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Referral Fees

3/12/22       
Guinea Member

We recently hired an independent trim sub for an installation. The guy does great work and is priced reasonably. Now he's asking about referral fees on future projects. I found some older threads on finder's fees to designers, etc., suggesting 10% is fair, but 10% what? If it's a percentage of the gross sale, that seems excessive. Plus, this would be in addition to his installation fee. Has anyone used a similar arrangement? How did you handle it? Many thanks.

3/12/22       #2: Referral Fees ...
RichC

What is your current cost to get a new customer? If you don't spend any money to get a new customer, then it may seem high. But if you are doing any advertising at all, 10% is not bad for a solid lead. You do realize that a new customer can bring in more work in their circle. Word of mouth is always the best and cheapest advertising.

3/12/22       #3: Referral Fees ...
Mark B

My referral fee would be zero. Just like when someone aske you for a good trim sub and he gets a job, will he pay you? If he wants a referral fee let him run the job and hire you as a sub in those situations. Maybe he does good work but sounds like a scam artist to me. These arrangements go both ways an in my world when I am referred to a job, or I give one of our contractors a recommendation for a project there is nothing exchanged other than a big thanks a bunch, I really appreciate it... and a marker in your mind of who you want to work with in the future.

3/13/22       #4: Referral Fees ...
james e mcgrew  Member

Website: mcgrewwoodwork.com

The Value of something is what those are willing to pay for it, yet somehow many seem to think that setting that value is a one way negotiation. my response to that request would be " well what are you looking for in this ?"

3/14/22       #5: Referral Fees ...
TonyF

Guinea:

I agree with Mark B., as I have reciprocated on referrals with other contractors and it has worked out well, with appreciation acknowledged but no fees exchanged.

Perhaps the next time you use him as a sub, ask him for a referral fee, and see what his reaction is. If he is talking himself up as a real rainmaker, it seems that he would have been too busy with all of his own work to be your subcontractor.

How much work could he actually get you, how badly do you need it, and what is that worth to you?

Only you know the answer to that. Good luck.
TonyF


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