You have no clue how much money you’re leaving on the table…
I’ve never had a good reason to think Dan Kennedy was wrong about this. But it took me a long time to believe it enough to prove him right.
When I attended my first AWAI Bootcamp in 2009, Dan Kennedy was the headline speaker.
And one of the points that he made, from the stage, was that copywriters totally under-charge for their work.
He said this as he waved around an actual check for, if I remember right, $30,000, that was 1/3 of the project fee for a project that he expected would take him less than two weeks’ worth of actual work.
Somewhere in the neighborhood of $100,000. For two weeks’ work.
80% of the room were scraping their jaws off the floor. 15% were saying, “Yeah, but he’s DAN KENNEDY. I could probably do it someday, if I reach that level.”
I was in the 5% that thought, “I think I can do that — I just have to figure out how.”
I’m still not there yet. But I’ve come far enough, fast enough, that it suddenly seems realistic.
And I’ve identified the not-so-secret secret.
It’s about who you work with, and how you structure the deal…
Let’s start with the “who” — this is really important…
Because you either need a client who is willing to just blow fat wads of cash… Or someone to whom your work is many multiples more valuable than the preposterous sums they’re paying you. (I opt for the latter.)
Think about this.
Let’s say for a moment that you work with a company that’s already doing $50 million per year.
They’re doing a lot of things right. But, like every company in the world, there are opportunities for improvement.
Let’s say you make a very marginal 5% improvement in their business. That is, you help them generate an additional $2.5 million in sales.
5% isn’t that much. For most companies, adding 5% to revenue is very doable.
Now let’s say that, in exchange for providing them the direction that led to that 5% in sales bump, you structured the deal so that you get 5% of that increase.
That’s 5% of $2.5 million. Or, if my math is right, $125,000.
Now, we could be talking a little tiny recommendation here. A tweak to a headline. Turning them on to a new traffic source for potential customers. A campaign to sell their current customers a new high-value, high-priced widget. There’s a lot of changes — big and little — that can lead to a 5% bump.
It could be one conversation. And, if you did the deal right, an additional $125,000 in your pocket.
Now, if it’s a $500,000 company who gets the same advice, and gets the same 5% growth, it’s not quite as exciting.
That’s $25,000 growth. And your 5% of that is $1,250.
It’s not chump change, but it’s a testament to working with the right clients.
Alternately, imagine two companies, each doing $2 million per year.
Company A is content to grow a little bit each year. Company B is chasing opportunities for rapid growth.
We’re not to structuring the deal yet. So let’s just assume that both are willing to give you the same 5% of revenue deal.
Now, let’s assume you write an ad or campaign for each that’s a big winner.
It has pretty much unlimited possibility, for the company who knows how to get it in front of the (big) target market.
Company A, who is content to grow a little each year, uses it as part of their normal marketing. They send it to their house list, and run it a few places where they’d normally run ads. Since they’re content to have a little growth each year, they’re ecstatic that it adds $500,000 in sales for the year. You get a $25,000 royalty, and that’s definitely not bad!
Company B is aggressive about using your winner though. They pour revenue back into more marketing, almost as soon as it comes through the door. They don’t just use all their familiar channels to reach their target market, they proactively test other media and methods for connecting with their ideal customers. They have a minimum ROI they have to meet, but they’re going to find every possible opportunity to put your winner in front of any audience they can for that ROI or better. Because of this approach, your ad takes them from $2 million per year, to $10 million per year. (This definitely happens with companies who have this mindset.) That’s an extra $8 million you generated. Your 5% here is $400,000.
Two companies of the same size. But due to mindset, one is worth 16X in royalties what the other is worth.
As I said, “who” is important.
Now let’s talk about structuring the deal…
Most copywriters have no clue what a client is willing or able to pay for a marketing campaign.
What we do is magic. If we do it well, we’re basically making money appear out of thin air.
And for clients who test and track, it’s a demonstrable difference. The control promotion got X response. Yours got 2X. Or even 1.2X. You did that much better, and so you’re the winner.
They don’t know how to do that. They have ideas. But they need you.
And they’re willing to pay a premium.
But we’re caught up in so much head trash, we’re not willing to ask for it.
We’re scared to charge higher prices, because we fear rejection. Little do we know — until we learn better — that we’re just as likely to be rejected for charging too little as too much.
When we charge more, we get respect. And, we get the financial benefit and flexibility that comes with those higher fees.
If you charge too little, you can’t afford to invest as much time and energy in the project. You’re too quick to move to other things, to cover your bills. You can’t take the time you need to create a big winner. Charge more, and you have the advantage of time and resources that can be bought by time.
Even then, you can’t charge anywhere near what the copy is worth, up front…
Even Dan Kennedy’s $100,000 copywriting fees are a pittance compared to what a winner is worth to his clients.
That’s why you have to ad performance bonuses, wherever you can insert them.
Royalties on gross sales. “Bounty” payments per lead generated. Percentage above base or trend. Usage fees, such as “per piece mailed.” Equity in the business.
If you’re making a substantial financial impact on a business, you should be rewarded proportionately.
If you don’t, you’ll always be limited by time.
Even if you charge $25,000 per hour, your income is limited by the hours in the day.
If you charge $25,000 per hour plus a percentage of results, you have leverage.
This is the single-biggest factor that leads to copywriting fortunes being made.
The richest copywriters I know have tied their compensation to results, then found a way to generate extraordinary results for their clients.
It also works for consultants, or in any business relationship where you are impacting your clients’ top- or bottom-lines.
Everything else about structuring the deal is secondary to this basic premise — at least in terms of the financial rewards.
Find a way to work performance-based compensation in, then go create some big breakthroughs.
Yours for bigger breakthroughs,
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