As of BizMagnet TVP consultant experience in the industry, the very question of a client is not “am I qualified to apply for the TVP?” but “how do you charge?”. It is reasonable to see if it is cost effective. In general, there are TWO charging methods for TVP consultation services: proportional and fixed fee. Let us brief how they work. (BizMagnet TVP consultation is fixed priced.)
Proportional to grant
The majority of the TVP consultants in the market charge proportional to the granted subsidy, and the commission is from around 8% to 25%. These consultancies highlight “no win, no fee”, and this is exactly the advantage. The applicant company will not pay anything to the consultant if the application fails. (Of course the cost of human resource, time and business opportunity is inevitable). Therefore many firms give a try to the TVP application as it looks like nothing to lose. Moreover, the government fund consultants get paid only if the application is successful, this encourages the consultants to do the best and gets as much as possible.
As the consultant fee is proportional to the subsidy, more subsidy results higher commission. The charging method motivates the consultant to enlarge the TVP project scale. If the applicant companies are not familiar with IT solution, they are easy to purchase more unnecessary system function under consultant persuasion. The one-off cost may look slight due to the 75% of government grant, but the long term maintenance cost is significant.
TVP know more: TVP suppliers shouldn’t be a TVP consultant at the same time
Another common charging method is the fixed fee. It can be one single fixed price or multi-tier depending on workload. The fee is independent of the subsidy, from several thousand to thirty thousand HK dollar. As the consultant fee is independent of the project, there is no incentive for the consultant to persuade the clients to overbuy IT solution. Thus, it is more direct and easier to engage between the consultant and the clients. Many enterprises don’t accept a proportional “carve-up” consultation fee, so the fixed fee policy is easier for the accounting to handle.
Relatively, an independent consultant is not like a “no win no fee” TVP agency, which has a structural incentive to maximize the subsidy. Therefore a clear explanation is necessary before the engagement to build the required trust. BizMagnet TVP consultation service charges at a fixed fee.
Further reading: TVP successful cases
Choose consultant and supplier carefully, don’t be greedy
In recent years, the government has established many subsidizing funding. Many agency and consultancy businesses follow to start. There are also variety of charging ways besides the above. Nevertheless, applicant should carefully choose TVP consultants and suppliers. BizMagnet client told us that it had very bad experience before. Our client mistrusted adverse IT suppliers and believed to earn a technology system free with the TVP. Once it paid the deposit in cash, the TVP supplier demanded more and more. Please remember that a TVP consultant, as any trustworthy corporate service providers, should provide an official agreement with clear payment terms. There should be no hidden cost, nor conspiracy such as secret rebate under the table.
Forecast: TVP consultant trend prediction 2021