Last year somebody reached out to me and mentioned that they had a client they couldn't take on so they wanted to pass them my way. I got some basic details about the project and it seemed like we'd be a good fit for what the client needed, so I said send 'em over. The person said, “OK and then when you land the client, you can send me a 10% finder's fee.” Without thinking much about it, I agreed. After getting off the phone and giving it some thought, I wasn't really sure how I felt about it. On one hand, I may not have ever found that client, so getting 90% of something is better than 100% of nothing. But, on the other hand, the other developer was overloaded and wouldn't have taken the project anyway and I felt like they were just trying to capitalize as they sent the client away. Either way, I wasn't really happy. And, as luck would have it, it didn't work out and we didn't land the client so I didn't have to deal with it anyway.
I go to a fair amount of WordCamps around the country with a bunch of other WordPress developers. When hanging out and talking with non-developers, one question that comes up from time to time is “Who is your competition?” My answer is always the same, “Everybody here. And nobody.”
I'm currently fielding more project enquiries than I could handle. Hell, my current project list is already insane and I'm telling anybody who calls that I'm booked through the middle of next month. And when they say that they can't wait that long to get started, the next thing I do is send them an email with a list of other WordPress developers I know who may be able to squeeze them in. No request for a finder's fee. Just trying to connect somebody who needs work done with somebody who may have time to do some work.
This past week I had another request from somebody asking for a finder's fee. I politely told them that I don't offer a finder's fee and if they wanted to send the project to somebody else instead, that was fine with me. Once again, when I got off the phone, I stopped to think about the conversation. I'm wondering if I'm going about this all wrong? Am I missing out on a grip of cash by not requesting a finder's fee from people I send leads to?
Oh, right, I almost forgot… I don't care.
Here's my thinking; if you are only interested in sending me the lead because you're looking for a slice off the top as the client leaves your hands, do me a favor and just don't send them my way. If you spent time with the client ahead of time and helped them sort out their RFP, you definitely should be paid for that. There's even a word for what you did. They call it consulting. Consultants get paid. By the client. I am not your client.
So, yeah. After having some time to think about it, I'll just go on record and say, “No, I will not send you a finder's fee”. I'll have to list this post right next to my “No, I will not sign your NDA post”
I'm curious what you think. What's your take on finder's fees? Do you ask for them? Do you pay them? Leave a comment and give me your angle on it.
Hey John, I am totally with you on this. I have had the same happen, people want to build these so called relationships only to find out they want a finders fee, or referral percentage. I’ve even been asked what mine is? Which is zero.
I have been doing business for 24+ years and have never done this. I’m like you. I know good people out there that could use the work, and if something doesn’t fit in my schedule, or isn’t in my scope of services, well, I’ll give their name out, with no expectations. That’s how I have built some of my best business relationships, not on the almighty dollar.
But I don’t criticize anyone who does this. If it works for them, and that’s how they do business, all the power to them. It’s just not how I work, nor will it ever be. I’m in the mindset, “what goes around comes around”. And there is nothing truer than that with the WordPress community.
Great post!
Thanks Bob. I figured it wasn’t just me. 🙂
I also don’t criticize those that ask. I just think they may need to put some thought in to it before they ask.
I’ve been on both sides of that fence. Heck, I might have been the guy you were talking about a year ago. 😀
A year later, I pretty much agree with you. I’ve been smoked by the down side of a finder’s fee with someone who was lesser known to me. So, I am pretty much against the idea now.
What I do think is appropriate, and I’ve been on both sides of this as well, is a courtesy gift, either cash or something tangible (I got a Kindle Fire. I’ve given iPods.) to someone who hands you a big deal/client.
Saying thanks never goes out of style.
Doug, I am all for saying thanks to people who send me clients. I have a client now who has sent me 2 or 3 other small to medium sized jobs. While I haven’t sent him something tangible, there is one thing I haven’t sent him. That’s an invoice for a handful of hours that I would have billed any normal client. Have I gone out of my way to let him know that’s happened? Nope. I don’t think it’s necessary to step up and say “hey, I’m doing something nice for you.” He sends me clients, which is nice of him. I do some bonus work for him, which is what I feel is appropriate.
Oh, and no, you definitely weren’t who I was talking about. 🙂
I usually offer them when I think that it only has the potential to be a one-way relationship. If I refer work to others who do the same for me, I usually don’t.
