# GC wants referral fee



## HOT H2O (Sep 23, 2011)

I recently picked up a new General Contractor who has given me a few remodels, a code violation, and a slab leak over the past couple weeks, with a new home and some more work on the board. 

Tonight he calls me and says we may have another slab leak, will I call this customer of his. So I call, and go over to diagnose, and schedule the repair for tomorrow. 

Upon leaving, I called him to bring him up to speed, and ask if I am billing him or billing the customer directly. He said to bill the customer directly but to "add a percentage for him.... what ever you think is fair" 

It kind of caught me off guard, I said "ok" but I'm not sure what is "fair".

I don't want to insult him, as he has given me decent work. Has anyone been asked for a kickback like this? What is the customary percentage? Any thoughts? 

Thanks in advance.
Billy


----------



## Qball415 (Nov 20, 2010)

I would say percentage No! Gift card maybe! Thank you definetly!


----------



## Titan Plumbing (Oct 8, 2009)

Run it through him so he can make his "cut", which is BS to start with. Other than a "Thank you"...DON'T give him shiot. I guarantee he wouldn't give you a red cent for referring him a job.


----------



## PrecisePlumbing (Jan 31, 2011)

I give my gc that recommends me work 10% y'all may think that's high but i just put it on top of my price. He recommends me with flying colours so im guaranteed the work. He has done the same for me on a few jobs I've pushed his way when small jobs have turned into big ones.


----------



## Master Mark (Aug 14, 2009)

give him 50 or 100 bucks and leave it at that

tell him to kiss the blarney stones if that is not enough:thumbup:


----------



## HOT H2O (Sep 23, 2011)

I thought 10% and it's probably a $500 job. So like $50 is cool. The job is all labor, so it won't hurt that bad. I mean it's $450 I wouldn't have made if he called someone else. 

But if the next job is a $2K job ... or a $7K job, will this guy expect his 10%.


----------



## Qball415 (Nov 20, 2010)

HOT H2O said:


> I thought 10% and it's probably a $500 job. So like $50 is cool. The job is all labor, so it won't hurt that bad. I mean it's $450 I wouldn't have made if he called someone else.
> 
> But if the next job is a $2K job ... or a $7K job, will this guy expect his 10%.


How bout that intro that Mr. Biz politely asked for a few months back?


----------



## plbgbiz (Aug 27, 2010)

HOT H2O said:


> ...But if the next job is a $2K job ... or a $7K job, will this guy expect his 10%.


Yes he will. 

Very simple, if he wants to be the GC he gets whatever he can sell it for above his cost of hiring you. 

If he gives it to you and he does nothing, then pay him nothing. Paying him a commission opens Pandora's box. Part of that box contains the muddy water of an employee vs. sub relationship and the tax rules that accompany it. 

For crying out loud. The GC wants to make money even if he is not GC'ing. :laughing:


----------



## plbgbiz (Aug 27, 2010)

Qball415 said:


> How bout that intro that Mr. Biz politely asked for a few months back?


I forgot about that. :furious:

How about just ignore the GC like you ignored the request for an intro.


----------



## ChrisConnor (Dec 31, 2009)

One thing about a GC, no matter the situation, they act like they are giving you something.


I think that giving him a referral fee for a landed job can be an okay thing if it greases the wheel. What does it cost you to advertise to get a new customer, compare it to that.

Some service businesses give 10% to their referrer. I think this was discussed in a referral marketing thread a couple of weeks ago.


----------



## Tommy plumber (Feb 19, 2010)

Just tell him you'll give him a few bucks on the next job, you didn't make any money on this one..........:laughing:...and see how long you can keep telling him that......


----------



## RealCraftsMan (Dec 27, 2011)

Do you send him any work?


----------



## Dan (Nov 29, 2011)

We have had one company ask for a referral fee, they said 2 percent. I was glad to have them put a number out there first because i was considering 5. We do 2 pernt for the job directly associated with them and continue marketing to the homeowner.


----------



## swedishcharm21 (Oct 29, 2011)

Hot H20: How you handle this can depend on a lot of things. Fortunately, my business is always booming and a few years ago I made it a policy that we never sub contract our work, and we never accept sub contract work. We work directly with the HO or authorized agent. I do not have to sacrifice my rates so a GC can profit from me so I gain consistency. Not here at least, BUT what I do is "trade". This means if a GC throws me a job, down the road I send a job back their way when it comes along. I do not give "finder fee's" nor do I slice my rate in half so the GC gets profits from my plumbing so I stay busy is what I am saying.

