Traditionally, the iGaming industry has relied on the revenue share model to bill customers, with most platform providers taking a percentage of the Gross Gaming Revenue (GGR) or a minimum fee, whichever is higher. However, one of the first companies to introduce a new approach is 4Play Gaming, which now offers a fixed fee model, charging a set monthly fee regardless of the operator’s performance.
This article covers the benefits of using the fixed fee over the revenue share model:
Confidentiality
When a platform provider charges customers based on results, the entire financial operation is exposed to them. This level of exposure is uncommon in many industries, and there are numerous reasons why a business owner would prefer to keep financial results confidential.
Predictable Costs
One of the most compelling benefits of a fixed-fee service is the predictability it brings to your budgeting process. With a fixed fee model, you know exactly how much you will be paying for a service, regardless of the results or the volume of work performed. This consistency helps businesses to plan and allocate their resources more effectively without the fear of unexpected expenses.
Increased Transparency
Fixed fee services promote transparency. All terms, costs, and expectations are clearly outlined from the start, eliminating any ambiguities. This clarity fosters a better working relationship between the service provider and the client, ensuring that both parties are aligned in their objectives and understand the scope of work involved.
Risk Mitigation
In a revenue share model, the service provider’s earnings are tied directly to the client’s revenue, which introduces a level of risk that might be undesirable. If the client’s revenue drops, the service provider may be less motivated or unable to sustain their operations. With a fixed fee service, the provider is compensated fairly for their work, irrespective of the client’s financial performance, ensuring consistent quality and effort.
Focus on Quality
Fixed fee services often encourage providers to focus on delivering high-quality results within a specified timeframe and budget. Since their compensation isn’t contingent on the client’s revenue, they are more likely to concentrate on optimizing their processes and delivering superior service. This can lead to better outcomes and higher client satisfaction.
Simplified Contract Management
Contracts for fixed-fee services are generally more straightforward compared to revenue share agreements. The terms are typically easier to understand and enforce, reducing the administrative burden on both parties. This simplicity can save time and resources that would otherwise be spent on managing complex contractual obligations and negotiations.
Better Alignment of Interests
A fixed-fee arrangement ensures that the interests of both the client and the service provider are aligned toward achieving the specified goals and deliverables. In a revenue share model, the service provider might focus on strategies that boost revenue in the short term but are not necessarily in the best long-term interest of the client. Fixed fee services encourage a more holistic approach to problem-solving and service delivery.
Conclusion
Choosing between a fixed fee service and a revenue share model is a pivotal decision that can significantly impact your business’s financial health and operational efficiency. While revenue share models may appear appealing due to their performance-based nature, the predictability, transparency, and risk mitigation offered by fixed-fee services make them a superior choice. With clear, upfront costs, a focus on quality, and reduced administrative burdens, fixed-fee services empower your business to achieve sustainable growth and long-term success. Make the smart choice for your business today and experience the benefits of a fixed-fee service model!
