Referral or finders fee
- Thread starter rlsaloga
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We pay 10%, or we give a flat price to contactors and then they can put whatever they want on top.
One contractor we work for a lot always adds a good 20% at least. But he pays us on the spot and he pays us well, so he can make anything he wants.
imagineero
Addicted to ArboristSite
I don't pay for referrals, I also try to avoid sub contracting to builders, landscapers etc. Doing so only builds up their business, generally at the detriment of your own. You need to build a name for yourself, not ride on the coat tails of others. Also, if I pay for a referral, I need to either make less profit, or charge that customer more than I generally would charge. I'm not happy doing either of those things.
Shaun
Shaun
mckeetree
Addicted to ArboristSite
I know where you are coming from. Letting contractors put whatever they want to on top of your price is just plain bad business.
imagineero
Addicted to ArboristSite
Totally agree. If you are charging a fair price for your service (and you ought to be!) and the principal contractor marks it up by whatever percentage they feel like, the customer is rightfully going to expect to receive a service which is commensurate with the dollar value they have been charged. In short, you will either have to provide a higher quality of service than what you have charged for (at a loss), or receive a bad reputation because your principle has profited from your work while adding no value.
Shaun
mckeetree
Addicted to ArboristSite
Exactly.
I'm not talking about working for the contractor - i'm talking about working directly for the property owner/manager and giving a finders fee to the contractor who referred me to the job. Thanks.
mckeetree
Addicted to ArboristSite
You talking kickbacks here or what?
I completely disagree.
We have three contractors (all landscapers) who sub-contract us regularly and have done so for years, and we make very good money with them. They have high-end clients and they do all the clean up, we just do the take downs. And that we help build up their business is great - they help build up ours. We all make a paycheck and everyone is happy.
There is no "detriment" going on. What is going on is employment and a paycheck for everyone. I don't see the problem.
As I said, we give 10% at least for the first job. If the customer turns into a regular client, we don't give 10% in perpetuity, but we do figure out a deal so everyone is happy.
Business is business and we make sure all parties walk away with a dollar and smile. It's good business.
As I said, we give 10% at least for the first job. If the customer turns into a regular client, we don't give 10% in perpetuity, but we do figure out a deal so everyone is happy.
Business is business and we make sure all parties walk away with a dollar and smile. It's good business.
Thank you. I agree.
imagineero
Addicted to ArboristSite
I guess we've got a different opinion there. There are two ways of looking at it - one is that by subbing for them, you are getting work which you otherwise wouldn't have won. The second, is that if you weren't subbing to them, you could have bid against them and built up your own company. By subbing to them, it's ethically very hard to win future work from their customers in future, or referral work from those customers since they are the principle.
Partly it depends on how big the market is. If it's a small market, you really can't afford to be working for others. On the other hand, if it's a big market, why work for others anyway? You could get your own jobs, and either offer the customer the same work at your price (without their markup) and thereby beat them on both quality and price, or you can compete at a similar price point and make more profit yourself.
I used to do some of that type of sub contracting, but the more I thought about it, the more I figured I was better off building up my own business. There are so many downsides to sub contracting - you can't compete against your principle, they are marking up your work, they're in charge of the job, less chance of getting paid, if you do a lot of work for them you may become dependent and in a weak bargaining position etc. The only reason to do it, is if you can't get enough work of your own.
On the other hand, if you enjoy subbing for others, maybe I should start a huge advertising campaign in your area. I'll sell the jobs, you do the work, and I'll take 20%. You provide everything, and I'll tell you the address and collect the cash and give you your share later. Sound fair?
