Referral fees

[vwphone]

Wondering what you guys were paying in referral fees to those that bring you work. I have a telecom broker that occasionally brings me leads. If he brings me a lead that pans out, what should I pay him? Doing research has brought me no closer to an answer so I thought I would ask the question of my fellow business owners/phone guys.

What is the appropriate amount to pay someone that brings you work?

 

[JustAGlitch]

Typically we pay leads by a percentage of the deal depending on the Gross Profit Margin. So if I landed a job that lets say material cost would be $20k and I mark it up for material, labor etc by 18% over actual cost my Profit would be $3600.00. Then I agree top pay 10% of my profit margin as a lead which would come to $360.00.

This was a knock off of a formula back in the day where sales who worked for any company who have leads given to them got say 5% commission and if they brought their own leads to the table made 7% which allowed them to cut happy customers a deal for leads to be 2% of the total cost of the sale which had a great trickle down effect from receptionists and company owners on keeping the leads coming in.

I felt 10% of profit is a good lead reward but obviously you could dictate your percentage higher or lower to entice the lead provider and be fair. I would steer clear of setting a single lead $$ amount in case the lead didn't make you very much profit.

Hope this helps.



If It's Not Broken...Don't Fix It!

Stephen Webb
Norstar, BCM and IP Office Engineer