Fair Kickback/Referral Fee?

[Twicepipes]

So I've been out hitting the pavement, cold calling etc. to drum up some business and have discovered many of the plumbers, electricians, carpenters etc. want some kind of kick back fee. Problem is...I really can't see going more than 10% on ANY job. It just seems pointless then. More than a few not only reject the 10% but also my minimum charges. Apparently I'm too expensive :rolleyes: And also, a 10% kickback for simply handing someone my card isn't worth it to 'em. Why are some people so damn greedy wanting something for nothing??? I'd rather just dump more money into direct mailers to get business. This business of knocking on doors is for the birds. Any thought's?

[stxrus]

i don't do referal fees/commissions, etc. but the 3 folks that send me the most referals i'll do a personal cleaning/camera for free, if they need it. i also refer them to clients so it's win - win.

steve

[gear junkie]

There's a business club I belong to and we give each other business for nothing in return. There's no costs or fees with this, we just have to have a specialty trade. No general contractors allowed. I have to refer hvac jobs to the other guy even though I do hvac myself. No one checks on us to make sure we're honest so I use "you give me a job, I give you a job".

[Service Guy]

I do my own advertising, and my repeat customers love me and give me tons of referrals.
I have given gifts to certain people who really gave me a lot of referrals, but I have never paid directly for them, and I probably never will.

[garager]

So, you get a $10,000.00 job out of me, now I get $1000.00 for setting you up with a possibility... :eek:

I never do this to anyone, but if you'd like to get me some MN Twins/Vikings tickets or a gift cert. to a restaurant, now that sounds more like it.

Never deal with a greedy person, something reasonable is the answer, shoot even a Thank You would do it for me.....

That thousand bucks can get you filled up at any gas stations.... :cool:

[Twicepipes]

Thanks for the replies.

As an employee, it seemed the standard was for the customer to call (contractor or not), I give price, I do work, customers pays. NOW, being a sheep among the wolves so to speak, these same people call and it's the other way around. Not all, but a good many of 'em. "Ah so you went out on your own" they say. I had a "friend", someone whom I went to high school with, played drums together, later to become a G.C., one time ask me what I charge. Then, in the same breath, ask me, "what's my price?". He wouldn't use me unless I did the work at his price. :mad:. Nice friend huh??

Honestly, I don't like the idea of kickbacks unless, like someone said, results in a bunch of guaranteed jobs. Even then, I like to do the work first then give a discount, not the reverse. Btw, I see a discount the same as a kickback. Either way it's money given away.
I've even had people tell me they can line me up work for a 50% cut. :eek::mad:
WTF?
The guy I'm getting (was getting) about 80% of my work from wanted to pull that 50% crap. I told him to pound sand. My truck, my tools, my gas, my labor, my money, 50% my AS$ :rolleyes:.


So, you get a $10,000.00 job out of me, now I get $1000.00 for setting you up with a possibility.
garager:

I'm a one man gig. I do drains and minor plumbing nowadays. A 10K job ain't happening for me. I'm talking about day-to-day service calls. A job that big would probably go back to you.

[ToUtahNow]

I use to have people ask me all the time if I was going to pay them a fee for referring their friends to me. I would respond by asking how much I should add to the friends job for the fee I was paying? That usually ended the discussion.


Mark

[Masterplumb]

I thought kickbacks are illegal? Silly me.

[ToUtahNow]

I took my contractors test almost 30-years ago but back then you were allowed to give a "gift" as long as it was not worth more than $5.00.

Mark

[shup]

Most good contractors will give you work without asking for a referral fee. People refer other people because they like to help one of the customers or friends. Even though, I offer referral fees between 5% to 10%, I get almost zero from the contractors I make this offer to. Although, I get many referrals from contractors who do not want a fee.

What kind of double talk is this.

[Twicepipes]

I thought kickbacks are illegal? Silly me.

I guess "kickback" is the wrong term to use. I'm not suggesting THAT kind of kickback, under-the-table deal with the intent to defraud the IRS or someone else.
I'm talking about legitimate referral monies as documented income. Last I checked that's not illegal. Maybe I'm wrong.

