How to compensate a referal?

[overkill04]

Hi all,

I've set up a convenient arrangement where my sofware reseller is feeding me work from his customers.

I'm new to the contract game and was wondering what kind of compensation is being doled out in this situation. I realize that every situation is different ie, length of job, value of job, but some ballpark ideas would at least help me negotiate our arrangment.

Cheers





Specs, Intel Pentium M 2.16 Mhz
SW 2007 R2.2
1.5 Gb Ram
NVidia GE Force GO 6800 256Mb

 

[IRstuff]

You could give him either a flat fee, or a percentage

TTFN

Eng-Tips Policies FAQ731-376

 

[atlas06]

some people are more than willing to shell out 8% of contract amount if work walks in the door without marketting or advertizing. Keep in mind that those customers should send you even more referrals (assuming you do great work of course).

 

[ozmosis]

Why don't you speak to the software reseller and ask them? As they are getting sales due to you doing the actual contract work, they might be quite happy with the current arrangement. There is no need to be giving away your income if you don't need to but coming back to my first point, having a trusting relationship with your supplier is one of the most important aspects of doing business and if you can speak to them in an open and honest way, then this is a good start to your business.
Trust should not be a by-word for naivety

 

[overkill04]

You make a good point sed2. If the arrangement leads to seat sales then there really isn't a point for the fee.

Thanks for the responses so far!

Specs, Intel Pentium M 2.16 Mhz
SW 2007 R2.2
1.5 Gb Ram
NVidia GE Force GO 6800 256Mb

 

[DaveVikingPE]

A box of cigars?

 

[Ashereng]

Lunch or dinner? Tickets to the game?

Or, do you mean a more formal arrangement?

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
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[overkill04]

I'm just looking at all the options. I think lunch or tickets works out if it's just a couple of hook ups. Anything more I think would have to have something spelled out.

Specs, Intel Pentium M 2.16 Mhz
SW 2007 R2.2
1.5 Gb Ram
NVidia GE Force GO 6800 256Mb

 

[GregLocock]

I'm a bit surprised by the stinginess seen here. If someone were feeding me useful jobs, and no duff leads, that I would not have otherwise got, I'd be thinking of a finder's fee of the order of 1-4% of the first contract. I don't know how you work out your cost of marketing, but it seems to me that if they are bringing leads in then that is less marketing that you have to do.





Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[pauljohn]

I agree. I would be prepared to pay 5% if someone kept supplying me with clients. Look at it this way - there will always be someone else that can do the job that your doing.

 

[ozmosis]

I'm not sure it is stinginess. Overkill04 hasn't spoken to his supplier about this. If the supplier has anything about them, then they would incorprate a % into the purchase price and if not, they should be saying "now then, my back needs scratching too...".
As a company who sells products through certain channels via distribution, we spend a lot of money in market communications with the sole aim of stimulating the market place. Once stimulated, we point them towards our distributors. The benefits that distributors offer far outway the costs of doing business direct. Of course, we make some money on the transaction to the distributor but this is accepted, this is business.
Overkill04 must be adding value to the chain otherwise the SW supplier would not be doing this. The value must be something the supplier cannot themselves offer.
If the process is working for overkill04, as in he/she's making a living, then I would say the next step is for him/her to discuss with them.
If you're starting out in business then the last thing you want to be doing is giving away your margin if you don't need to. It's not stinginess, just business sense.

 

[atlas06]

Let me get this straight, you get a referral that brings in work at $100.00/hour plus overhead, and you are not willing to pay out $5.00/hr for that work walking in? just by sitting your fat a** in there, you will not be satisfied with $95.00/hr instead of $100.00/hr?

The stinginess is mind boggling indeed. You sound like the kind of employer that does not even offer health inssurance to your workers. I thought architects were suckers, could Engineers be worse?

As Greg says, Cheers

 

[CorBlimeyLimey]

atlas06 ... WOW!

First of all ... who are you replying to?

Who mentioned $100/hr plus overhead?

No one mentioned not being willing to pay?

How do you know that whoever you are replying to has a "fat a**"?

You think the implied stinginess is mind-boggling? I find your assumptions to be even more so!



SW07-SP3