Friends with another electrical contractor
- Thread starter zappy
- Start date
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25% for a referral seems a little high to me. If he is to busy or doesn't want to travel that far for the work, he is unlikely to get the job anyway so he sends a referral to you or the customer just keeps going in the yellow pages until they find someone to do the job. Before you decide what to do ask yourself "Would he do the same if the situation were reversed?"
growler
Senior Member
- Location
- Atlanta,GA
I wish I could find people to give me 25% of the money for finding work, I would never work again. That's more than the profit on most jobs.
There is nothing wrong with a little kick back but 25% is just plain greedy.
So what's fair?10% of the profit?Or just a set price per job.
- Location
- Lockport, IL
- Occupation
- Semi-Retired Electrical Engineer
I don't like the term, or even the concept of, "kickbacks." But if you friend finds work for you, it is not unreasonable to offer something in return. Something "in kind" would be best, meaning you find work for him from time to time. A piece of the action would also be appropriate, meaning that you let him do some of the tasks involved in the project, and pay him for those tasks. But a flat "finders fee" seems out of line, to me at least. Doing 100% of the work, and keeping only 75% of the pay, seems like a particularly bad deal. Even if he means that you send him 25% of the net profit, it isn't a good deal.
He keeps 25% of what net? gross? or profit? Most of our jobs produce a 7% profit, at the most. on an annual basis we are lucky to keep 2 to 3% 25% of gross is just crazy, and 25% of net would leave you paying him for all the work, don't forget you have overhead, and operating expenses! you can't just give up 25% of your revenue.
ceb58
Senior Member
- Location
- Raeford, NC
With freinds like that who needs loan sharks:-?
mikeames
Senior Member
- Location
- Gaithersburg MD
- Occupation
- Teacher - Master Electrician - 2017 NEC
Does he pay 25% of the materials? What if there is a loss does he pay 25% of the loss? I personally would not give any kick back. Instead I would remember it and throw him work when I could. If that's not ok with him then I would continue to be friends with hime but only rely on myself to get me work. At least when I do I keep all profit. Just my 2 cents
growler
Senior Member
- Location
- Atlanta,GA
What's he doing to earn his money?
1. He's providing a lead. Phone and address for customer wanting work done but job needs to be sold to customer.
2. He has already done all the leg work and has sold the work to the customer for a good price but just doesn't have time to do it.
3. He wants to be involved to the point of subbing the working out to you, he collects from customer and takes his chances, one way or the other you collect from him.
In scenario number one he has done almost nothing but in scenario number three he is the prime contractor.
There is nothing wrong with paying but make sure what he is doing is worth it to you. A lead is not worth very much but a sold job takes leg work and is worth more and if he is taking all the chances then that's worth even more.
What you should pay is something that's fair to both parties and something you both can live with.
I am assuming you mean 25% of the profit. Is he doing the estimate too? Either way, he is not a friend. I send work to friends all the time and have never charged a dime.
The only time I have ever done an arrangement anything like that was a design build that was designed, budgeted and gift wrapped for me with the understanding that I would share a percentage of the profits with the EC who got me the deal. Considering how much work he put into it, the deal was more than worth it.
bradleyelectric
Senior Member
- Location
- forest hill, md
The only way I'd do it is if I could tack the money he wanted on top of what I'd have charged to do the job anyway and still sell the job.
That would be scenario #2.
bradleyelectric
Senior Member
- Location
- forest hill, md
your time is worth money. So is his. If you can make what you want after paying him, it's like hiring a sales department.
kbsparky
Senior Member
- Location
- Delmarva, USA
He is wanting to act as a GC, but make you be responsible for all the liability. :-?
IF he wants to keep 25% then he should take the contract himself, and then sub-contract the job to you for 75% of the total. IF you are willing to do it for that amount, that is.
Otherwise, he is literally asking for a kickback, or acting as a salesman without the requisite documentation.
IF he wants to keep 25% then he should take the contract himself, and then sub-contract the job to you for 75% of the total. IF you are willing to do it for that amount, that is.
Otherwise, he is literally asking for a kickback, or acting as a salesman without the requisite documentation.
tonyou812
Senior Member
- Location
- North New Jersey
25 percent is a rip not to mention that you have to drive a long ways. I wouldnt go higher than 10-15 percent on the profit.
kbsparky
Senior Member
- Location
- Delmarva, USA
I have a similar but better arrangement with a local friend/contractor here.
When I am too busy to handle some jobs, I'll refer them to him. When he is too busy, he sends them to me. No money changes hands between us for the referrals.
I've gotten some good long time customers from this arrangement, and he has as well.
When I am too busy to handle some jobs, I'll refer them to him. When he is too busy, he sends them to me. No money changes hands between us for the referrals.
I've gotten some good long time customers from this arrangement, and he has as well.
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