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100% of Nothing
Copyright Cathy Stucker
What would it be worth to you to receive a steady stream of
new customers with little or no effort on your part? Would you
be willing to pay 10% of the revenue they generate? 20%? 50%?
Or do you believe that you can't afford to pay anything?
During a recent discussion, I was surprised that people
said they could not afford to 'give up' 20% in commissions to
reach new customers. If you have more work than you can
handle, that makes sense. However, most of the people who take
this position do so because they think it is 'not fair' that
someone else get a percentage of the money they believe is
theirs. My question is: Would you rather have 100% of nothing,
or a smaller percentage of something?
I have taught courses at several places where my
compensation was a revenue share. Typically, I received 50% or
less–often much less–of the fees the students paid. Many
instructors think this is unfair. After all, if they are
presenting the course, shouldn’t they get the bulk of the
money paid by students?
Break down what is actually involved in making the course
happen, and it all makes more sense. The sponsor provides a
place to present the course, lists it in their catalog and
does other marketing (a big expense), takes registrations
(including absorbing credit card fees) and handles student
questions and issues. I could do these tasks, but they take
time and money. Plus, I don’t enjoy them. I prefer to use my
resources on the part I enjoy most and do best–presenting a
great course.
Instead of worrying about someone else also making money
from ‘my’ course, I look for ways to increase the income I
generate, including publicizing the class to attract more
students, providing a required or optional text for an
additional fee, and keeping in touch with students after the
course so that they can become long-term customers.
When offered a commission or revenue-sharing arrangement,
consider the following:
Do you have more of the product than you are currently
selling, or the ability to create more? Do you have time to
provide additional services?
Will your pricing accommodate paying a percentage of
revenue to someone who will refer clients to you? If not,
maybe your rates are set too low.
What does it currently cost you (in time and money) to get
a client? If you spend little money but lots of time, don't
forget the value of that time. Wouldn't it be better to
increase your billable hours, even if you only net 80% of your
regular rate for those additional hours?
What else will you get from the relationship? Perhaps you
will gain visibility from the referrer's web site, newsletter
or catalog. The clients referred to you may become repeat
customers who do business with you for years to come (and
depending on your arrangement, you may only pay commissions on
the deal referred directly to you, not repeat business).
Don't overlook the value of having partners to help you
grow your business.
Copyright Cathy Stucker. As the
Idea Lady, Cathy Stucker can help you attract customers
and make yourself famous with inexpensive and free marketing
ideas. Get free
marketing strategies, articles and more at http://www.IdeaLady.com/.
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