[NorthernIllinoisPlumber]

An electrician in my neighborhood has given me several referrals. All are friends of his, or neighbors of his friends. I am thankful that he trusts me to work in their houses. I delivered a 12 pack the other day with business cards...and I make an occassional phone call saying thanks. Other neighbors throw the word out, more 12 packs. No one has asked for a thing, I just feel its important to remember people who think highly of you.

[Devine Plumbing]

Never given one, never taken one. Keeps business relations simple that way.

[DUNBAR PLUMBING]

I sent some guy tons of work when I got busy with my 2nd biz,


still waiting on that percentage based check he told me I'd be getting for all the work he gained in that move.



Instead of money, I like to bank favors over cash. Seems to be very well thought out because then you can instantly obligate them to do something for ya because you lined their pockets.


That beats green bills hands down imo.

[garager]

I sent some guy tons of work when I got busy with my 2nd biz,


still waiting on that percentage based check he told me I'd be getting for all the work he gained in that move.



Instead of money, I like to bank favors over cash. Seems to be very well thought out because then you can instantly obligate them to do something for ya because you lined their pockets.


That beats green bills hands down imo.

That is how I like to do business. :cool:

[Plumbcrazy]

We do not pay kick back or referral fees. Nor do we accept them.

However, we offered a local drain cleaner all of our drain cleaning calls in return for a $10.00 fee per call. Our reasoning is this, if the call came from our yellow pages, it cost us to get that call. We answered the call, collected the info. (and qualified) the customer, then called him with the info. We followed up with customers to make sure they were happy. He did not want to offer anything to us- and this was a steady flow of business.

Instead, we invested in better drain cleaning equipment and now advertise that fact. We were trusting him with our customers and new customers, therefore, we felt entitled to something for the risk we were taking. along with our time in handling the call.

Hope this helps to see another point of view.

[garager]

We do not pay kick back or referral fees. Nor do we accept them.

However, we offered a local drain cleaner all of our drain cleaning calls in return for a $10.00 fee per call.

Call me stupid or something, this is the same but your just labeling it another name :D. $10.00, is very reasonable though.

[Plumbcrazy]

Garager - I separate the two this way.

No referral / kickback - If a customers asks "Do you know a good electrician?" I give them a recommendation and expect nothing in return. I don't call the electrician, I don't follow up with the HO etc. On a bathroom remodel, we recommend other trades and have them work directly for the HO. They do the same for us. No kickback, no referral. Working with other good trades is in our best interest.

Administrative fee- I am providing a service. For a new customer, they get set up in our system (+ I have spent time qualifying/diagnosing the call, making the appointment, follow-up etc.) The drain cleaning company will respond to my call for service much faster than if the customer called direct. For existing customer - the call is logged in their history. Drain cleaner works for many different plumbing companies so the chance of him recipricating is very slim. Without any sort of fee, it would not be worth our while to get involved and risk customer calling back with "Mr. Draincleaner was late, took too long, charged too much etc."

We have since found a drain cleaner who is very happy with this arrangement.

Hope you can see the difference between the two.

[DUNBAR PLUMBING]

I sent some guy tons of work when I got busy with my 2nd biz,


still waiting on that percentage based check he told me I'd be getting for all the work he gained in that move.



Instead of money, I like to bank favors over cash. Seems to be very well thought out because then you can instantly obligate them to do something for ya because you lined their pockets.


That beats green bills hands down imo.



Got a check last week for 5% of the calls I sent the company. Wasn't much but it at least pays me for time on the phone doing the shuffle.

He went on to add that they also got the job doing a replumb for a bakery locally.

Every little bit helps I suppose and the follow-through was a compliment to the relationship.

Now with others that I do referrals for.....no money. One fringe benefit was the use of a camera this past weekend. That had a tremendous value.


The other guy is a drain cleaner that gets my neck out of a noose when I'm too busy and willing to trust him with one my customers without losing them.


But I always feel that when I ditch a call, it's gone permanently. Not the end of the world but sometimes that has to happen.