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Party Planner Wants A Contract. - Page 3

post #31 of 36
So for the people who have these arrangements, what is a standard fee? Percentage? Is that before or after expenses? 10% off the top is a big difference from 10% of the profit.
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post #32 of 36
There really is no "standard" fee, it depends on the cost structure of the partner and market value for the services they provide, just like when pricing cakes. One example of a mutually beneficial situation would be a baker selling a cake as part of a planner's party package for the same price as a direct sale (or slightly less considering the direct customer acquisition cost is $0), with a markup applied by the planner to the entire package.

A partner requesting upfront payment or agreeing to a deal without sampling your product are red flags.
post #33 of 36

I don't know about standard percentages, but I do know it is usually of the gross for referral fee to avoid any confusion or discrepancy as to the profit. You don't want people arguing over what job costs are and whether something should be put into a cost for a certain cake or spread over several cakes (say you need a new pan for a cake that you purchase and take out of the profit for that cake to which you pay a referral fee, but then you have a new pan you can use for other cakes and it wouldn't come out of the profit for those cakes which you may or may not be paying referral fees on.)

 

 

Take for example a franchise (like McDonald's) in order to use the resources, name, training tools, etc. each franchise pays McD's a % of their gross, not net. 

 

I am using super vague examples and guidelines as I do not have any contracts for referrals, but know of people that do for different industries. 

 

Also, if you do have a contract for referral fees payment for the referral should ALWAYS be after you receive payment in full from the client, never up front.

post #34 of 36
Quote:
Originally Posted by jason_kraft View Post

There really is no "standard" fee, it depends on the cost structure of the partner and market value for the services they provide, just like when pricing cakes. One example of a mutually beneficial situation would be a baker selling a cake as part of a planner's party package for the same price as a direct sale (or slightly less considering the direct customer acquisition cost is $0), with a markup applied by the planner to the entire package.

A partner requesting upfront payment or agreeing to a deal without sampling your product are red flags.

Yes, customer acquisition is $0. That is the point of a referral fee. Essentially you are paying a referral fee instead of spending your money elsewhere on marketing. 

 

If it's not for you, then it's not for you. Especially if you get most of your work by word-of-mouth and/or are not looking to expand your business.

post #35 of 36
This is what I have come across although I'm no expert! 10% or 15% for a high value spend. This is on the total price of the cake, not the profit.
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post #36 of 36

This just sounds suspicious to me.  Like you make this huge cupcake order, get paid, pay this referral fee, then the payment for the cupcakes disappears.  I would not do this, sounds like a scam.  But I may just be distrustful, especially of craigslist.

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