@Breffni-Potter said:
Where as with this model, it is in my interest to prevent issues/problems, If a client is stable and happy across a year, that's a years worth of revenue as my incentive plus by preventing issues, I get an easier life. You cannot prevent 100% of problems but there is a lot of work you can do.
What you have is an adversarial agreement. This is the primary reason we won't consider these kinds of pricing structures. It is in your interest to deliver as few services as possible - maybe even to the point of incurring risk for the client. It is more cost effective to be risky and lose some clients to disaster than to do the right thing for most of them. It's like SAN sales, you make more money selling customers something risky, even if you lose lots of clients, because the margins are great. So this makes you the financial enemy of the client.
Likewise, it is in the client's interest to push for scope creep and get as many services provided within the agreement as possible. They have no interest in your cost problems.
This type of agreement requires you both to overcome the inherent "enemy" structure of the agreement. It rarely works.