Keep in mind what works for me may not work for you. Why I am at it, let me explain why i no longer deal with builders or GC's.

A common problem I had with GC's is when I passed inspection and money was due, I would here "You get paid when I get paid". That is where I had a problem. I would tell the GC "My deal is with YOU, NOT your client!, I need to be paid". I have the belief that a good GC knows how to get the proper down payment to pay his sub's when they are done and the GC needs to know how to manage their draws when they get them. Too bad it usually does not work that way.

Usually the GC will get a down payment, and be out of money when the sub's need theirs. Yes,they may end up paying you, but more times then none you will hear that classic line -"You get paid, when I get paid". Too bad I can't tell my creditors that line! Wouldn't that be nice?!

Not here buddy. This ole boy gets paid when the job is done and/or inspection is passed. At times it seemed that they were trying to pay me for my rough when they got paid for the finish. 

By the way, you gotta love it when something goes wrong between the GC and THEIR client, so now the GC does not get paid, then NOBODY gets paid! Have had that happen too. Besides GC's around here think you should be paid about $40/Hr regardless of how many guys you need working on the job.

I have yet to lose a single dollar since I have eliminated doing business with GC's


----------



## LEAD INGOT (Jul 15, 2009)

If the G.C. is running the project, and solicits your services, industry standard is 10%. Sometimes more, sometimes less. If it is your baby, tell him thank you for the refferal, and you will reciprocate in the future. What he is asking for is something for nothing, at your customers expense. He is only as good as the people he works with. Respect is a dutch door. If it were me, I would tell him I was uncomfortable adding a fee on my bill for him. More math for you, and your business. If he wants his cut, he can cut you a check when you give him the bill, and he can add whatever he wants, and handle collecting.


----------



## LEAD INGOT (Jul 15, 2009)

And I'm with swedishcharm. I have spent the last 3 years taking the GC out of the equation. My stress level, and my bank account are better for it.


----------



## ToUtahNow (Jul 19, 2008)

HOT H2O said:


> I recently picked up a new General Contractor who has given me a few remodels, a code violation, and a slab leak over the past couple weeks, with a new home and some more work on the board.
> 
> Tonight he calls me and says we may have another slab leak, will I call this customer of his. So I call, and go over to diagnose, and schedule the repair for tomorrow.
> 
> ...


I use to tell them "sure, how much should I tell your client you wanted?". They don't ask a second time.

Mark


----------



## Phat Cat (Apr 1, 2009)

LEAD INGOT said:


> If the G.C. is running the project, and solicits your services, industry standard is 10%. Sometimes more, sometimes less. If it is your baby, tell him thank you for the refferal, and you will reciprocate in the future. *What he is asking for is something for nothing, at your customers expense.* He is only as good as the people he works with. Respect is a dutch door. If it were me, *I would tell him I was uncomfortable adding a fee on my bill for him.* More math for you, and your business. If he wants his cut, he can cut you a check when you give him the bill, and he can add whatever he wants, and handle collecting.


A referral fee shouldn't be added to the bill IMO. If we paid one, it would be coded as a marketing or advertising expense. Similar to coupons, you don't raise your price to deduct the coupon. 

Anything under $100.00 is really cheap to acquire a new customer.


----------



## TX MECH PLUMBER (May 27, 2011)

If he wants a cut why doesn't he just sub you out and mark up what he wants! Isn't that what a gc does??


----------



## drtyhands (Aug 16, 2008)

Perfect timing for this thread.
Two months ago a shady contractor asked me to add $5,000 to a $16,000 proposal and he would get me in.I was told to keep $1,000 kick $4,000 to him.Told him no.Bummed me out.Shared it with another Zone member.


GC got kicked off the job today.

I've already crossed swords a couple days ago at the supply house with the other plumber who took the deal.

Wouldn't it be a shame if everyone under "Shady Construction" got screwed by the homeowner?


----------



## LEAD INGOT (Jul 15, 2009)

drtyhands said:


> Perfect timing for this thread.
> Two months ago a shady contractor asked me to add $5,000 to a $16,000 proposal and he would get me in.I was told to keep $1,000 kick $4,000 to him.Told him no.Bummed me out.Shared it with another Zone member.
> 
> 
> ...


