4. Deal Economics & Approval
Deal Economics & Approval
Section titled “Deal Economics & Approval”Every engagement in the WillDom ecosystem generates economic value that is shared among participants according to the Transaction Model. Before a candidate introduction or solution proposal moves forward, the ecosystem applies a structured evaluation to ensure each transaction meets minimum profitability standards and is reviewed by the appropriate stakeholders.
This framework ensures that commercial decisions are made transparently, that margin expectations are aligned across the ecosystem, and that every engagement contributes to the long-term sustainability of the platform.
Gross Margin Calculation
Section titled “Gross Margin Calculation”Gross margin measures the economic value retained by the ecosystem after direct costs are accounted for. It is the primary metric used to evaluate the financial health of each engagement.
Formula
Section titled “Formula”Gross Margin = (Sales Rate − (Talent Cost + External Talent Cost)) / Sales Rate
Where:
- Sales Rate — the rate the client pays to WillDom
- Talent Cost — the rate paid to the talent assigned to the engagement
- External Talent Cost — the hourly rate for externally sourced talent, if applicable (e.g., Developer Referral Program participants)
Example
Section titled “Example”- Sales Rate: $65/hr
- Talent Cost: $35/hr
- External Talent Rate (DRP): $2/hr
- Gross Margin = (65 − (35 + 2)) / 65 = 28 / 65 = 43.07%
Key Considerations
Section titled “Key Considerations”- Branch splits are not considered a cost for gross margin calculation. The split is applied to the remaining profit after margin is determined.
- Client Referral Program (CRP) commissions are not included in the semaphore calculation. However, CRP cost is subtracted from the remaining profit before the 50/50 branch split occurs when two branches participate in the same engagement.
- CRP participants receive their share only after the client pays, creating no financial risk for the ecosystem. This differs from talent costs, which are paid before client payment is received.
Margin Semaphore
Section titled “Margin Semaphore”The semaphore system provides a visual and procedural framework for evaluating whether an engagement should move forward based on its gross margin.
Green — Gross Margin ≥ 35%
Section titled “Green — Gross Margin ≥ 35%”The engagement meets the ecosystem’s profitability standard. The introduction or proposal can proceed without additional review.
Yellow — Gross Margin ≥ 30%
Section titled “Yellow — Gross Margin ≥ 30%”The engagement is below the target margin but within acceptable range. At least one Branch Leader from each party involved in the transaction must participate in a risk analysis and negotiation review before proceeding.
Red — Gross Margin < 30%
Section titled “Red — Gross Margin < 30%”The engagement is below the minimum acceptable threshold. It is important to avoid operating in the red zone. At least one Branch Leader from each party involved must formally sign off (email confirmation required) before the engagement can proceed.
Minimum Gross Contribution
Section titled “Minimum Gross Contribution”In addition to meeting the semaphore threshold, every engagement must generate a minimum expected gross contribution of $1,500 to be approved for candidate introduction. This ensures that even high-margin engagements with very low volume are economically viable for the ecosystem.
Total Contract Value (TCV)
Section titled “Total Contract Value (TCV)”Total Contract Value measures the complete economic value of a contract once executed. It includes all recurring revenue from the engagement as well as any one-time charges such as placement fees or other costs incurred throughout the contract term.
Formula
Section titled “Formula”TCV = (Monthly Recurring Revenue × Contract Term Length) + Contract Fees
Rules for Indefinite Contracts
Section titled “Rules for Indefinite Contracts”When a contract has no defined end date, TCV is calculated using standard periods based on the transaction type:
- ● Talent Transactions — calculated as a twelve (12) month period
- ● Solution Transactions — calculated as a twelve (12) month period
Why TCV Matters
Section titled “Why TCV Matters”TCV enables accurate revenue projections, which in turn support budgeting and resource planning across the ecosystem. It also helps branches and partners identify which types of clients and engagement models generate the highest contract value, informing future sales prioritization.
Changes to pricing strategy or contract length can have a dramatic effect on TCV. When comparing TCV bookings over time, any variations in pricing or contract terms should be accounted for.
Branch Splits and CRP Interaction with Margin
Section titled “Branch Splits and CRP Interaction with Margin”When multiple ecosystem participants contribute to the same engagement, the economic distribution follows the Transaction Model while respecting the margin calculation hierarchy:
Step 1 — Margin Evaluation
Section titled “Step 1 — Margin Evaluation”Gross margin is calculated using the formula above. The semaphore is applied based on this result. CRP commissions and branch splits are excluded from this calculation.
Step 2 — CRP Deduction
Section titled “Step 2 — CRP Deduction”If a Client Referral Program participant originated the opportunity, the CRP commission is deducted from the gross profit before any branch split occurs.
CRP commission rates:
| CRP Participant Commission |
|---|
| 5% of revenue profit |
*note: Older CRP was based on Gross Margin. New CRP is 5% flat of revenue profit
CRP commissions apply for the duration of the client engagement during the first year, starting from the date of the first Statement of Work.
Step 3 — Branch Split
Section titled “Step 3 — Branch Split”After CRP deduction (if applicable), the remaining profit is distributed according to the Transaction Model:
- Talent Transactions: 50% Client Owner / 50% Talent Provider
- Solution Transactions: 20% Solution Know-How Owner, then remaining 80% split equally between Client Owner and Delivery Provider
Approval Flow
Section titled “Approval Flow”The approval process ensures that margin and contribution thresholds are met before resources are committed to a new engagement.
Standard Flow
Section titled “Standard Flow”- Calculate gross margin using the formula above
- Apply the semaphore classification (Green / Yellow / Red)
- Verify minimum gross contribution ≥ $1,500
- If Green: proceed with candidate introduction or proposal
- If Yellow: escalate to Branch Leaders for risk analysis
- If Red: escalate to Branch Leaders for formal sign-off
Escalation Participants
Section titled “Escalation Participants”- Branch Leader — reviews margin risk and negotiation options for engagements within their branch
- Partner — participates in approval when the engagement involves cross-branch collaboration or CRP-originated opportunities
- SSC Account Development — supports margin analysis for expansion opportunities within existing clients
Summary
Section titled “Summary”The Deal Economics framework ensures that every engagement in the WillDom ecosystem meets profitability standards before moving forward. By combining a clear margin calculation, the semaphore approval system, minimum contribution thresholds, and TCV measurement, the ecosystem maintains financial discipline while enabling branches and partners to pursue high-value opportunities with confidence.
This framework operates in coordination with the Transaction Model for revenue distribution, the Opportunity Qualification process for engagement eligibility, and the Contract Negotiation Playbook for commercial terms.