Skin in the game

[glorybound]

Has anybody been approached with an offer like this?

"I am not promising future work, only offering a larger fee if you come in as part of the team and the project sells."

They design some nice houses, however, everything is done with pencil on paper, so I wouldn't get CAD files. Most of the houses have complicated site plans.

[dean_dmoo]

I had that once and my answer was a clear no. The balance between risk and profit isnt worth it. For example they can earn 10% by selling the project, and seeing the mansions you are rendering that could be up a million, yet you have to do nearly all your work, run relatively high risk and the payoff is little. If a company is already trying to spread risk to very small "partners" its a warning sign.

I was asked this for a tender a couple of years ago, a 130mil euro project and they wondered if I would accent part of my fee was based on them winning. These were reputable companies so a "no" was fine and I did the job for them, they can always ask. The answer is usually how they respond to it.

[glorybound]

This isn't the mansion guy, but they do, do some nice houses. I think I agree. Basically, it sounds like they don't have money, so I think I'll just say no.

[dean_dmoo]

Another option is to increase you fee by for example 50% and have an agreement that 50% gets paid regardless of sale. If it doesnt happen you get paid 75% of your normal fee, if it does sell you get 150% of your fee. But really for the money involved and the timwframe of developing and selling a house it seems like too much hassle to me. And thats even without considering all the revision work you would probably end up doing which they could/will say that gets paid when it sells.

[glorybound]

I did think about that.

[Neilg]

I dont think you can write a contract that can enforce payment like that because it falls under commission, and they cant give you a commission without you being licensed. They'll have zero legal obligation to pay up when/if it sells.

[glorybound]

I dont think you can write a contract that can enforce payment like that because it falls under commission, and they cant give you a commission without you being licensed. They'll have zero legal obligation to pay up when/if it sells.

I emailed them a straight quote and he is talking to his partner. My quote was exactly what he was expecting, which is good. His partner wants to use a cheap local guy, but the local guy isn't very good, or so he says. We'll see how it pans out.

[squintnic]

i would mark his email as spam.
sounds like a scammer with no money!

[glorybound]

We'll see. I'll try to stay ahead of things.

[crazy homeless guy]

We have done this a few times but only for competition work. Do the work at a reduced rate, say 75% of what you would normally bill. But then add a clause that states you get and additional XX if the design wins, the XX might equals 150% to 200% of you normal fee.

Doing this on a competition is a greater risk than doing it if (or when) a project sells. Is there any reason for you to believe that the project won't eventually sell?

Lets pretend you do the project at full cost, no skin in the game. You get paid 100% of your billable rate and you invest all of it in the stock market. How long is it going to take that money to reach 150% of its original value? How long for 200%? If you do really well and manage an increase of 10% a year you will reach 150% of its value in just under 5 years.

Now say you do the "skin in the game" method. You get paid 75% of you billable rate. 10 months later the project sells and the value of your investment reaches 150-200%.

It's your standard risk -vs- reward scenario.