Cut for a referral?

[bewaretheblur]

Howdy POTN Peeps...

I have a situation on my hands. My good friend is getting out of the photography business... He's been in it for years and years and happens to be a highly respectable, renound photographer in the northeast. I've been training under him for the last two years and have only started taking my own weddings in the last year.

Well, he called me the other day and excitedly told me that he wanted to make me a deal. He would refer every wedding/event/etc. that he gets in the future for a cut.

Well, he named the cut, and I feel like I'm majorly getting ripped off.

So, without letting you know the amount, what would you say would be a fair cut for a referral? I mean, I refer weddings that I can't do all the time to other local photographers, for no cut at all. Now it's a little different with this guy, because he's so well known and will clearly get a LOT more requests than I would. I'm okay with him getting a little off the top as a result; but what percentage is fair?

I'd love to hear your thoughts. Thanks, folks.

[Karena]

I have a friend that is a photographer and we refer one another for commercial shoots which is mostly what I shoot at the current moment. We take 10 percent off the top and give to one another if the referral books.

[jessiper]

Honestly, it doesn't sound like someone I'd want to work with.

[notapro]

I had a photographer ask me to work for him doing weddings for his studio (after some training obviously) and I've decided that's not what I want, but I was planning to offer him a 10% finder's fee for referring inquiries to me. I thought that 10% was fair... enough to be worth him sending them my way, but not so much that I'm bankrupting myself.

mind you, I'm thinking in smaller numbers, so the say $150 incentive that I'm thinking would probably represent a smaller percentage for you. I guess I'm saying that I think $150 is a fair amount!

[Nan08]

Honestly, it doesn't sound like someone I'd want to work with.

second that.

if he wants that much and you guys get in a little issue down the road because of this, i don't even want to think what he might say..

i say just work hard and if your style is good enough, it'll pay off eventually.

good luck!

[cdifoto]

I wouldn't pay him for referrals. I'd pay him for bookings. But not a lot. 5% maybe or a flat fee.

[picturecrazy]

Wow, I have a circle of friends whom we send clients to all the time... no cut whatsoever.

Now, it's different because this guy is no longer working, but that doesn't mean I'd send him lots of money his way. 10% at the MOST. If not, then I'd just find my own bookings. Get a good rating on google and you probably won't even need his help at all.

[S.Horton]

Guess the % of your time that you spend finding a firm prospect, that's the max % to pay.

FWIW, in the consulting I do for a living, the best firms neither pay it, nor offer it, on the theory that it complicates everything over time.

[bewaretheblur]

thanks for the input guys...

yeah, he originally said....


....


50/50.

I said, "I really don't feel comfortable doing that. I definitely wouldn't take anything less than 75/25, and i'm not even super comfortable with that."

He then gave me a big shpeal about how he's worked hard over his career to be able to get these referrals to give, and how that should count for more than just pocket change. He said 60/40, I said no way, and we could talk about later in a few weeks.

The more I think about it though, the more I'm with you. He wouldn't be doing a THING besides telling people my phone number... it's true that I wouldn't get the gigs if it wasn't for his referral, but that's not worth a quarter of the profit. I think I'll go back with 10%, and just be ready to not get the referrals. I'm getting plenty of work on my own anyway...

[cdifoto]

He wanted 50% just for passing your number? No way in hell...that guy's a scheister. I wouldn't even give someone like Yervant or Buissink 50%.

[bewaretheblur]

He wanted 50%? No way in hell...that guy's a scheister.

well, i AM new to the business... and we are good friends...


... oi. maybe I'm just naive.

[cdifoto]

well, i AM new to the business... and we are good friends...


... oi. maybe I'm just naive.

Anyone who wants 50% of your cut is no friend. He, of all people, should know that 50% is just outrageous.

[Karena]

50 percent? Wow.. what a scammer. No way in this world. Like I said.. IF a referral pans out and becomes a paid booking, I give 10 percent. Never have I given more than that and never will I either.

