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Business With a Smile Page
EVERYTHING is negotiable!
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A GENERAL COMMENT ON BUSINESS |
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Black Box hardware in general allows a 15% margin for agents and distributors. These figures are all very clearly defined and work very well.Systems Integration and engineering business is less well defined but works on taking the whole costs of capital equipment and assigning the following then trimming actual costs. |
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Engineering Integration & Project Management |
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Installation Integration and Supervision |
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Installation Materials |
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Consultancy payment is generally quite vague and some consultants are inclined to charge as much as they can.We have experience and documentation of engineers being charged at over USD 2,000 per day. YES PER DAY!!! Not to mention further totally unrealistic consultancy fees. This is unfair to clients and very unreasonable. We prefer to avoid the "take what they save" approach to our services and help our clients make the right decisions so that we all may benefit. It is best to have a flexible formula for this. We find a Lehman scale allows a better approach to the business of "comfortable" pricing and we prefer to use it. We expect you do too. |
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A Lehman scale of stage payments is as follows |
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5% |
On the first nominal project amount |
The Nominal Amounts are based on the risk analysis associated with the project |
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4% |
On the second |
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3% |
On the third |
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2% |
On the fourth |
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1% |
On the balance |
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EXAMPLE |
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A project of 20 million is being analysed. You are asked to process the feasibility and get a success fee for working on the project |
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PERCENTAGE |
NOMINATED AMOUNT |
PAYMENT |
LEVEL |
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5% |
1 million |
50,000 |
Speculation |
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4% |
2 million |
80,000 |
Re Analysis |
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3% |
2 million |
60,000 |
Commitment |
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2% |
2 million |
40,000 |
Design |
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1% |
Balance (13 million) |
130,000 |
Final |
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TOTAL FEES DUE = 360,000 an average of 1.8% on the whole 20 million deal |
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IMPORTANT TO REMEMBER - 12% of 15% = 1.8% |
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It is important to separate the project study and the funding if requested and the bulk of the payment will usually be paid on completion of the study and design (230,000) and the success of the funding through to the end of the project (130,000). Or approximately 67% : 33% All payments are pre payments except the first which is an analysis process and post paid based on the analysis (a minimum startup deposit will be erquired). On further analyses the figures can be renegotiated based on the direction the project takes. |
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PERCENTAGES |
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5% |
Of |
5% |
0.25% |
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4% |
Of |
10% |
0.40% |
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3% |
Of |
10% |
0.30% |
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2% |
Of |
10% |
0.20% |
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1% |
Of |
65% |
0.65% |
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ALTERNATIVES |
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For putting together a project with low per item profit on a large quantity units of the same specification 15% of gross profit pre all outgoings after the deal is signed with the client, no speculative stage payment unless pre agreed. |
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