Underwrite the Outcome
Applies to both verticals. The principle is identical for a distributor and an agency; only the baseline metric changes.
The problem, in your words
You've been burned before. A big software or consulting project, a big invoice, and results that never quite showed up in your numbers. The firm got paid either way. You carried all the risk.
That's backwards. And it's why a skeptical owner is right to be skeptical — the model is built so that the people promising the outcome have nothing riding on it.
Why it persists
Flat fee, paid on delivery, risk parked on your side of the table — it's the comfortable model for the vendor, so it's the default. And most firms couldn't change it if they wanted to: they can't model the outcome, so they can't stand behind it. The tell is simple. If a firm can't tell you the dollar number before you pay, they certainly can't underwrite it after.
The teach — what underwriting the outcome actually means
It means the firm puts its fee where its forecast is. Three concrete forms, lightest to strongest:
- No fit, no fee on the diagnostic. If the audit doesn't find a payback worth pursuing, you don't pay for the audit. The firm carries the risk of being wrong about you.
- Fixed scope, fixed fee on the build — not hourly. The risk of overrun sits with the builder, not with you. You know the price walking in.
- Base plus success fee on the run. A portion of the fee rides on realized savings against the agreed baseline — the labor hours freed, the cash released, the cycle time cut. If the number doesn't move, neither does that part of the fee.
What makes any of this possible: you can only underwrite what you can measure (see Play 09). The baseline and the bridge aren't paperwork — they're the instruments that let a firm carry risk instead of handing it to you.
The play — what to ask any firm, including us
- "Show me the dollar number before I pay." Can't? They're guessing.
- "What's fixed, and what's hourly?" Push the overrun risk off your desk and onto theirs.
- "What part of your fee rides on the result?" The answer tells you exactly how much they believe their own forecast.
- "What baseline will you measure against?" No baseline, no accountability — just a story you can't check later.
How to measure it
- Share of the engagement fee at risk against outcomes.
- Realized results vs. the underwritten target.
- Payback — the same number from Play 09, now with the firm's own fee standing on it.
The number it moves
It changes who's accountable for every other number in this library. A firm that underwrites the outcome shares your exact goal: move the number, or don't get fully paid. The math stops being adversarial.
This is the single most ownable promise in the business — competitors charge flat fees and never underwrite — and it's the one most firms won't make, because they can't. That refusal is itself information. Ask the question early.
[PLACEHOLDER: MarginArc outcome-based engagement terms — to be added]
Anyone can promise a result. Ask who pays if it doesn't show up. Then watch the room.