Have you seen success with revenue share models based how much money you can save the customer?
This model is very risky and while I have seen success, I have also seen failure with it. The failure I have seen comes down to Control and Opportunity Cost. Regarding control, the further you get away from fully controlling the items for which you are billing, the more likely it is that something will go wrong. Likewise, the further you get from fully controlling the entire revenue model, the higher the Opportunity Cost is.
In your example, if you can tie directly into, or extract data directly from, the system where you are trying to save them money and be certain that what your client is reporting is accurate, then that might be okay. However, if you have to take their word for it, you lose control and therefore the risk goes up. The Opportunity Cost goes up in the latter model because now you will need to spend time and money following-up with clients, auditing your clients’ invoices, etc.
Author: Lincoln Murphy