Sean's Notes
Powered by 🌱Roam Gardenrisk & reward
In a traditional client | vendor relationship the "risk" involved in the project is shared by both. The client pays whole or in part for the service provided; reducing the risk taken by the vendor... The vendor (you) provides the service with the understanding that the fee paid is a flat rate, the rate generally will not increase or decrease. This fixed price reduces the risk for the client, they know exactly how much money they are risking against how much they hope to gain from completion of the project.
KEY: You aren't only getting paid for the work you're doing, the skills you have, or simply the results you generate... you're also getting paid (or not paid) for the RISKS you're taking.
Building The Lemonade Stand | The Distribution Mechanism
Referenced in
The Age of The Growth Agent
Answer: understanding the concept of risk & reward will help you mentally accept a seemingly "overpriced" fee for your service. A client who agrees to a fixed rate lowers your risk and potential reward... You are also incentives to work as quickly as possible on the project (even if you have pride in your quality), every extra hour spent on the project reduces you profit. Agreeing to a performance based payment reduces the clients risk up front, they only pay if tangible results are reached, but this greatly improves your potential reward.