5% To The Interior Designer?

sage

About a year ago I started working with an Interior Designer on my Upscale remodels. There are some very obvious advantages to this.

The Designer Asks that she be paid 5% of my profit from any of her referrals that go to contract. Anyone else do this? I have been more than willing to accommodate because of the size of the jobs and the volume of jobs that I have closed on from her referral.
Recently I landed an upscale remodel and was asked by the homeowner if I could refer a good Designer. I referred my Designer, but then I was left wondering if I should be getting a 5% cut of her take. It would seem fare to me. What do you all think? I would love some insight on this and if I'm out of my mind for even thinking it please let me know.

I have not said anything and likely won't because she makes me good money and I don't want to ruin the relationship.

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Grumpy

If she's upfront about it and you can mark it into your project cost... why not? I pay my sales reps additional if their sales are self generated. I know what my average cost per lead is, and I basically just give them that much. They are happy I am happy. Win win.

If this person is giving you work, and these are her terms, and you are able to mark up your jobs to cover the loss, go for it.

sage

Grumpy, I agree and that all makes perfect sense.
What about when I refer her to jobs that I have landed. Should I expect compensation? I already know what I am going to do, nothing. I've never been greedy and don't want greed to screw with things now. But I was wondering if other contractors would expect their Designer to pay them % if they kicked them a referral.

__________________
-Lead from the front, or dont lead at all-

Peladu

Not answering for Grumpy, but this is what I say: Maybe not on the first one that you gave her, but ask her how it went and work into the conversation that you would like the 5% for any reffs following. Hell no, I don’t think that it would be considered greedy. Once she knows that you will need X amount of cabbage, she will just forward the cost to the customer. What’s good for the geese is good for the gander.

go dart

5% of profit is pretty cheap. I pay 8% of gross, but the jobs are usually large and noncompetive. I add 1/2 to the cost of job and fund the second 1/2 from profit. without the designer "bringing me in" i would of never got the call. also i've offered my designers for no fee. i just want them to keep calling

Mike Finley

How in the world do you work out 5% of the profit? Why in the world would anybody agree to that? What if you lose money, does she owe you?

I can see adding 5%, 10%, 2% whatever you want of the contract price but the profit?

Regardless you should be getting something. If she expects something for referrals to you, how could she not be aware that it is reciprocal? Is it 5% of the profits? Who the hell knows. What are her profits on a job? Once again basing it off profits seems unworkable to me.

Grumpy

What's good for the goose is good for the gander. If you refer her work then she should be paying you a commission since you are paying her one.

Hell in the grand scheme of things if you are both referring each other work back and forth why ask for anything from each other? That just complicates things!

sage

Mr. Finley - As far as 5% of profit, (What I think I will make * .05) added to what I would have charged if she was not involved. I don't know about you guys but I usually have a ballpark idea of how much money I will be making on any given job, otherwise why get out of bed. The % is not that hard to figure into the job cost. Also, this not something in writing, and she has not complained about a check or asked to see the numbers on any job (what she gets is what she gets). At the end of the day if I make $100.00 where I should have made $100k she gets five cold hard George Washington's.
What's her profit? Or how would we work it in the other direction? Hell if I know, that's why I asked you guys. She asked me for 5% of my take, that's what I've tried to do. Again the work and the money are good, real good so I probably won't ask her for anything as long as the referrals keep heading my way.

Grumpy- once again I agree, why bother if we are kicking stuff back and forth? I would rather call it a wash.

__________________
-Lead from the front, or dont lead at all-

sage

Oh Ya Thanks for all the replies!

Can some tell me how to quote, I'm completely Confuser Irritalit! Illegitimate, um illiterate. Thanks

__________________
-Lead from the front, or dont lead at all-

Teetorbilt

I work with many Designers and this has never been approached.

We charge independently but work together at our own rates. The ones that have marked me up get too expensive and fade away. Usually, they are the ones that overrated themselves from the beginning.

For remodlers, I can't stress knowing designers enough. The right ones will make your work glow and make for very happy customers.

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