Solving the Service Problem
Our theory on the problem with the service economy, because its modeled much similar to how the products/goods industry had developed over the past century or more, with the manufacturing industrial revolution. Today, people are only willing to "pay" for a final product, or a finished service solution. That's going to change, in our vision.
So as a customer, you're seeking advice and hesitant to deal and commit to a final solution without hearing what the service provider has to say upfront. The service provider has to give a lot up front, which diminishes the appearance of difficulty for the work that goes into the finished service solution. The biggest gap here is that the customer lacks the knowledge in the beginning, and doesn't want to spend dearly for making a mistake on choosing the wrong service provider. The knowledge of the service provider is often exploited early, because they're building rapport, communicating, teaching/hand-holding the customer with various consultative elements of reasoning to begin the quoted project and the real hard work begins.
Once the customer better understands your vision of an end product (in this case a serviceable solution) the service provider often feels vulnerable at this stage; where there's less incentive to commit by the customer once they know your biggest secrets. Therefore the service provider holds back at the beginning, we get a trust loop in reverse of the desired outcome. We should be compensating for the consultants time, knowledge dispensed. Instead today, we give free quotes and the customer goes elsewhere, very often. It's a terrible conundrum in the service industry.. because knowledge takes years to acquire and is "virtually free" in the world we live-in on the Internet. If you acquire the knowledge from someone who put in the time, and you don't compensate them.. that's really bad for the future of business. So, how do we build a great future? For people to work on something, without having reverse business models that destroy most service industries. Our response is —
Paid Introductions
We're stripping away the layer between the first consultation, removing the risk for the service provider that they'll put all kinds of work in to quoting a solution and providing knowledge without the customer paying for their solution in the end. If the service provider is paid for knowledge, they'll be happy to let you do it yourself; if that's what you choose to do as the customer. Simply doing it themselves or going to a similar provider for a cheaper cost, hampers the trust of the service provider to give much up early in the process. This destroys the confidence in both parties. We're bridging the gap for the customer, because often the service provider "holds back" on early consultations, so you don't know truely how smart they are, or how much experience they truely have in the industry. A simple paid introduction says, I'm serious about doing business with you. I'm serious about getting to know you. I care deeply about what you have to say. I'm going to put a little skin in the game, to make you comfortable in sharing your knowledge with me. It's a win-win for customer and service provider. I always thought, why don't real estate agents charge to show me all these places, how do they get paid? Oh, they take a cut from the seller of the property, so their incentive is just get you to buy something. If a real estate agent was paid for their time/knowledge, similar to a fiduciary for financial advice — it's in theirs and your best interests; for as long as it takes.
Our solution, with
"paid introductions" is to revoutionize the entire services industry, and properly incentivize where it should be, not with the quirky business models like we have literally across every service industry today. You'll get knowledge from reputable service providers in your area, then you go from there, or go your own separate ways.
How to Price Properly for Service Providers
Often the service provider can say, how much do I need to make in a year to cover my office and my overhead costs; such as rent, computers, ISP/telecom, phones and software? Depending on how many projects you can handle per year, how much time off you need to recoup. Here's an example. Most web programmers make between $60,000-80,000 in North America, which includes 3-4 weeks off around Christmas, Thanksgiving and other family holidays such as Hanukkah, Ramadan, Diwali or Chinese/Thai New Year.
$60K divided by 52 weeks is roughly ~$1150 per week. Let's say you can do one website per month, over 3 weeks and take a week off or a few days to do your bookkeeping, prepare quotes and do consultations for more work. Your "minimum price on average" (or "MPOA") is $3,450. We'll use this number as a baseline, other industries will vary. If you are a musician, producer or running huge events, or speaking in front of big audiences you'll need to price your appearance fees accordingly to the venue and size of the audience, like a rock concert will be up to $1 million or more. Your speaking/appearance could be $20,000 to $50,000 depending on your influence/reach.
We're assuming for the time being, that many projects in the hundreds of thousands (and more) will go to bigger agencies/conglomerates (for the time being) as we grow our brand. Our sweet spot is between $5-100K, for now. This covers guest appearances, book signings, smaller venues, movie & video set/studio, modeling/photoshoots, buying a property, a renovation or software/web project where you'll retain all the rights of ownership and go-at-it solo.
Pricing & Business Model
How is it priced for customers? The service provider gives notice of their "minimum price on average" (MPOA) for most projects, so if you truly want to work with them in the end, keep this overall price in mind. Don't mess around, and don't act bigger than you are.. leading people on. We step aside, and have no oversight beyond the "paid introduction".. but its important you maintain a serious professional manner. As we specified earlier, we'll use the $3,450 number for an independent provider who usually earns $60K/year. You'll pay $345 fee (10%) for a
guaranteed
paid introduction, and you'll coordinate with the service provider to discuss how to complete the project — drawing up contracts, project management, discussing fees/costs; outside of our purview/supervision.
Customer Payments
Service provider charges a $3,450 "minimum price on average" (MPOA) for a job.
You'll pay 10% of the MPOA as the customer, which is $345 to have a guaranteed "paid introduction", if this introduction never happens and you're not able to contact the service provider after a grace period (specified by the service provider in advance) you're eligible for a 100% refund. Otherwise, during normal due process you'll have a "virtual meeting" via a phone call, exchanging several emails in correspondence, get on FaceTime, or Skype, Zoom and/or whatever means to talk out strategy, work things through for a project. This should be specified by the service provider their preferred methods of communication. We step aside, and this concludes our involvement in your business. We're a paid introductions company, that's it. You handle it from there-on out.
Our Cut, What's Our Take?
For our paid introductions, using the above example numbers as stated previously. From $3,450 "minimum price on average" (MPOA) the customer pays $345 for the paid introduction. We take 20% of $345 (or $69) and you (the "service provider") get $276 (80% of MPOA) for the virtual meeting (or "paid introduction"). You take it from there, if that means a live appearance in the future, or real-life meeting that's beyond the scope of the paid introduction, not under our supervision and up to both parties to come to their own agreement(s) beyond the paid introduction.
Remember, from the $69 we have transaction fees of between 3-5% of the $345 for merchant fees (no fault of your own, and neither your problem) but to justify our position on the percentage of 20% commission for a paid introduction of 10% on the MPOA, we call it the
"20-10 model", and we'll end up paying up to $17.25 to settle our transaction costs, leaving us with $51.75 (or roughly 14.5%) to pay our customer support staff, our web hosting costs and other business fees, taxes, etc. per $345 transaction on our end. Hopefully this seems fair!
more