 Hands, just keep doing the craft. Everyone that told me that if I kept working the way I do, I would be out of work. Well they are living under bridges. The customer appreciates honesty, and integrity. And I have a nice home, and a clear conscience. Care about the art and the customer, and you will never fail.


----------



## HOT H2O (Sep 23, 2011)

Qball415 said:


> How bout that intro that Mr. Biz politely asked for a few months back?


Sorry about that.... will do when I get in tonight.


----------



## RGPlumber (Jan 30, 2012)

When I first started out 5 year's ago I had a GC call me and ask me to price a new 3 bathroom cottage.
After I was done the estimate the guy tells me to deal with the customer and to tack on 10% for him. He wanted me to give him the money in cash when we completed the job and I said that I didn't think that that sounded right. None of the other contractors had asked for anything like that. I just gave them the Invoices and they paid me not the customer.
He told me " everyone does it this way" so I made a couple of calls and found out that it wasn't done that way up here.
When I called the GC back and ask him if I got him a job would I get a 10%? He started to laugh and told me no way. It don't work that way. I am a GC he said You are just a sub trade. I not so politely told him where to go and how to do it and now he can't find a plumber due to his greed.


----------



## Titan Plumbing (Oct 8, 2009)

I think "paying" a GC for a job is feeding the monster we all have come to dislike so much. Almost like paying extortion money.

I've never seen or heard of a GC around these parts that would "give" me money out of the goodness of their heart.

I recently picked up a "high-end" GC through doing work for his girlfriend. He has referred me to several of his clients over the past couple months. I have done over 6K worth of business for these NEW clients of MINE. Not once has the GC ever asked for ANY MONEY. When he sent the first couple, he called to give me a heads up, I asked if I was to bill him or the client directly...he told me to bill them directly. I said thank you. In the mean time, I referred a ground up job to him. 

In my humble country boy opinion, this is how it should be done. If you're paying a GC for his referrals you might as well be dealing with the mob or become a politician.

I don't advertise (other than my website) and I don't pay someone for the opportunity to bid on a job, along with 2 thousand other plumbers and I sure as heck don't pay GC's. Heck, I don't give them a large discount, if any when I work on their personal homes either.


----------



## user2090 (Sep 26, 2009)

I recently had a contractor offer me a finders fee for getting him in on a remodel I landed. He specifically asked how much to add to quote for a finders. Told him nothing I was making what I needed. 

Later I instructed the homeowner to go with another contractor. I don't allow my customers to get hosed by shady contractors of I can help it.


----------



## Phat Cat (Apr 1, 2009)

Referral fees in and of themselves are not bad. It starts to cross the line into shady when the customer unknowingly is paying for it.

If a mover and shaker came to me and said, I can refer a lot of H.O.s to you for a $25.00 referral fee, I would jump on it in a heartbeat. Not doing so is absolute stupidity IMO, and if you would not take the deal, you seriously need to consider if you are really a business man. $25.00 to acquire a new customer is a steal!

Our customer would NOT be paying that cost! It would come directly from our profits and coded as an advertising expense. It is NOT a kickback, nor any different than paying Service Ma$ic a referral fee. 

When we were asked by a contractor to mark-up a customer's invoice to cover him - the answer was NO! I can send you the bill and you can bill your customer however you like. BUT, our invoice is NOT going to show an inflated number. The danger is if the customer is unhappy with the final price, they are telling everyone "look what this plumber charged me." You end up with a bad reputation and don't have the additional money/rewards to show for it.

A good reputation is PRICELESS!!!


----------



## Widdershins (Feb 5, 2011)

It's pretty rare that I do any work w/out having a GC onboard.

Working re-pipes, remodels and new construction means somebody is going to have to go in and make repairs.

I have a few small time GC's who I use for patching up the damage caused by re-pipes and remodels on the smaller jobs I bring in. The thought of charging them a finders/referral fee has never crossed my mind.


----------



## Plumber (Jan 18, 2009)

I see absolutely nothing wrong with a finder's fee. Everybody is in this thing to make money and anybody who gets me work gets a slice of the pie.

It was the GC's customer and we all know the work involved in getting and keeping those rare birds. 