I am with you on finders fees. I just went through the same thing a friend referred me to someone and he wanted a fee & I usually do not give them but I said I would give him something never agreed on an amount & when it came down to it he wanted 10%. I did not know what too say, I gave him somethin but not 10%. & We are not friends any longer which were we really friends at all is my question. I believe what comes around goes around.
I agree you should not have to pay a finders fee I send clients to other outfits and they return the favor.
we call it networking
I tend to agree that finder’s fees are not the way to go in the “referral business”. We should all be helping each other make it in life, not just wanting to take from each other while passing along unneeded or unwanted information.
But I do want to run a scenario by you wherein I believe a finder’s fee may be appropriate. That is when you are and have been doing business with a company for quite some time. You have a vested interest in growing your own company and you look out for business to help grow the other company in order to help both of you. Why would anyone do that? You ask?
This is something that is common in The Arts industry. A business may be a cultural center where performances, classes and workshops can be held. An Artist may need a place to bring his/her students or clients to for the classes in their program. The amount that the Artist charges the students goes to the Cultural Center and a 10% finder’s fee goes back to the Artist. This becomes a win-win proposition for all parties. This kind of finder fee approach is much more oriented to respect, responsibility and relationship, rather than, cash for goods.
Sure, there are always going to be exceptions to the rule. But really, just giving somebody a 10% cut of something because they mentioned my name, that’s going to be very rare. If the other person has a compatible skill set, I’d be much more inclined to work out a way for us both to work with the client. Perhaps that’s having them do a portion of the project that doesn’t fit our exact skillset. Or, even if it does, they could handle that portion while we handle the heavy lifting.
Totally agree with your first sentence! Makes no sense to me either. Wasn’t it at one time we used to acquire our earnings the “old fashioned way”? Didn’t we EARN IT? . As much as we wish it were so, there really are no free rides in life. 🙂
For me, referrals are open to more services, spend more and stay longer. So they are very valuable to my business. Because of this I tell those I trust in my network, “Hey, if you see a fit for Spark please send them along, I’ll be happy to pay you 10%.” It’s what I would pay a sales person and for a much better lead.
I don’t ask for finder fees and there are creeps out there trying to get finders fee. I stay away from that shade of business person. I enjoy connecting people, my network enjoys connecting people, even going to bat for the sake of another business. Those circumstances I have no problem sending compensation, or gift of appreciation. “)
I think that under the right circumstances referral feeds work. We get a LOT of word-of-mouth referrals these days, and even ones that seem like they’re hand picked still end up taking a lot of time to land, if they land at all. This is definitely one of those times where one size definitely does not fit all.
Im curious about the same thing. I have a bunch of clients I habe made connections with and spent time, done meetings with and did a project plan. I have used many hours that I coild have elsewhere in getting this client so I believe I should be payed a bit if I give it to a contractor. But maybe im mistaken, and as this is not a “finders fee” since I just did not find a client and send him over. They found me, then we went over the project, met a few times, and broke down there project.
From then on the perskn who is doing the work (in my case website) just has to code and design or w.e. I deal with ALL client contact and they dont have to worry about anythimg but the work. I tell them what the clients want changed and so on
But I guess this would be apples and oranges right?
Matt,
One thing you might want to consider is charging clients up front for research and discovery. Then, if you hand off the client to another developer, the client gets the benefit of having a documented plan for the project, and you’ve earned some cash for the work you did. Then, there’s no need to receive a finders fee. Thoughts?
I agree and not with you, how much cost an advertisement in magazine, radio or tv?
Usually these people searching (finders) are hired by someone else that you want to make an investment, but which in turn wants to see several investment options and the finders will show … in some times the finders not charge commission to the investor in other si (depends on the circumstances of the deal), honesty here finder works for not wanting a double commission.
Anyway, what you pay the finders really is to appear on a list of options that will be shown to the investor, I think it is best to negotiate, perhaps may be less the commission, the decision is simple for me, I request general aspects of investor and evaluated the project and monetary convenience, future, inclusive if possible make me partner with investor in this deal … in occasions I access to pay the commission to the finders, in others not, I believe the business that I have in my hands is valuable and ripped alone.
I think that all is negotiable between business man… This is my humble opinion … greetings
Im sorry for my bad english…