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SEO/SEM on a pay-per-preformance base
Please Help with ideas for the contract
paladin

10+ Year Member



 
Msg#: 720 posted 12:41 am on Mar 6, 2003 (gmt 0)

Hello Everyone,
I have just agreed with a long-standing client of mine that I will help him market his new web site in the search engines on a pay-per-preformance base (he will be paying me a fixed percentage of the sales).

Iíll start off by saying that specifically with this client I do not feel that we need a contract due to our prior joint ventures. However we are both of the opinion that it is better to have the contract and never use it than not have it and need it. Hopefully we will both sign it, lock it away somewhere and just have to dust it off every few years.

Anyway I have the basics of the contract and wanted to hear your input, both good and bad, and to see if I missed anything:

1. In general the client will operate the site, including all operating expences (hosting, billing, shipping etc.) and I will take care of the S.E. marketing.
2. Once the site is up I will receive my percent on a monthly basis.
3. The contract will be for a two year period and will automatically renew itself every year for a one year period unless cancelled by one of us at least 30 days prior to the end.
4. All phone and fax orders must be entered into the website database.
5. In the event of a breach of contract by the client he will still have to pay me until the end of the contract unless the business itself is closed.
6. Regarding PPC and other campaigns we will discuss it on a case-by-case basis. Sometimes I will pay for them, others the client will, and yet other will be paid jointly by us.

I understand that in the end, even if he breaches the contract, it will be hard for me to sue him. I just wanted to make sure that I get the basics down in this contract.

Thanks,
Alon

 

jimbeetle

WebmasterWorld Senior Member jimbeetle us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 720 posted 1:29 am on Mar 6, 2003 (gmt 0)

I'd say simplify it and get down to what you can really put on paper and enforce.

4. All phone and fax orders must be entered into the website database.

And you make sure that is done by...?

6. Regarding PPC and other campaigns we will discuss it on a case-by-case basis. Sometimes I will pay for them, others the client will, and yet other will be paid jointly by us.

Don't see how you can possibly write this so it is understandable and enforceable.

Ain't no lawyer, but I'd say go for a straight percentage of the gross (smaller %) or net (larger %) while client bears all expenses. Keep it simple.

Just my 2 cents, folks with much better expertise will probably be along soon.

Jim

bmcgee

10+ Year Member



 
Msg#: 720 posted 5:07 pm on Mar 6, 2003 (gmt 0)

Enforcing the rule about the phone and fax sales will be difficult. This can be resolved if you create the system and the only method of entering orders is through the web site. Sure, dishonest people can still circumvent that, but it will make their books much harder to keep.

Also, I would recommend that you go purely on Gross, rather than Net. It is far too easy to deflate the net and dilute your earnings. Besides, how will you audit that?

Your job is to bring business to them, not to run their business. You should get paid for business you bring (Gross), not the end result of how well they run the business (Net).

They will know upfront what percent of the gross you are getting. They will know what they need to do in order to price their products and run the show in order for themselves to remain profitable, including your cost per sale.

As much as you have a good relationship with this customer, still be on the watchout. Greed causes dishonesty, and we have seen issues even with those we have the strongest relationships with.

decaff

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 720 posted 3:25 am on Mar 7, 2003 (gmt 0)

Paladin,

I just went through an experience with a business owner that may help you with your process...

First, I agree with bmcgee...ask for a flat rate per sale up front (gross)
Make sure you discuss this thoroughly with your business partner about what he is wanting to make per sale (what is his profit margin)..and what he can afford to pay you per sale.

The next thing to hone in on is the actual market dynamics for the particular products or services that are being sold so you can guestimate your actual income from your efforts.
Is it cyclical and sees big activity during certain times of the year? ...or is it something that will get very steady order traffic...?

Regarding tracking of phone/fax orders...if you can get the consent of your partner to set up your email address as one of the fields that gets information per transaction from your partner's credit card processing service (like Authorize.net) then you will know precisely the orders that are coming in via fax/phone if they aren't finding their way into the Web site database....better yet make sure you have access to this via the user/password (if your partner will agree to this) so that you can regularly check these.

A certain percentage of people refuse to place online orders and will only use the phone/fax to do so....so be sure you can access this and put it writing how this will be done.

Make sure you set a regular, accountable day once a month when you will recieve payment and don't let someone dictate how many sales are required before this is active.

Also, see if you can negotiate a percentage based annual bonus (say 3% of total sales ... here's where net may come into play...for the any calender year)..

Make sure your partner doesn't have a gambling problem and is pilfering away your hard earned dollars and not able to pay you .... or payments are delayed for weeks on end...
very painful to discover something like this after you have worked so hard...

Absolutely state infactically exactly what your responsibilities will be....this must be spelled out to the letter or you might find yourself being sucked into becoming a sysadmin or something you didn't bargain for and stick to your guns on this....

Well, thanks for letting me purge that some...send me an invoice for the counseling session..

decaff

Mike_Mackin

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 720 posted 3:35 am on Mar 7, 2003 (gmt 0)

>A certain percentage of people refuse to place online orders and will only use the phone/fax

That # is about 30% per our clients remarks!

Price your services accordingly and everything will be OK

paladin

10+ Year Member



 
Msg#: 720 posted 7:53 pm on Mar 7, 2003 (gmt 0)

Thanks for all the responses

I'll start off by saying that I will be getting a strait percentage of the sales (not including shipping and handeling charges). If someone puts an order of $100 in the site + $10 S&H then I will get my percent of the $100. Payments to me will be made at the begining of the month for sales that were entered during the previous month.

I know that it will be almost impossible to enforce that all phone orders are entered into the site, but I rather have it there than not. Keep in mind that this is a client that I have known since 1997, so I am not too worried about him trying to put one over on me. An additional fact is that we will be putting my phone number on the site, along with the client's, this is because the client is in the Middle East, and with my number it will give U.S. customers a local phone number to reach. There will also be an order tracking system in the site so the client will have to to update the orders in the site so customers can see the status of the orders.

With regards to PPC campaigns, it is quite simple. If both me and the client do not agree as to who will pay for that indavidual campaign then that specific campaign will not happen.

As far as I know the client does not gamble. I found this comment a bit ammusing (although it is a serious one to take into account) due to my prior job. Before I went freelance I was the affiliate program manager for an online casino.

Also I am not worried about becomming a system admin. The site currently sits on my server (paid monthly by the client), and part of the contract is that it continues to be on my server. In general I will be incharge of rebuilding his current web site, using the current functions that are there while optimizing it for the search engines.

That's about all I can think of for now. Thanks again for all your input. Let me know if you think of something else I should take into consideration.

Alon

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