Why you should never agree to accept results-based payment for your work, except for whenever you should.
If you want to receive deferred results-based payment in your business that’s up to you and you don’t have to listen to me. I’m not your mom.
But let’s discuss this a little bit so you can take some things into consideration so that way I don’t see you posting in Facebook groups asking how to get a deadbeat client to pay you for your work when it could have been avoided in the first place.
These are just a few of the things I’ve learned over the years, both through the school of hard knocks and thanks to some of my business coaches.
How do you handle it when a prospect wants to forego paying you in actual cash and instead requests to pay “once they get results”?
Every so often I get a prospective client on a strategy session, discovery call, or who slides into my DMs who’s looking to pay me “with the results”.
In the audiobook world, for example, a lot of authors hire a narrator and split the book royalties. This attracts authors who are on a shoestring budget or who, for whatever reason, are unable or unwilling to pay a narrator or producer’s going rate. The way it works, in theory at least, is that the narrator is basically recording and narrating your book for free, or really a deferred payment plan, and you both agree to set up ACX or whatever other services you’re using to publish your audiobooks who will divide the royalties evenly between the two of you for the next 7 years.
Narrators who are new to Audible or Amazon and are “building their portfolio” are enticed by this payment setup more than seasoned pros who have no problem finding clients who will pay their rate or who know how to pick good royalty-share projects that are likely going to make back more than enough to pay the narrator’s rate. Perhaps newly self-published authors who haven’t the faintest clue how much work narrating and producing an audiobook is are more prone to look for the cheapest way they can get their book produced and the deferred payment of royalty-splitting is appealing.
I’m rarely keen on doing a royalty-split in the context of audiobooks nor in writing services, which is not indicative of me disbelieving we can make a project sell well. I have tangible expenses like paying my editor and designer upfront for their roles. Having done a few royalty shares with authors on the audiobooks I’ve narrated for them has left me gun shy about working for a deferred payment with no guarantees of compensation, and my projected budget for a project like this would result in and require me to pay my subcontractors out of pocket.
For that reason, I charge a flat fee in the first place as this is a largely paid-for-work service I’m offering. (Edit: since writing this post, ACX has come up with the “Royalty Share Plus system where the narrator splits the royalties with the author, but AFTER having received compensation for the narrator’s expenses– such as hiring their editor and/or proofer).
But the reason I’m asking this today is not specifically audiobook-related.
Why should I have more skin in the game with your book than you do?
You see, my guarantee that your written book will sell well is if only I’m involved in being able to have creative input or control in certain key aspects of the book, like making sure you have a quality (read: professional) cover, the content is stellar, professionally edited as well as well-written in the first place.
Oh, and that the client will DO what I suggest and implement.
Otherwise, the marketing effort we put forward will not result in success.
And if no success, such a client expecting to only pay when they get results, will not want to pay.
Um, no thank you!
So, my “guaranteed results”, if you will, depend on me actually being able to do everything with excellence. This doesn’t happen if I can’t pay my team and I’m forced to volunteer my skills.
If you want to let your niece design your cover because it would hurt her feelings if you didn’t, but yet she can’t design a cover for market or that would actually sell your book, then I’m sorry to say it, but I will not expect results. I’ve said before just because you get a nice cover doesn’t mean it’s one that will sell.
I’ve been thinking about this as I’ve had authors in strategy sessions who’ve suggested having me work for them on some kind of “commission basis”. I’m not sure how that would work in their minds exactly, as the services I offer have to do with helping coaches and thought leaders write and launch their books, but things like ghostwriting and audiobook narration are time-consuming, so… why should I not get compensated for that time? My standard packages all include ALSO providing a cover and working with a professional editor.
Both of whom I pay.
No editor worth their salt is going to work for a % of royalties on a book or deferred/results-based performance. If I’m being hired to ghostwrite or heavily re-write the content, I’m now spending MY time working on it, and not making any profit for those hours, as well as shelling out money from my own pocket to produce a quality book, so….
. . . how do I know the author will pull their weight to promote the book and sell it enough to pay me back for my time and expenses?
Basically, why should I have to pay to work for you?
Why should I have more skin in the game for your book than you do?
There’s no way you will be able to answer the above questions with even close to a good answer.
So no, I don’t work for results-based payment. You either trust me and decide to hire me, or you don’t. But if you do, then my focus is to make sure you write a bestseller or become a thought-leader in your space thanks to your book.
“Clases pagada, clases dada”
My wife used to say about English classes she’d offer to neighbors of ours: “Clases pagada, clases dada.” It doesn’t rhyme or sound as lovely in English as it does in Spanish, but translates basically “classes paid for, classes given”. We came up with this policy after she had parents stiff her for 6 weeks’ worth of English classes and tutoring.
Every Saturday morning for that period was blocked off while she helped this pre-adolescent with her English homework and helping her learn more intermediate English while I watched our recent-born. It was an inconvenience and not really the way we’d liked to spend our weekends, but the thought never entered Lili’s mind that these parents would not pay her.
Until they didn’t.