Also, it ain't rocket science; all he has to do is go to Love's site and many plumbers there will be happy to tell him how to do it.

10% is right and fair.


----------



## swedishcharm21 (Oct 29, 2011)

If for some reason you are considering doing business with a GC, ask them "What happened to your last plumber?" If you sense some bull**** story, You may even want to contact that plumber. A good GC may ask you for references, do not hesitate to ask them for some too! Remember you work for YOU! You do not work for the GC, you are working WITH the GC!

Before I cut off GC's altogether, I had one call me who was licensed, had a $50,000 truck, and was a seasoned veteran in his field. But I asked him why does a guy who has been around need a relationship with MY company!? He said his plumber "moved" and needed a new one.

After checking this guy out and talking to some friends, I discovered he screwed his last plumber for $8K! The GC also had 2 pending lawsuits against him as well! I ran into him again and told him straight up he was a snake in the grass and we will never do business together.


----------



## swedishcharm21 (Oct 29, 2011)

Plumber said:


> I see absolutely nothing wrong with a finder's fee. Everybody is in this thing to make money and anybody who gets me work gets a slice of the pie.
> 
> It was the GC's customer and we all know the work involved in getting and keeping those rare birds.
> 
> ...


Hi plumber: Glad to hear that works for you.


----------



## HOT H2O (Sep 23, 2011)

UPDATE:

So I run into the GC today while fixing the slab leak. It was right near the outside wall and took just a few hours to diagnose the job. Tomorrow I will return to complete the re-pipe. So I said, to him... what is your customary percentage? 10% ? He laughs and says "No *chuckle* more like 20%" I said I can't eat 20% on this job, I'm only billing a few hours to begin with" He laughs again and says that I don't have to eat it... just add it to the top of the bill. 

Now if he would have said this before hand, I probably could have inflated my rate to cover it, but I had already quoted my hourly to the owner. And of course she is the kind that counts the exact minutes....

Since they know my rate, I'm sure another 20% will be hard to pass off, so I will probably eat this one. And while I'd love to tell the GC to go screw, he's paid my mortgage for the next couple months with the work I've gotten in the past few weeks. 

BUT, this story does have a happy ending... while on their job, a neighbor called the number on the side of my van, and I got a 3 bath fixture set scheduled for next week. (not referred by the GC) 

God works in mysterious ways.


----------



## justin (May 14, 2010)

What exactly is the defenition of a gc in this thread? Im not a general plumber im a professional plumber. I give bookoo work away and have never even thought of a kickback. 

Nothing negative , i work for gc's. I do a goid job and you pay me. Now we both got our kickbacks. I dont fuqin lie to customers! That douche you are getting referrals from needs to have a good reality check. " ooh, hey im a gc " how hard is that ? Id blow his cover in a heartbeat . The home owner obviously trusts him . See what they think if they new the whole story. 

Dont ever take a customer for granted. They are not stupid . They always know honesty.


----------



## Phat Cat (Apr 1, 2009)

HOT H2O said:


> UPDATE:
> 
> Since they know my rate, I'm sure another 20% will be hard to pass off, so I will probably eat this one. And while I'd love to tell the GC to go screw, he's paid my mortgage for the next couple months with the work I've gotten in the past few weeks.
> 
> ...


Say your standard rate is $100.00/hr. and you add 20% fee = $120./hr. for G.C.s customer.

A few weeks go by, you get a call for some work, and quote them $100./hr. You show up to do the job and it's in the same neighborhood.  Neighbor then mentions she had seen your truck and that H.O. #1 raved about you.

Next day customer #1 calls, why did you charge me $120.00/hr. and my neighbor $100.00/hr.??? :furious::furious:

Ummm, uhhhhh, I had to pay the G.C. a finder's fee.

Customer: Where the hell is my referral fee? She only called you because you were in MY driveway and I told her how good I thought your work was. 
You can be sure you won't be working in MY NEIGHBORHOOD again! Click


----------



## tungsten plumb (Apr 15, 2010)

Referral fee:laughing: he should be happy you're keeping his customer happy.


----------



## plbgbiz (Aug 27, 2010)

justin said:


> What exactly is the defenition of a gc in this thread?


I am not allowed to define GC on the forum because I would be banned for using bad language and abusive speech. :laughing:


----------

