Know-How Exchange : Strategy

Denise,

Like the saying goes "It's all fun and games until someone loses an eye".

This is so common, but putting things in writing prevents hurt feelings (even among small businesses) and economic hurt. I have several agreements..even with friends. The idea is that the 2 of us could get run over with by a truck and then it's left to the spouses to figure it out...not a good plan.

Try to look at it as a management fee. The primary company manages the relationship for both of you. For that "fee" they do all the work. You just provide the service. For the one in play, you can always raise your prices and offer to lower them if they'll drop the fee.

Michael

I pay and receive finders' fees from time to time, and here's my attitude toward them: I think it's worth, say, 15-25% of the fee to have someone else find the opportunity (at least in my business), so I'm happy to pay the fee. In fact, I want to pay as much as I can justify so that the other party is highly motivated to find new business for me.

Similarly, I would hope it's worth 15-25% to someone else to not have to prospect for new business, so when I refer a client, I expect to be paid that kind of finder's fee.

In both cases, renewals from the same client are usually at a lower rate, but not too much lower. I WANT others to refer me and I'm happy to pay for the referrals when they work out. And it works both ways, of course.

I recognize that ultimately the client is paying for the referral fee, but they'd be paying (indirectly) for my time prospecting and finding them in the first place, so it shouldn't really impact the total amount billed very much. (In some specialties you might want to adjust the percentage a little, but for marketing strategy, branding and positioning, I've found these referral fees to be quite fair.)

Anyone want to refer some business? I'll pay fair referral fees. :)