agoThanks Patrick for this piece. Very helpful. A question. What do you suggest if I visit some online site/system, find some weakness or area of improvements and contact the owner and tell how it can be improved? Will it work?