Now, this question may sound a bit stupid, but let´s think about it for a moment: What are the key elements of a sale?

Well many would say that, at the end of the day, selling comes down to

 

Value Exchange

 

Think about it: whenever you buy something you´re trading value (an amount of money) for another value  – the desired end result your expecting to get from the product or service.

And for a sale to happen, that desired end results for you must be more valuable than the money you´ll have to “sacrifice” – otherwise you won´t buy, right?

And they would be right – every sale is a value exchange.

 

But there is a 3 element involved in any sales – and that element is Risk and its Allocation!

Every sales transaction involves risk that needs to be distributed and allocated.

If you are going to pay up-front, and there is no guarantee whatsoever that the product /service will deliver the promised results, the risk is on you.

If you pay only after the product service has generated the promised results, or if there is a money back guarantee in case it does not deliver, the risk is on the seller.

How does the risk allocation impact the sale and what´s the correlation?

Well, if the risk is too much for the buyer, he either won´t buy, or he´ll go for a price reduction, to compensate the risk.

These 3 elements are especially important, if you´re selling consulting, coaching or services.

Pay attention, how in these 3 strategies I´m about to show you, value, price and risk are structured:

 

So, let´s get started:

1.      No up-front fee, just sharing the profits

This is a method Frank Kern used when he did the launch for Neil Strauss. Since it is risk-free for the other party, this method could help you sell your services even if you don´t have a track record or strong proof that your stuff “works”.

Another benefit is that, since it is risk free for the other side and therefore an attractive offer, YOU can actually choose who you´d like to work with. However, since you´ll get paid based on the results you generate, you should choose someone that you are sure to get him results.

Furthermore, make sure this person is able and committed to contribute THEIR part to make the project successful.

Here Frank Kern explains this method in more detail (starting at the 7th minute): https://www.youtube.com/watch?v=CH8gOkL6Us8&t=420s

This method works fine, if you have no track record in this industry or have no relationship build on trust with the specific prospect you´re approaching.

 

2.      Up-front fee + royalties, coming with a strong guarantee

The other way would be to charge an up-front fee, but also provide a “no brainer” guarantee. Once again, Frank Kern was using this method. Here you´ll find out more about it (starting at minute 11:50):

https://www.youtube.com/watch?v=CH8gOkL6Us8&t=710s

Basically, that way you can charge ANY price by increasing the value with a strong guarantee. For example, with a guarantee that, if you don´t make someone 500 k, you´ll refund him 240k, you can charge 200k and still get clients (provided you target the “right” prospect, who can afford those payments and create trust that you´ll honor your guarantee).

So, the value of your services depends heavily on the prospect and his business (how much he might be able to benefit from your work), as well as on your guarantee.

However, if the prospects beliefs that he may get the same (or better) value from someone else for less, or with a better guarantee, it´ll be difficult to make the sale.

So, when applying this strategy, you´ll need to make sure that your prospect doesn’t think he/she could get the same value for less.

Once again, it´s important to choose wisely who you´d like to work with since, because of the guarantee, you´re risking a lot in the case of failure.

And, you´ll need to make sure that the other person is able and committed to deliver their part to make it successful.

The downside of this method is that, in order to make it successful, you´ll need a sufficient level of trust and authority. At least the prospect must trust your ability and commitment to pay the guarantee in case you don´t perform as promised.

 

3.      Deliver Results in Advance

This is a strategy I see lots of marketers applying, especially in the “lead generation” business. It consists of giving the other party results in advance, like sending them some leads “free of charge” in order to prove, that you are really able to generate results for them.

Here you can learn more about this strategy (starting at minute 16th): https://www.facebook.com/localsaleslab/videos/580934568676700/

and here: https://www.facebook.com/billygeneshaw/videos/10101455040798616/

Another way would be to send them some free samples, like a “critique” of something (their website, their video, their sales letter etc.) with specific action steps for them to get better results. For example, the company KlientBoost used this approach to build and grow their agency (pretty much from scratch), as you can see here: https://growandconvert.com/marketing/grow-digital-agency/

This is another great method, if you are new and just starting out, and therefore you have no authority in the industry, or if you are dealing with a client that doesn´t know and trust you enough to “risk” and up-front fee.

To recap: If you have already a trust based relationship with your prospect or a powerful position in the industry (so that prospects “know” you as a “guru”), method #2 might be the right one for you.

If, on the other hand, you´re starting out, you don´t have (yet) a “guru-status” or the prospect you´d like to work with doesn´t “know, like and trust” you enough, to pay an up-front fee, methods # 1 and 3 might work better.

However, all methods require you to choose your prospects wisely, since a significant risk is on you and you don´t want to “waste” your time and resources on the “wrong” prospects who either can’t afford your services or who are not willing to do what´s necessary on their part to make the project work.