Hi Jad,

I run in a similar space (lead generation for law firms) and the options for partnership are similar despite the deal size. You basically have (from least to most involvement):

1. Set up only
2. Retainer for service
3. Pay Per Lead
4. Commission on closed business
5. Equity ownership

I also get offers for pay per lead arrangements regularly, and have also paid for services to generate leads for my own business in the past. Here are the challenges I see with the model.

1. More demanding on cashflow. My company uses google ad funnels to generate leads but even if you're pure play service you have wages to take care of before you're seeing money. Much more challenging to take on a client like this.

2. Very high touch. I consider myself a pretty easy customer with most things. When I was paying $XX per lead for emails generated, I became very aware of the quality of each individual lead. If someone responded 'k' and that was forwarded to me with the same enthusiasm as 'yes I'm interested let's book some time to talk', I wasn't too happy. I would get in touch with the lead generator and say that's not a lead I want to pay for.

You're setting yourself up to be questioned on every lead if this is the case. Also, due to point #1 you're also in the hole financially when this happens.

With a retainer it's easier to look at things on aggregate and accept the bell curve of lead quality that will come in a given billing cycle.

3. Lack of commitment. In my experience clients are seeking arrangements like this because they don't have the budget to commit to a retainer which almost always has more upside. You could spend a lot of time and money on a client that has none and will never have any.

That's why I don't do pay per lead. Hope this helps!

Jan