Power of Percent

Its obvious that the economic crisis has presented business owners with an unfavorable situation, take today’s market swing as an example. I had an earlier post talking about the hardships the weak economy has presented marketers, especially companies in their infancy. There have been multiple pitch situations where our potential clients are reluctant to sacrifice a hefty front-end investment in marketing and/or web design without any guaranteed results. It is hard as a new company to show your worth to potential clients with a small portfolio, no matter how good you.

In our negotiating processes we have started to present potential clients with percentage of profit Milestone Fee Basis options. As we present our clients the bid figures we present them with the option of percentage of profit sharing. Be wary of who you offer this option to based on the work ethic they show, but this can be a very mutually beneficial payment method. If the potential client agrees to a percentage method be sure to run analytical figures to estimate necessary sales to reach the payment amount of an original approach. You must also reconstruct the payment terms agreed to in contracts. We suggest a Milestone Fee Basis that follows a quote system. For example: agreed to a 30% profit share for up to 200 units sold, 40% for 200-600 and 50% for 600+. Also, it is wise to include a longer agreement term to ensure the marketing efforts have time to gain exposure as well as a mutual cancellation clause to ensure that the client doesn’t bail when the term is up because the marketing is paying off.

Our company along with larger firms are beginning to adopt this method because it entices clients to invest in marketing and offers marketers for potentially larger gains, but also presents more risk. If your confident that your marketing methods will work I suggest you consider this in the future.

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