At Rosalab Designs, we have noticed a peculiar business trend surfacing in the post dot-bomb era. Web design companies are receiving solicitations for services under the terms of a pay-for-performance relationship.

The pay-for-performance (PFP) model is not new to the web. It’s increasingly accepted as a model for selling ad space or as an incentive package for companies to perform above a certain fixed margin.

Problems begin when prospects seek pay-for-performance as the sole means of a business transaction, particularly for the web design and search engine optimization industries. The following article addresses the problems with the pay-for-performance model.

The pay-for-performance solicitation

With pay-for-performance web design, a person solicits a web design and promotion company to tender service under a set rate of acquisition. This means the web design company would receive a fixed dollar amount for every qualified lead that comes to the solicitor’s site.

A qualified lead could be a visitor who fills out an application, buys a product or service, or meets any other criteria determined by the solicitor. The solicitor may even tell the company to offer a competitive bid for the rate of acquisition itself — sort of a lowest bidder wins deal.

Even retainer fees, a common prerequisite of business transactions, are not outside the realm of pay-for-performance deals. The solicitor will be quick to stipulate that any retainer paid is not an actual payment for services but simply an advance. This means that when you complete the work, the money is not really yours unless the client’s market performs above what the client paid to you.
Nice work if you can get it

This is a no-risk situation for the solicitor. If the solicitor doesn’t receive a return on investment, the web design company is expected to return the difference on the retainer fee (if offered one) or make no money at all.

Solicitors argue that since past deals didn’t provide the return on investment they expected, they now demand a guarantee. What they’re really asking for is another company to assume the risk for their business.

One solicitor can request a web designer’s services, say how much he loves your reviews and your site, then he will often refuse to pay a set fee because he didn’t feel he could trust you.

Our personal and professional stance is not to engage in pay-for-performance arrangements — especially as the main or sole source of revenue from a business deal.

Where is my lifetime guarantee?

No matter what web field we work in, a web designer’s work does not determine the ultimate success or failure of a client’s business. There are simply too many intangibles web designers have absolutely no control over.

Web designers can give a client a quality web design and top-notch search engine optimization, but that’s where the designer’s part ends. What if the client’s business lacks service, quality, manpower or business intelligence? What if the market is too competitive or just not there?

It is ludicrous to expect anyone else to assume the risk for your own company. Web designers and marketers can bring people to your business. What web designers and online marketers can’t do is run your business.

If solicitors tell you they want pay-for-performance results, tell them this. If your web site doesn’t bring you additional clients, then you, the web designer, can charge the solicitor 2x your design service fees. After all, pay-for-performance can go both ways.