Fee Systems

Imagine taking time off from your business to go on holiday and during that time, you and your business keep earning and receiving fees from subscriptions, commissions and repeat orders?

Or what if you only need 2 or 3 clients a month paying high value fees for your specialist/niche service?

Or perhaps you have a systemised manufacturing process that, when operating, requires little further input other than basic monitoring from a small number of staff?

Business trading, in its simplest form, is the exchange of an item or service for money. If you’re a heating engineer, then you might sell a boiler service for, say, £90 – that’s great but you need to keep doing boiler servicing, maintenance, call-outs and installations to earn money. If you don’t go out to work, then you don’t get paid.

What if the boiler engineer sells a warranty service after he/she’s provided a service? Let’s say £15/month in exchange for a free call out and 1st hour of labour? This might be quite a nice idea for some clients. Now the engineer is earning money when he/she is not working.

Ok – I admit this is a simple example, and the sums need to add up to be viable. But you get my point.

The holy grail for many entreprenurs is subscription payments or/and advertising revenue derived from online content. So perhaps the heating engineer can create online content with self-help videos for common problems – if the client can’t resolve their problem via a self-help video then they complete an internet support for diagnosis, pay a fixed fee for repair/call out and the heating engineer then sub-contracts the ‘easy fixes’ to a mutual competitor whilst making a profit from the fee. If the repair looks difficult then perhaps he tackles it her/himself. Individual losses may be encountered but when all losses and gains are aggregated together, an overall profit is made.

Ok – that’s enough of the heating engineer analagy. I’ll finish with a few final thoughts: what’s better – a million items sold for a £1? Or 1 item sold £1million? The profit might be the same, but what was involved in terms of workload, logisitics and effort? And which has the best future and liklihood of repeat/return customers?

It’s a deliberately open question without parameters – have a think about this idea for your business idea – will you be able to build scale into your business as you grow and develop? Will you be able to create monetised aspects of your business that take advantage of different fee systems. An entrepreneur with a “constrained business” might reach max headroom before they reach the scale required to make their business viable… not good when that realisation comes after 2 or 3 years of effort.

What does this have to do with ‘spend or save’?

Spend money on the systems or processes that help achieve scale and monetisation, but you need to calculate the cost versus benefits. Perhaps spending is needed for a production/manufacturing method or it might be an app/software to undertake computer tasks that would be otherwise time-consuming. And when you employ staff, are you doing it simply to reduce your/staff workload? How do you know that the workload is not the result of inefficiency that could be resolved with a technological/software solution? Perhaps, frankly, your lack of skills with a computer is creating inefficiency and unnecessary costs?

Next article ‘Time Rich – learn to use a computer’.