Understand Your Buyer > How To Convert >Results Based Pricing
What is it?
When it comes to charging for your work, charging for time can limit your potential. Charging for the results you obtain rather then simply the “cost” of just your time means your buyer will only really pay when they get what they want which is a fair setup.
Why does it work?
It works for three reasons:
1 – Limitation of risk. Your buyer only wants to pay for the result they need, not pay arbitrarily for your time. Charging for results enables this to happen.
2 – Likelihood of success. If what you charge is based on the result you obtain then it implies you are capable of achieving the result / are incentivised to do the best work possible.
3 – It reduces negotiations. If you charge by the hour for your work, it’s easy for buyers to negotiate and commodotise your worth. If you charge for the result and it varies – they can no longer make this link to your time and use it as a bargaining chip.
How can you use it?
This works for service based businesses primarily. You need to do the maths to make sure you can afford to not get paid if you don’t achieve results for buyers, but if you can obtain ongoing results then it’s just a case of settling on a pricing structure that reflects the true value of the work you do.
Example
Estate agents charge a % of the property price for their servces- so you only pay when you sell and how much you pay depends on the value of your property.