Seems like he wants out of the business but to still make enough money to live comfortably. This MIGHT be okay if he was providing the business, providing the equipment and paying travel costs, maintenance costs, upgrading fees, etc. Then, it would be like he was outsourcing his business to you but a referral? I would not give him 25 percent either. HE has NO investment in it at all. You have tons of investment in and it's wear and tear on your equipment, car, etc.

[cdifoto]

Exactly. The guy wants to live off you.

[bewaretheblur]

shucks... you guys are just confirming what I was worried about. I thought to myself "This seems insanely unethical, but I guess I'm new to the business and don't understand how these things work."

I guess I understand more than I think.

[picturecrazy]

50% is insulting and ridiculous. You'll put in tons of hours and investing in equipment. How about he pays YOU $500 per wedding he sends you because you're keeping his name out in the world.

[restech]

hi beware

how about you propose to him instead of percentage, you sell to him your service. And he could make his own 'profit'.

Let say that you want to charge $1000 per wedding and he could sell that to other for $ 1300 and he takes the $ 300.

But yah the drawback is, you can't put your price on your website.

[Karena]

hi beware

how about you propose to him instead of percentage, you sell to him your service. And he could make his own 'profit'.

Let say that you want to charge $1000 per wedding and he could sell that to other for $ 1300 and he takes the $ 300.

But yah the drawback is, you can't put your price on your website.

You've completely lost me here.

To the OP: Don't get taken advantage of this way. You can do better on your own, trust me.

[bewaretheblur]

yeah, i thought about that... not to mention that I started talking about how much I wanted to charge for the DVD etc, and he said "Oh no way... we're going to charge more than that."

Ugh. I don't want someone else telling me how to run my business... I'll charge what I want to charge. Don't get me wrong, I appreciate what the guy has done for me, but he's just not being reasonable. It's not his business, and it's not going to be.

[jessiper]

Anyone who wants 50% of your cut is no friend. He, of all people, should know that 50% is just outrageous.

My thoughts exactly.

[cdifoto]

My thoughts exactly.

Great minds think alike. And then there's us.

[Nan08]

If he's a real friend, then he won't even ask you for referral $$...

[tlc]

if he's getting out of the business, then i dont think he should get any amount of referral.

[thebrewer]

Can he guarantee a certain $$ per year in 'referrals'?....... probably not

If he can guarantee x00,000 per year it may be worth you while, but I doubt he is able/willing to do that.

Tell him to enjoy his retirement.

....and get your website working if you want to do business.

Rich

[Wazza]

Looks like he's retiring early, to live off your hard work!
I say 0-10%! (tim has referred a few to me, but generally I've been busy, as not a full time pro - and recently moved as well, so pretty much turning everything down) - 50% is a joke
What has he done to deserve that? Sit at his email inbox waiting??

Either way, I wouldn't even compromise now, even if you could get him down to 10%. Walk away now, and let things build up naturally in your own time.

[Banbert]

50% is a joke and if someone had asked me for that I wouldnt entertain any further discussions with them ..... I can however think of one situation where 50% may be worth while. If your currently charging $2,000 a wedding and this guy can send you brides willing to book you at $10,000 a wedding then its worthwhile doing.... but I doubt thats the case eh ?

[tmonatr]

I, also, don't agree 50% is fair. But, Banbert had a good point. If you are suddenly dealing with more wealthy and freespending clients?? Also, if your "friend" is as reknown and influential as you say, he could possibly cause you problems if you don't agree. He obviously feels you are indebted to him, and maybe you are to a degree. Pretty tricky situation. (guess you already you that, though, didn't you)

[cdifoto]

if your "friend" is as reknown and influential as you say, he could possibly cause you problems if you don't agree

That's blackmail and/or coercion. It's illegal. The mafia uses those tactics.

[Robert16]

Am I getting this? This guy is quitting the wedding photography business but will send all prospective clients to you for half of what you earn from them as their photographer? Not a bad retirement plan! This deal sucks

[cdifoto]

You can bet your ass he's trying to set up other photogs as well. He doesn't want to provide referrals out of respect for your work...he wants to be a booking agent. Think about it. He gets 5 photographers. He keeps them shooting every weekend. Even if they charge $2,000 per wedding, he gets $1,000 x 5 each weekend. That's $5,000 in one weekend just for passing out your cards. The more photogs he "refers" and the more those photogs charge, the more money he makes.

