Referral Commission fee, what is reasonable?

[LiveEntrepreneur]

So I'm going to potentially be in business with someone that I know and they will be giving me some clients but from what I can tell the proposed commission structure is a percentage wise of the current retainer that I charge every month and seems to go into perpetuity which seems excessive. My line of thinking was to counter offer, 10% every month for the next 12 months then the referral finishes after that. So if I charge $1,000 a month for example, they get $1,200 at the end of the year in total and nothing else after that.

Any advice on the most fair way to go about this? The way I look at it is that they provided me value and I'm going to pay for it, but seems unreasonable to pay for it forever. Once a favour is done it's done.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Stargazer]

As it is you looking at the proposed commission structure then it's the other party who wrote it.

If he gave it to me I would have just ripped it up in front of him and said 'Think again'

Then left it at that.

There is no commission structure that someone else imposes on your company.

The number one reason you want someone to refer anyone to you is because they believe your service/product is the bees knees. And therefore they would refer to you anyway.

The fact that I would get rewarded fo referring is therefore a bonus.

A gym might offer the referrer a free month or a branded towel or a free smoothie. A broadband provider would credit £50 to both accounts.

In other words the companies are giving you a nice, relevant thankyou.

Maybe 3 x months if you want to, so $300 but after that what did he have to do with it?

The only reason a customer stays with you after that is 100% down to your provision and your customer services. The only reason I go back to a gym, restaurant, broadband provider, £1200 a night hotel, anything is because of the provider not the referrer.

If he says 'Well sod it I will introduce the customers to someone else' then he isn't thinking of his custoner at all is he?

He either believes you will do his customers a great service or he doesn't. That's his peace of mind. Knowing there will be no negative comeback by referring to you.

Dan

 

[LiveEntrepreneur]

As it is you looking at the proposed commission structure then it's the other party who wrote it.

If he gave it to me I would have just ripped it up in front of him and said 'Think again'

Then left it at that.

There is no commission structure that someone else imposes on your company.

The number one reason you want someone to refer anyone to you is because they believe your service/product is the bees knees. And therefore they would refer to you anyway.

The fact that I would get rewarded fo referring is therefore a bonus.

A gym might offer the referrer a free month or a branded towel or a free smoothie. A broadband provider would credit £50 to both accounts.

In other words the companies are giving you a nice, relevant thankyou.

Maybe 3 x months if you want to, so $300 but after that what did he have to do with it?

The only reason a customer stays with you after that is 100% down to your provision and your customer services. The only reason I go back to a gym, restaurant, broadband provider, £1200 a night hotel, anything is because of the provider not the referrer.

If he says 'Well sod it I will introduce the customers to someone else' then he isn't thinking of his custoner at all is he?

He either believes you will do his customers a great service or he doesn't. That's his peace of mind. Knowing there will be no negative comeback by referring to you.

Dan

With this structure, they are doing me a favour in the sense that I don't need to find my own clients but I guess as payment they need some sort of commission. For context, they can take the clients if they want to but are passing some of them off to me as they aren't the sort that they want at this moment in time.

 

[heavy_industry]

With this structure, they are doing me a favour in the sense that I don't need to find my own clients but I guess as payment they need some sort of commission. For context, they can take the clients if they want to but are passing some of them off to me as they aren't the sort that they want at this moment in time.

Do you want real advice, or you're just looking for confirmation on what you've already decided?

@Stargazer stated it plain and simple.

You're being ripped off. A lifetime of 10% of all incoming revenue for an ongoing service is ludicrous.

But I guess natural selection applies to the business world as well.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[LiveEntrepreneur]

Do you want real advice, or you're just looking for confirmation on what you've already decided?

@Stargazer stated it plain and simple.

You're being ripped off. A lifetime of 10% of all incoming revenue for an ongoing service is ludicrous.

But I guess natural selection applies to the business world as well.

Of course, real advice I was just supplying context because I thought I didn't supply enough info. Yeah that's what I'm saying, it seems like an unfair deal. But I agree with the above.