We’ve already looked at the pros and cons of paying copywriters by the hour, by the project, and by the word.
Last in our line-up is performance-based pay in which compensation is directly tied to pre-determined results (i.e. conversions, traffic, sales, leads, etc.).
Whereas the 3 previous systems are fairly interchangeable, performance-based pay stands alone.
Some people love it. Some people hate it.
My feelings are mixed. It really depends on the project and yes, the client.
Let’s explore the pros and cons.
Advantages of Paying for Performance
Less Risk to the Client
Reduced risk for the client is probably the most obvious benefit of performance-based pay. You don’t have to hand any money over if your targets aren’t met. And whatever money you DO pay probably comes from the increased revenues that a successfully completed project brings in.
It’s easy to see the appeal of this approach – especially for solar companies with very tight marketing budgets.
Greater Incentive to Produce Results
In theory, a copywriter will work harder if he has a stake in the outcome. After all, there’s potentially no payoff if he only achieves 99.999% of what you’ve asked him to do.
The logic is sound and can often produce amazing results. I’ve worked on a few solar copywriting projects using this system and got more than I expected.
But there’s enough literature out there that questions the value of performance-based pay as a motivator. I’ll let you be the judge.
Let’s check out some of the cons of performance-based copywriting pay. As you’ll see, most of these downsides affect the writer more than the client.
Disadvantages of Paying for Performance
Risk Management for the Copywriter
As a freelance copywriter, I generally don’t have a problem assuming 100% of the risk if I can control 100% of the variables. But in life, this is usually not how it plays out.
This is why many copywriters shy away from performance-based systems.
Let’s say you hire a freelancer to write a business plan, with the promise that you’ll share a predetermined percentage of whatever funding this plan helps you secure.
The copywriter writes a terrific business plan. But what happens if:
- Someone from your management team suddenly leaves the project
- Your supplier doesn’t deliver, forcing you to delay or shut down
- An unknown competitor comes out with a newer or better product
- The financials you provided the copywriter turn out to be way off
There are a million and one things that could go wrong, many of which are beyond the copywriter’s direct control. But because payment is tied to results, he gets nothing.
Difficulty in Tracking
As the client, measuring performance is very easy to do. You have direct access to sales, analytics, conversions, etc. But the copywriter must usually rely on whatever information you provide.
9 times out of 10, there’s no problem with this.
But there are clients out there who knowingly fudge the numbers to avoid having to pay. They tell their copywriters, “we only secured 100 new leads with the landing page you wrote,” when the true number is closer to 200.
One way to overcome this issue (or the perception of this issue) is to provide the copywriter with more access to your tracking methods.
Some clients are uncomfortable with this, and I can certainly understand. There are sometimes good reasons why you don’t want to open up your books to outside parties. But unless you can provide unfiltered access, it’s difficult for the copywriter to objectively assess his or her own performance.
Prone to Disagreements
This is closely related to the point up above. But performance-based pay is more prone to disagreements – even when both sides are 100% honest and transparent.
The disagreements usually come from miscommunication or poorly defined terms. The best way to overcome these challenges is to spell out everything as clearly as possible.
This includes contingencies:
- If the goal is to secure 1,000 new leads, but you only secure 999, should the copywriter get $0?
- If the goal is to attract 100 new visitors by next week, but it actually takes 7 days and 2 hours, what do you do?
- If the copywriter delivers what is asked, but extenuating circumstances beyond his control prevent the desired results, do you have a Plan B?
Some copywriting projects are not ideally suited to performance-based pay for ethical reasons.
Grant writers, for example, are discouraged from accepting commissions (i.e. a percentage of the money that a successful grant proposal brings in).
This is not an official rule, and you’re usually not breaking any laws by offering a percentage. In fact, you can find plenty of solar grant writers who have no problem accepting commissions. But you should still be aware of the ethical concerns involved.
Hybrid Pay for Performance
One way to mitigate some of the disadvantages of performance-based pay is to use a hybrid system. Essentially, you offer a lower per-word or per-hour rate coupled with a lower commission.
This approach spreads the risk while still weaving in incentives.
Which Solar Copywriter Payment System Is Best?
Now that we’ve looked at the pros and cons of the 4 major payment systems, which one is the best?
Tackling this is the subject of our last and final installment in this 5-part series on solar copywriting payment terms. So stay tuned.
In the meantime – what are your thoughts on performance-based copywriting payments? Share down below.