Tying your fee to results sounds fair to everyone until you try to agree what a result is.
TL;DR Only viable when the metric is measurable, attributable to you, and inside your control. Always keep a base retainer that covers your costs. Pure performance pricing transfers the client’s business risk onto you.
The three tests
Before agreeing to any performance-based deal, all three must pass.
| Test | Question | Fails when |
|---|---|---|
| Measurable | Can we both see the number, from the same source? | Metrics live in their system and you cannot verify |
| Attributable | Can we isolate your contribution? | Six things changed at once |
| Controllable | Do you control the levers? | Their sales team, pricing or product decides the outcome |
Fail any one and do not do it. The most common failure is attribution: you generate leads, their team does not follow up, the metric misses, and you are arguing about whose fault it is.
The structures, from safest to riskiest
1. Base plus bonus (recommended)
$3,000/month base, plus $500 for every month exceeding [defined metric].
Base covers your costs and effort. Bonus shares the upside. Your downside is capped.
2. Reduced base plus larger bonus
$2,000/month, plus 10% of measured incremental revenue.
More upside, more risk. Only with a client whose data you trust and whose operation you have seen.
3. Milestone-based
$5,000 on delivery, $5,000 when [defined outcome] is achieved.
Works for projects with a clear finish line.
4. Pure performance
15% of incremental revenue, no base.
Rarely advisable. You are financing their growth, carrying full delivery cost, and depending entirely on their execution. Only consider it with a proven client, a long track record together, and a floor.
Never work without a floor
Your base must cover your delivery costs, at minimum.
Without it, a bad quarter for reasons outside your control means you worked for nothing while still paying wages and overhead.
Frame it plainly.
The base covers our cost to deliver. The bonus is where we both win if it works. We are happy to share upside. We cannot absorb your downside.
That sentence closes the conversation in most cases, because it is obviously fair.
Defining the metric
Ambiguity here is what turns a good relationship into a dispute.
Write down
- The exact metric. Not “more leads.” “Qualified leads, defined as X, recorded in Y system.”
- The source of truth. One system, agreed, that both parties can see.
- The baseline. What it was before you started, measured over a defined period.
- The measurement window. Monthly, quarterly.
- The attribution rule. What counts as yours.
- Exclusions. Seasonal spikes, one-off events, existing customers.
Baseline is the one that gets skipped and causes the worst arguments. Measure it before you start, in writing, signed.
Attribution, realistically
Perfect attribution does not exist. Agree a workable convention rather than pretending otherwise.
Practical approaches
- Source-tagged only. Only leads that arrived through channels you control.
- Incremental over baseline. Everything above the agreed pre-existing level.
- Defined window. Conversions within X days of a tracked touch.
- Agreed split where multiple channels contribute.
Write the convention into the contract, including its imperfections. “We both accept this is an approximation and neither party will relitigate it” is a clause worth having.
Protective clauses
- Client obligations. If they must respond to leads within X hours or provide access to Y, state it. Their failure to hold up their end cannot reduce your fee.
- Cap on the bonus, or not, decided deliberately. An uncapped bonus can produce a number the client refuses to pay, which is a worse outcome than a cap.
- Minimum term. Results take time. Three to six months minimum.
- Data access. Written right to the reporting you need. Losing access mid-term is a real risk.
- Termination. What happens to accrued bonus if either side exits.
- Review point. A scheduled renegotiation, so a structure that stops working can be fixed rather than endured.
Where this works and where it does not
Works
- Lead generation with clean tracking.
- Recovery work, where you are collecting or reclaiming a measurable amount.
- Efficiency work, where you are reducing a cost that is already measured.
- Sales support where you control the whole funnel.
Does not work
- Anything depending on the client’s sales team.
- Brand and awareness work.
- Long sales cycles where the window exceeds the engagement.
- Clients with poor data hygiene, which is most small businesses.
That last one is the practical blocker. If they cannot tell you their current numbers accurately, there is no baseline, and without a baseline the whole structure is guesswork.
The conversation when they ask for it
Clients often propose pure performance pricing because it sounds risk-free to them.
Happy to share risk. Here is how it works: a base that covers our cost to deliver, and a bonus tied to [metric] above the baseline. What we cannot do is carry the full cost of delivery on an outcome that depends partly on things we do not control, like how fast your team follows up. If we do this, we will also need [their obligations] written in, because those affect the result.
Reasonable clients accept this immediately. Clients who insist on pure performance with no base and no obligations are usually telling you something about how the relationship would go.
Before agreeing to any performance deal, write down the baseline number and get it signed. If you cannot establish one, you do not have a deal, you have an argument scheduled for month four.
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