Commisions

Discussion in 'Business Operations' started by EliteImpressions, Nov 7, 2004.

  1. EliteImpressions

    EliteImpressions LawnSite Member
    from Jersey
    Posts: 215

    I have been giving local companies some of my business cards to hand out. I promised them 4% of the profits I make from customers that reference their name. Does anyone do this? And if so, how do you determine how much to give them. I was thinking that a set price of $20 or so per customer would be more appealing.
     
  2. Stuttering Stan

    Stuttering Stan LawnSite Bronze Member
    Posts: 1,504

    4% of "profit" sounds small. What if you only made $100 profit off a small job, $4 isn't much.
     
  3. HOOLIE

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    What sort of companies are you doing this with? Retail, contractors? Anyway, I don't know that I'd necessarily offer them anything. I swap business card with some of my customers who own their own businesses. Just do it to help each other out.

    If you were to offer some kind of finders fee, I'd make it a one-time payment, versus an ongoing percentage of profits.
     
  4. Lanelle

    Lanelle LawnSite Bronze Member
    Posts: 1,361

    That could become quite an accounting burden if it were successful---especially for maintenance accounts. How long would this 'finder's commission' be awarded? Seems that referring clients is a matter of good will and then occassionally remembering the business person who has sent customers to you is the way to go. Depending of the level of business generated by the referrals, a gift card to a local restaurant or tickets to a sporting event might be a nice 'thank you.'
     
  5. jerryrwm

    jerryrwm LawnSite Bronze Member
    Posts: 1,274

    One large LCO in central Texas would pay a bonus or basically a commission for finding them new business that signed an annual contract. They paid equal to one month's revenue from that account which amounts to about 8.3% commission. They paid out the commissions quarterly. Made sure that the new customer was going to stay with them and that there was no funny business going on.
     
  6. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,480

    as stutter said, 4% of "profit" sounds small. anytime you throw in the word "profit", it's open to interpretation. if you are set on doing commissions, i'd go with gross. the first time you send someone their check for 8 bucks that they think probably generated you thousands, will probably also be the last check you send them.

    tony
     
  7. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

    Hi EliteImpressions,

    Here is a quote from this post.

    "We give anywhere from 5-10% commission on accounts we get like that. Now most of those are high end accounts where we can just add that to what we would normally charge and noone knows the difference. I get with individual managers when I can and cut them checks 3 or 4 times a year based on grass sales from their referrals."
     

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