After six weeks and numerous requests for payment, Lili put an end to this manner of teaching and tutoring and required upfront payment in the future from other parents who asked her to tutor their kids, until motherhood inhibited her from being able to anymore.
It was a lesson for us in forgiveness and not chasing after the parents, no matter how awkward passing each other in the street may have been in the months, even years, that followed.
You’ll protect yourself from wasting time working for nothing when you charge a deposit or upfront payment, even if the client or prospect doesn’t think it protects them much if you receive a down payment or installment before you lift a finger to do any work for them.
I only have two repeat or recurring clients I do accept payments from once the work is done, and in both cases they are super generous and have built trust with me over the years that they can be relied on to come through, paying my invoices super promptly.
But there’s no way I’m going to take this chance on you if you’re a new client and we’ve not built up trust.
It’s appealing if you’re new and haven’t had any clients yet.
Beginners in any service or client-based business should NOT do these kinds of performance-based deals. If you are in coaching or consulting and offer your knowledge and intellectual property in a “pay when you get results” method of payment, which is totally your prerogative if you do, what happens if your client doesn’t implement on your action steps and gets no results?
How do you measure and value your time wasted in that case?
If you offer your talent and skills and create something (art, design, writing, music, etc…) there aren’t always “results” to point to as to whether you’ve earned your payment. What’s to stop the prospective client from deciding you didn’t follow through on some arbitrary results? This, of course, is assuming you both had a clear agreement or contract of expectations and what constitutes “results”.
I learned this lesson the hard way when I first started. I think four out of my first writing coaching clients were offered payment plans where the final payment was due when our work was complete or super close to it.
Care to guess what happened?
Each of them didn’t follow through on their part, changed their mind about writing a book, completing the work or delayed it immensely to the point it was like cancelling it altogether. If I was dependent on them to do their part (finish writing a manuscript, or review and approve ghostwriting of mine, etc…), and only then would I get paid, then guess what? I most certainly didn’t get paid as they each dragged their feet and felt no urgency as payment was results-based instead of timeframe-oriented.
This put me into financial binds more than once as in those days I was budgeting as though clients would do the right thing, and I otherwise gave people the benefit of the doubt.
Since changing my policy, and charging recurring payments on a fixed date or timeframe (i.e. every 30 days), rather than milestone-based payments, I’ve not only avoided this problem, but I’ve seen it work effectively with the type of clients I work with who actually DO the work.
There is something motivating about investing in something first.
Lowballing and Deferred Payments Actually Hurt My Mission work
In closing, let me repeat something I once said in a previous post, Scarcity vs Abundance Mindset or “I’m no longer taking on Ishmael Clients”:
I’m no longer willing to say “no” to the things the Lord tells me to do [in ministry], but I am getting better at saying no to certain prospects who otherwise could use my help. My prices reflect the anticipated amount of work required for something I’ll agree to so that I can afford my missionary objectives without worrying about the finances to manifest. I have disciples in this lovely nation whom Lili and I help substantially more than we used to when we were broke.
I owe it to the people I serve in Peru to charge “high” prices in my client work and not lowball, otherwise, my wife and I can’t serve them or help them in truly meaningful ways like we ought to.
To add clarification to that thought, when I undercharge or work for deferred payments that I’m not truly guaranteed, my time “per-hour” becomes much less profitable and I’m forced to take on additional work to compensate. As such, I’m less available to even do the ministry such work is designed to fund!
So, no, I will not jeopardize my ministry, either, by lowballing myself.
Another thing to take into consideration, especially if your prospect believes only paying when they get results is an “incentive for you to do a good job” is that, again, it often has the opposite effect: When you’re committed to only being paid once you’ve completed the work or you provided some specific result, you may need to tackle other projects to pay your bills and wind up getting pulled in several different directions at the same time, and the focus you can give that one client is more easily divided and you need to push them to the back of the line.
I learned this lesson the hard way, and then a particular client in question was frequently upset I wasn’t giving his project my undivided attention when in reality, I had no choice since I had lowballed this client and allowed them to break up my fee even more into multiple-month installments. The individual payments were way too low to be able to work exclusively without also taking on other work. That didn’t matter to the client.
There are many additional reasons why you should at least charge a deposit before starting any client-based work or service, but these are at the top of my list for now and this is a long enough post for today.
The Kind of Clients I Work Best With
Are you looking to position yourself as a thought leader in your industry, and gain more speaking engagements?
Your own book will open those doors.
Perhaps you already are busy in the conferences (or right now, Zoom conferences) and want to sell or give away a book of your expertise at your events.
If you are willing to trust my creative input and expertise, we’ll be a great fit. So long as you recognize that building your authority and influence needs to be your #1 priority, and you trust my process of delivering this to you through the creation of your book, then I’m more than happy to serve you.
Just not on a “pay-with-results” payment plan.
If you are a coach, consultant, entrepreneur, or an expert looking to position yourself as a thought leader in your industry, but need help writing or launching your book, my team and I can help.
Book a call with me and let’s get down to it!