He'd make more money "referring" than he would have ever made shooting for himself. It's not a retirement. It's a business shift.

[bewaretheblur]

I don't want you to get the wrong idea here though; the guy isn't getting out of the business hoping to retire... he's a missionary, and is moving out of his house into a camper to go around and teach the gospel all over the US. I believe really strongly in his ministry, and want to help him be able to do it,

SO that's why it's so hard to just blow him off... because he obviously isn't going to have any income other than what people are able to donate to him. I want to help his ministry; but at the same time, I don't want to be taken advantage of.

I really appreciate all of your thoughts. Thanks folks.

[cdifoto]

I don't want you to get the wrong idea here though; the guy isn't getting out of the business hoping to retire... he's a missionary, and is moving out of his house into a camper to go around and teach the gospel all over the US. I believe really strongly in his ministry, and want to help him be able to do it,

SO that's why it's so hard to just blow him off... because he obviously isn't going to have any income other than what people are able to donate to him. I want to help his ministry; but at the same time, I don't want to be taken advantage of.

I really appreciate all of your thoughts. Thanks folks.

My former preacher was almost busted for a timeshare scheme.

[bewaretheblur]

hahaha, I can understand how instantly when some people hear "preacher" they think "scammer," but I have known the guy for something like 8 years now. It's not like that at all... I think he was just thinking he was diong me a HUGE favor by getting me any clients at all, and he just wasn't really considering the standard business practices.

Oh well, it's no big deal.

[cdifoto]

You're fooling yourself. If he was just as naive as you are to standard business practices, he wouldn't have argued with you about the percentage and gone on his schpiel.

[Robert16]

It's still a crappy deal though. I understand that you would want to help out a friend but half of what you make? Anyway, the ball is in your court. Best of luck

[kona77]

This is the preacher's outgoing message on his answering machine.

Hi, you've reached XXXXXXXX Wedding photography. We can't answer the phone right now because we are currently emptying our honeywagon from our camper. As soon as we level the tires I will have my workhorse call you right away.

Although this may be far from the truth you need to see what a prospective client sees. If you want this to be YOUR business you need to make it YOUR business. Getting referrals is great but coughing up half of your income is ludicrous. I would tell them that you appreciate and respect his friendship but when it comes to business you must keep it as business. Any suggestions from him is helpful but you would like the opportunity to grow YOUR business, not keep his business going. Ask him what he would do it the situation was reversed.

Friends and business are tough sometimes.

[MrsOpie]

I would say 10% if the referral books the wedding with you. No point in paying over money for a referral if you didn't get the client anyways.

[Bailly Photography]

No way is 50% worth it, especially if he is not doing anything aside from passing on your phone number. I would say 5-10% of Booked weddings would be reasonably fair and that would be only for the contract fees, any after sale of prints, cds, ect. is all you.

[airfrogusmc]

shucks... you guys are just confirming what I was worried about. I thought to myself "This seems insanely unethical, but I guess I'm new to the business and don't understand how these things work."

I guess I understand more than I think.

When shoot weddings I used to work with wedding consultants the norm was 10 - 15%. Think of it as an investment. It always killed me to write the checks to them each month but most of the brides were pre sold by the time they came to see me so in my opinion it was always worth it. Its just business. This is only if they book....

[amonline]

Depends on how much work he can/will send you. I think 15% is fair for his name/refers, but I'd lock a time frame in, such as one year max and then break it off with him. Once word's out that he's not doing it and you've been his refferred source, he'll be out of the picture and you can do it without him anyway. 15% for a year is no big deal. ;)

Having now read the third page, it doesn't sound like you'll need that full year. ;)

[BJ Pulsipher]

If he is leaving to be a missionary, how is going to get you referrals? The amount he requested and his manner does not strike me as ethical. A finder's fee perhaps for every booking but I believe that you can manage your business better than that. Tell him that you are friends and you want to remain friends.

