Charging for referrals

[kamcbrayer]

I have a repeat customer that has a job that I went out to quote yesterday. Due to the scope of the work, I'll need to sub it out to a larger company. It's not a huge job, but worth about $2000. What is the going rate for referrals? If I'm asking for a $200 for the job, is that too steep? I need a little guidance in how I should approach another company and what should my concerns be? Step by step please.

Thanks,
Kevin

 

[ShoerFast]

Kevin

First of, I am in another field, so my $0.02 cents worth may not be the norm in your field.

But I will say that referrals have a way of coming back to you as more reverse referral work then you would sometime believe.

I am from the 'one hand washes the other' schools here.

Kevin

 

[kamcbrayer]

Good advice

 

[ATH]

I'd agree. I have given gas cards as a "thanks" for referrals from other businesses but haven't paid for or charged for referrals.

 

[BC WetCoast]

Are you subbing it out or referring it? Different animals. In a referral, the relationship is between the customer and the person you referred it to. With subbing the relationship is between the customer and you.

Assuming it's a referral, do you have a relationship with the other company or someone you only knew by reputation?

If it's someone you have a relationship with, then I wouldn't ask for a referral fee. Karma.

If it's someone you don't really know and may never work for again, then you can consider asking for a referral fee. But I would work harder at building up a relationship with this larger company.

 

[tree md]

I offer a 10% referral fee to anyone who brings me a sale, be it one of my employees or another contractor. Sounds like you are right on to me.

 

[pdqdl]

5% referral fee, if I do the selling to the customer, and I set the price.

10% if the job is sold by the "referrer" and I accept the price.

 

[kamcbrayer]

I like the 10% referral fee. I don't know about anyone scratchin my back around here if I scratch theirs. I think everyone's like me, hurting for work.

 

[kamcbrayer]

Now tell me this, what's the best way to work the deal out with another company? Paperwork? Contracts? Whatever. Just tryin not to get fudged on the cash.

 

[pdqdl]

Get the job. Get paid. Pay your dues, generate some loyalty.

 

[ATH]

Now tell me this, what's the best way to work the deal out with another company? Paperwork? Contracts? Whatever. Just tryin not to get fudged on the cash.

Are you subcontracting (that is a subcontract not really a referral) or did they refer you to a client with whom you now have a contract?

The subcontract should be paid by the other company for who you are working. If a true referral, the other company is out of the picuture and you have to get paid direct by the client.

Either way, get it in writing. If the job is over $500 you gotta have a contract. If not, you just should have a contract. Why wouldn't you?

 

[M.Green - SVTS]

If you go to bid a job and it is to large for you to do or you don't feel comfortable doing it. Call a reputable company probably with a full page add in the yellow pages.

Keep in touch with the home owner. Make sure the home owner is treated right by this other company. You won't have a contractual obligation to the home owner but them knowing you are looking out for there best interest will keep you in there "word of mouth".

If a reputable company stiffs you on a referral. Learn your lesson, don't do business with them anymore and it's not slander if it's true so don't hesitate to tell others about the mishap. Only if it's true. If they tell you that you will get 10% of the contract and they don't give it to you and you tell the story, it's not slander. You won't get your money, but there will be negative statements circulating your area about them.

Another good idea may be to ask them to sign a written contract with you before you even send them to the home owner. That way you aren't sub contracting, the work contract will be between the other company and the homeowner, but you will have a contract with the other company stating what you are to make from the referral IF the proposal is accepted by the homeowner and the payment terms. (I suppose in a way that is subcontracting, just not as profitable)

I hope that was helpful, A little confusing but helpful