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I think that his cut is about normal, I have heard of higher and lower. Both short and long term... I think you are going for a world of hurt, if you try to cu

I think that his cut is about normal, I have heard of higher and lower. Both short and long term... I think you are going for a world of hurt, if you try to cut him out later. My advise, in the contract with your friend make sure, that HE is listed as your customer (and not the end customer) and hence that HE has to pay you regardless of what the end customer does (i.e. he cannot say "I didn't get paid, so neither will you"). If he barks, then you have some room for negotiation... Also for a long term engagement 25% is a rather cheap sale (which is even free (in monetary terms) for you)!

thrwwwy123 7y ago
Thank you for the perspective, and for the suggestion regarding terms! Regarding 25% being cheap, can you clarify what is standard in this type of situation?
- svennek 7y ago
  I don't know of enough to know "standards", but I have heard percentages around 25% before. It might be a little on the high side, but everything is a negotiation ... And I know what it cost my company to sell long term consultancy contracts... Don't get blinded with what he earns. If he consistently gives you work for the next decade or so, be happy :) (That happen to a acquaintance of mine)
ddingus 7y ago
This: >My advise, in the contract with your friend make sure, that HE is listed as your customer That is a reasonable margin, but only when your friend is willing to earn it. Paying for value now will serve you later. Then, yes! Up your rates for work you source. Leave the margin there for work brought to you. Find enough, and form a firm. That is where the real money is for both of you. Seems like your friend is already thinking along those lines. Join him, bring others to the party and make similar deals. This will leave you and your friend as peers, a great basis for establishing a firm. Invest in your networking with your time freed up by other people taking on work. Bank some money so you can offer similar value to others.
- thrwwwy123 7y ago
  > That is a reasonable margin, but only when your friend is willing to earn it. Can you please clarify what you mean by this? Are you saying that his 25% is reasonable as long as he takes on the risk of paying me, regardless of whether the client pays or not? > Paying for value now will serve you later. Can you please also clarify what you mean by this?
  - ddingus 7y ago
    Yes. If it was just an introduction, that does not warrant an ongoing 25 percent. That kind of thing is what finders fees or referral fees are for. However, if your friend is leveraging his relationship with the customer, and he is carrying the risk, that does warrant an ongoing percentage. What I mean by both recognizing and paying for value serving you later is you will be participating in and learning from and how to do business at a higher level than just a simple client relationship. You too can cultivate relationships and you too can leverage them and carry risk and profit. Value takes many forms. And when you learn to see it, pay for it, later you also can do it, and ask for payment. Just the negotiation on this will benefit you. Make the case referral vs ongoing customer relationship and carried risk. You are happy to pay for the latter, otherwise there needs to be a cap on things as you will be doing the work, taking the risk and building the relationship. You should get all the income. Everything costs something. If he wants 25 percent, fine! You need to come to an agreement on what that pays for and all is well. And you need to make sure those things are real, so that your own time, appetite for risk and resources are otherwise free. If they are not, then your friend is not adding value and the 25 percent is a freebie, unreasonable. And maybe he can only add some value. That is fine too, maybe he takes 20 percent. That is the basis of negotiation right there. Think in these terms and more deals get made with better terms and fewer hard feelings, everyone adding value, doing work, making money. Make sense? Also, do raise your rates. Get a client that will pay them and then find a friend with whom you can make a similar arrangement. Take care of this friend to get your percentage cut. Does that also make sense as a future possibility? If it does, then you now have a basis for placing value on time you free up that goes beyond billable hours. That is the next step beyond mere contracting.
  - 7y ago

thrwwwy123 7y ago

Thank you for the perspective, and for the suggestion regarding terms! Regarding 25% being cheap, can you clarify what is standard in this type of situation?

svennek 7y ago
I don't know of enough to know "standards", but I have heard percentages around 25% before. It might be a little on the high side, but everything is a negotiation ... And I know what it cost my company to sell long term consultancy contracts... Don't get blinded with what he earns. If he consistently gives you work for the next decade or so, be happy :) (That happen to a acquaintance of mine)

ddingus 7y ago

This: >My advise, in the contract with your friend make sure, that HE is listed as your customer That is a reasonable margin, but only when your friend is willing to earn it. Paying for value now will serve you later. Then, yes! Up your rates for work you source. Leave the margin there for work brought to you. Find enough, and form a firm. That is where the real money is for both of you. Seems like your friend is already thinking along those lines. Join him, bring others to the party and make similar deals. This will leave you and your friend as peers, a great basis for establishing a firm. Invest in your networking with your time freed up by other people taking on work. Bank some money so you can offer similar value to others.

thrwwwy123 7y ago
> That is a reasonable margin, but only when your friend is willing to earn it. Can you please clarify what you mean by this? Are you saying that his 25% is reasonable as long as he takes on the risk of paying me, regardless of whether the client pays or not? > Paying for value now will serve you later. Can you please also clarify what you mean by this?
- ddingus 7y ago
  Yes. If it was just an introduction, that does not warrant an ongoing 25 percent. That kind of thing is what finders fees or referral fees are for. However, if your friend is leveraging his relationship with the customer, and he is carrying the risk, that does warrant an ongoing percentage. What I mean by both recognizing and paying for value serving you later is you will be participating in and learning from and how to do business at a higher level than just a simple client relationship. You too can cultivate relationships and you too can leverage them and carry risk and profit. Value takes many forms. And when you learn to see it, pay for it, later you also can do it, and ask for payment. Just the negotiation on this will benefit you. Make the case referral vs ongoing customer relationship and carried risk. You are happy to pay for the latter, otherwise there needs to be a cap on things as you will be doing the work, taking the risk and building the relationship. You should get all the income. Everything costs something. If he wants 25 percent, fine! You need to come to an agreement on what that pays for and all is well. And you need to make sure those things are real, so that your own time, appetite for risk and resources are otherwise free. If they are not, then your friend is not adding value and the 25 percent is a freebie, unreasonable. And maybe he can only add some value. That is fine too, maybe he takes 20 percent. That is the basis of negotiation right there. Think in these terms and more deals get made with better terms and fewer hard feelings, everyone adding value, doing work, making money. Make sense? Also, do raise your rates. Get a client that will pay them and then find a friend with whom you can make a similar arrangement. Take care of this friend to get your percentage cut. Does that also make sense as a future possibility? If it does, then you now have a basis for placing value on time you free up that goes beyond billable hours. That is the next step beyond mere contracting.
- 7y ago