If you have a consulting business - let's say that it's to provide or perform a service - and let's say that your potential clients are students who have limited financial means - how do you relate the points that you are talking about here (and also using ROI based compensation structure) to clients like that? Or clients who might fail to pay the compensation that you're due?
Great question Ewen. Percentage type deals should only be used when you've worked with the client before or have a very high level of trust. If your ideal clients are students, which in most cases isn't a good idea, you'd likely want to look at base compensation and getting equity in the company. But that's only if you really see great potential for the business.
@@ConsultingSuccessTV Thank you. Just a few more follow up questions in regards to trust - if you have a client who hasn't been paying you (because ROI/value based compensation appears to be often deferred compensation since it depends on future performance), what do you suggest in terms of enforcing the terms of the contract/compensation structure beyond what the courts/law will allow? Do you think that taking ownership of the IP would be a good idea? What would you do, beyond just enforcing tort law? Would you recommend having a clause in the contract/statement of work that if there are issues with payment that certain IP and/or equity in the company will be automatically assigned to you? How would you handle or approach situations of non-payment yourself? What would you recommend? Thank you.
@@ewenchan1239 how payment and IP are handled should be part of the original agreement. If someone doesn't honor their commitments don't continue working with them.
But that would be part of the problem, right? If ROI/value based compensation is, in effect, deferred compensation since it depends on future performance, you would have already perform the work, as the consultant, in providing a value to that client. If they decide not to pay you, you would be suffering the loss, and they would have already gotten the value out of you. I get why ROI/value based compensation strategy would be better, in terms of letting your client assign the value, and/or opportunity value with respect to your consulting work, but what isn't clear to me is when things DON'T go according to plan, and the client decides NOT to compensate you per your agreement. Outside of tort law, there hasn't been able proposals that I have seen that have been put forward by proponents of this compensation strategy, and therefore; this is the part that I am most interested in, in terms of how you would address the points about how you would have already provided the value to a client, who doesn't/isn't going to pay you per the agreement. Yes, you can go through tort law, but even that's no a guarantee that you will be able to enforce your original compensation contract either. So what would you do then?
@@ewenchan1239 ROI based pricing is different from performance, %, or equity based compensation. If you'd like to talk more about this and get some help contact us on our website. We'll be happy to explore how we can support you best.
If you have a consulting business - let's say that it's to provide or perform a service - and let's say that your potential clients are students who have limited financial means - how do you relate the points that you are talking about here (and also using ROI based compensation structure) to clients like that? Or clients who might fail to pay the compensation that you're due?
Great question Ewen. Percentage type deals should only be used when you've worked with the client before or have a very high level of trust. If your ideal clients are students, which in most cases isn't a good idea, you'd likely want to look at base compensation and getting equity in the company. But that's only if you really see great potential for the business.
@@ConsultingSuccessTV
Thank you.
Just a few more follow up questions in regards to trust - if you have a client who hasn't been paying you (because ROI/value based compensation appears to be often deferred compensation since it depends on future performance), what do you suggest in terms of enforcing the terms of the contract/compensation structure beyond what the courts/law will allow?
Do you think that taking ownership of the IP would be a good idea? What would you do, beyond just enforcing tort law?
Would you recommend having a clause in the contract/statement of work that if there are issues with payment that certain IP and/or equity in the company will be automatically assigned to you?
How would you handle or approach situations of non-payment yourself? What would you recommend?
Thank you.
@@ewenchan1239 how payment and IP are handled should be part of the original agreement. If someone doesn't honor their commitments don't continue working with them.
But that would be part of the problem, right? If ROI/value based compensation is, in effect, deferred compensation since it depends on future performance, you would have already perform the work, as the consultant, in providing a value to that client.
If they decide not to pay you, you would be suffering the loss, and they would have already gotten the value out of you.
I get why ROI/value based compensation strategy would be better, in terms of letting your client assign the value, and/or opportunity value with respect to your consulting work, but what isn't clear to me is when things DON'T go according to plan, and the client decides NOT to compensate you per your agreement. Outside of tort law, there hasn't been able proposals that I have seen that have been put forward by proponents of this compensation strategy, and therefore; this is the part that I am most interested in, in terms of how you would address the points about how you would have already provided the value to a client, who doesn't/isn't going to pay you per the agreement.
Yes, you can go through tort law, but even that's no a guarantee that you will be able to enforce your original compensation contract either. So what would you do then?
@@ewenchan1239 ROI based pricing is different from performance, %, or equity based compensation. If you'd like to talk more about this and get some help contact us on our website. We'll be happy to explore how we can support you best.
A very good explanation on value.
We're glad to hear that!
Thanks for the great points about consulting fees!
Glad it's helpful and thanks for the comment.
You're awesome
Glad you enjoyed the video David!