Sounds like a good arrangement for you if you want to handle the account
management, billing, etc and there's enough $$$$ in it for you.

Not sure why he should be able to collect 12% for doing nothing other
than a referral, however if you're comfy with the arrangement there's
nothing wrong with it as long as you make enough dollars to make you
happy and he brings you additional customers and remains active with

He's relying on you to be honest. He's also trying to make a passive
investment in you :-)

The bigger issue is if you have to hire additional helpers down the
line, should he get a piece of that ?

Not sure unless he's your full business partner :-)

Remember there are no FREE lunches unless you agree to it :-)

Richard Schoen
RJS Software Systems Inc.
"Get the information you need. Now!"
Email: richard@xxxxxxxxxxxxxxx
Web Site:
Tel: (952) 898-3038
Fax: (952) 898-1781
Toll Free: (888) RJSSOFT

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Today's Topics:

1. Compensation for Referrals (Brian)


message: 1
date: Wed, 28 Nov 2007 12:57:32 -0500
from: Brian <system.i.lists@xxxxxxxxx>
subject: [Consult400] Compensation for Referrals

I would like to hear some opinions regarding compensation for referrals.

A former IBM Business Partner I used to occasionally work with on a 1099
basis has contacted me with an immediate opportunity to provide services
to one of his clients. He wants to turn over complete control of the
account to me and in exchange he wants me to pay him a flat rate for
each hour I bill to the client. This flat rate equates to about 12% of
the hourly rate that will be billed to the client and stays the same
regardless of the number of hours billed. He's also offered to do this
with his other clients when/if they have a need for services. I can
accept these terms but I have no experience with an arrangement of this
nature so my first question is does this seem fair to both parties? Is
this the customary way for handling this type of referral or are there
better alternatives?

Feel free to contact me off-list.




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