Shaun
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mckeetree
Addicted to ArboristSite
Shaun, what you are trying to do is talk common sense to that guy...and he ain't got any.
futbalfantic
ArboristSite Member
I believe two different things are being discussed here. Working as a sub-contractor and a referral fee. Valid points on the sub-contracting. Why work for someone else and take a cut from your profits when you could cut out the middle man. (but then again works real well for home building). As for referral fee (referral bonus is more accurate), that just makes good since. The landscape guy, handy man, etc. tells a client a tree looks suspect, or the homeowner wants a tree down and asks the afore mentioned. The afore mentioned calls you to set things up with the HO. Job goes well, HO is happy (new future client), you give the afore mentioned a referral bonus and he is happy as all he had to do was call you and get free money, on top of that he found the HO a great tree guy a which earns him brownies (more future work) so he remembers you which opens your potential clientele that much more. Don't see how that is a bad idea.
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imagineero
Addicted to ArboristSite
They are two different subjects, but closely related in my mind. Offering a referral fee doesn't have all the downsides as subbing, but in terms of price, in order to give the referral fee you still must choose between either offering the customer a fair price and working for less than a fair price yourself, or overcharging your customer so that you can still get paid your normal price. Neither of those options appeal to me.
Maybe it's a cultural thing also... it seems to be common practice in most parts of the states, but here in aus less so. Giving a person money to refer you seems to imply that you need to pay them to get the work, and that if you didn't pay them, they would refer a different contractor. That isn't a quality referral in my mind. I get referral work from time to time, sometimes from related trades, and sometimes from other tree companies who were either too busy or couldn't do the job for some reason. I also give referral work to others. In all cases, no money changes hands. I would only refer someone who I feel works to the same standard as I do, because by referring them they are somewhat representing me. If they do a poor job, it will reflect poorly on me also. I also use sub contractors from time to time (chipping, stump grinding), but don't generally markup their work.
Shaun
Maybe it's a cultural thing also... it seems to be common practice in most parts of the states, but here in aus less so. Giving a person money to refer you seems to imply that you need to pay them to get the work, and that if you didn't pay them, they would refer a different contractor. That isn't a quality referral in my mind. I get referral work from time to time, sometimes from related trades, and sometimes from other tree companies who were either too busy or couldn't do the job for some reason. I also give referral work to others. In all cases, no money changes hands. I would only refer someone who I feel works to the same standard as I do, because by referring them they are somewhat representing me. If they do a poor job, it will reflect poorly on me also. I also use sub contractors from time to time (chipping, stump grinding), but don't generally markup their work.
Shaun
treeclimber101
UNCLE BUCK
I don't pay anything ........ I give them my price then allow them to sell the work , if they get more money for it that's fine , but I would never pay someone to "allow" me to work . There pay is showing there customers they provide someone of a different trade for excellent work ,they shine on that alone . My business is 100% referral based , I do work for huge landscape contractors and some small ones as well , I don't expect monetary return for a referral either it all washes out In the end
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Completely agree, building a name for yourself should come first!
Blakesmaster
Addicted to ArboristSite
I don't call it a fee and have no percentage base but if it's another contractor that turned me on to the job I always try to put a little something in their pocket. More of a tip. 50 bucks may not be much but they can take the wife out for a few drinks and know that I appreciate the referral.
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It's good to have a lot of opinions.
Actually, we do exactly what Treeclimber101 does. The contractor calls us, we give a price, and then he marks it up as he sees fit. I really don't care what he charges as long as we get paid. Only once did I hear what he charged over and above. We gave an estimate of $600 and he called the customer right in front of us and said he could get it done for $800. Fine with me.
And the customers we get from our contractors are not people we necessary would have got anyway. But through the contractors we get work, we get paid, and everybody makes a dollar. And we make good money off those jobs. The landscapers always want to use their own crew to clean up, so we don't need the truck and chipper, we just knock it down, buck it up, and go for coffee.
I sense hostility in your post and I really have no idea why.
We get along with the contractors we work for, we also get along with the other tree crews in the area. We keep our work attitude low stress and we're not at war with anyone. We all work, we all get paid, and we all try to get through the day in a good mood.
We leave the stressed out "Gotta make the maximum bucks or else!" stuff to others.
treeclimber101
UNCLE BUCK
I don't care if I estimate the job at 1800 and the scaper gets 5k for it , I say that because I did a day cleanup for a scaper charged exactly that and he charged the management company 5500.00 and they paid happily .