[tim]

10% of profit max IMHO, and I wouldn't pay that myself. Doesn't sound like a good friend to me.

[JJacula]

Two per cent. No more.

[LBaldwin]

OK there are several thing going on here. What he is proposing is actually a partnership or a contract 1099employee.

Refering you clients is one thing. But if he intends to BOOK them for you he is acting as your agent. If he wants a 50% cut of the profits then he needs to be responsible for half the risk too.

50% of the total profit after CODB may actually make sense if the referals are high end and the customer / dollar average exceeds your current level by that extra cost. In other words if he increases your gross by a total of 200% prior to expenses then it will be a profitable venture. He becomes your marketing director / sales manager. The rub is this, I would set a base line amount that he MUST meet on a quarterly basis prior to any disbursement of funds to him. Make him be responsible to you, make sure you hold the reins and write the contracts. He will be responsible for showing the clients your book, making the sale, signing the contract, collecting the funds, and delivering the finsihed product. Sales goals must be met or no funds will be givin out. Or you could use a sliding scale, so many dollars in will get this percentage, the more sales in, the bigger his cut. If he does not sell he gets no commision.

Photographers who have gallerys that show their prints give up 50% all the time. The same with some types of agencies like corbis or getty etc. Of course you will need to provide him the proper sale materials, books, business cards and contracts etc.

To the nay sayers that have weighed in, if I marketed / sold for your business and increased your overall sales from 30,000 to 100,000 gross per year what would you pay?
10 points? I won't even get out of bed. So any increase would be good.

Les

[nursek]

wow...this thread is insteresting...so it's been a week or so...did u talk to your so called "friend" and what is the outcome? did he scoff at your counter offer? as you should have when he suggested 50/50!?

cathy

[nanodog]

It's funny, I'm coming to this from a totally different angle.
I'm in real estate where broker to broker referrals are very common.

It seems to me that he's had you under his wing and worked with you right along. It also seems that he's built up a good book of business that he's willing to pass along for an anuity.

The business questions I have are:

Am I so busy as to turn down referral work?
Can I be profitable and Pay the referral?
Is there a good chance of more business down the road because of these referalls?
Years ago I owned a bicycle store, as part of the purchase there was a line item called "goodwill". I paid tens of thousands of dollars for the item because there was an assurance that I would have people walking in the door willing to spend money with me, that "base" allowed me to grow the business and was worth what I spent.

[Ulfius]

Think of it this way. What if you had booked a date with one of his referrals, then another non-referral couple calls and wants the same date. He just cost you 50%. Will he reimburse you or take off his fee? A referral fee of 10% (15% max) makes it a little more tolerable if he's getting you work that you wouldn't have gotten otherwise. If he gets higher fees for you, then you both benefit because you're paying him a percentage and not a flat rate. Oh, and put an ending date on the contract (you're going to write one if you go through with it aren't you?) so that after a period of time you can reevaluate the agreement and end it if you so desire.

[Big Mike]

Maybe this is why they say not to mix friends and business.

[tofuboy]

I don't see anything unethical in what he's proposing... just maybe a little greedy. But on the other hand, as a few others have pointed out, if he's able to book high end clients who are paying a lot more than your normal, then you win and he wins. And then all those guests at the referral weddings would now potentially be going through you instead of through him.

Don't think about it as losing $x,000 per wedding, think about it in terms of whether taking referrals from him (at whatever percentage) will help or hurt your yearly income.

It may be a good opportunity to grow your business...

[takeyourpic]

Are you sure this guy doesn't work now for Bella? This sounds similar to what they do.

[stathunter]

I have several wedding planners who funnel business for me. I have never paid a referral fee but feel it is to the point where I need to get them large Christmas gifts.

[liza]

Spend your money on advertising, education, and equipment. And tell your "friend" to shove it. Hasn't he ever heard of professional courtesy?

[JMHPhotography]

10% is my limit... You want to make more.... do the work yourself!