Sales Commission %
 

Been wondering how the community has been handling this issue. I have many friends that sell for a living at a very high level. Different industries, but they have access to corporate clients that I would spend weeks/months trying to prospect. They can help me set up meetings to get my foot in the door. How do you handle a "commission" towards these sales people for intros?

Do you commission them on the first project only? For a year? Longer?
What level (%)? Flat fee?

I could see several different scenarios, each with their own problems. Thank you to anyone who can offer insight.

Re: Sales Commission %
 

It depends what they do for you, but for an introduction (get your foot in the door), a 10% finders fee is typical, on a first project, unless the 1st is so minor but leads to a major one after that.

Beyond that. A gift would be nice, if it turns into a regular client.

Re: Sales Commission %
 

10% would be appropriate after the client pays for the job, HOWEVER.......You need to set some kind of parameters with your "salespeople". By that I mean, are you going to give them a commish on EVERY job you book with that client, what if the client calls you and wants you to just scan some photos in and make a montage of some sort? Should the "salesperson" get a cut of that? If you're going to continue to pay the person a cut, how long are you going to do that for? Those are the sort of things you need to figure out before making the move. While I'm sure your friends are honorable keep in mind that friendship is friendship and business is business and there's an old saying...never do business with friends and family if you want to keep your friends and family. Just sayin' keep it simple and get it in writing.

Re: Sales Commission %
 

10% on the first project, unless there is some extenuating circumstance (as mentioned above).

Re: Sales Commission %
 

Don- I couldn't agree with you more, I have seen "buddies" almost come to blows as a result of this. Shooters who get the business, and editors who actually service the client [Blu rays, web compression, etc... all the back-side stuff that takes the bulk of the time].

Any thoughts about what a typical time period is? Also, what if your sales person gets you into an ASSOCIATION, where you go in and sell a bunch of video to their members. Would you commish back your original sales person? Of course the sales person's point of view is you wouldn't have gotten to the ASSN without them getting you into their door.

Thanks all for your feedback.

Re: Sales Commission %
 

Well the time period could vary. For instance, what if the client is one that wants a lot of video work done in the next 6 months and say it adds up to, oh I don't know. say 20K. Hmmm what to do? But what if they don't want a lot and the work is spaced over 12 months and it adds to 10K. Now in either case the money is fine, hell, give me 2 of each like that right? This is something that needs to be talked about and a line drawn before the work commences. As for an association well, there again what if the job you described comes in 18 months after the initial handshake or what if it happens because your friend the salesman introduced you to the leader of the association. I hate to say it but you need to use your own best judgment in this scenario and the best way to do that is know you friend and how the business would affect the friendship. Hard to say.

Re: Sales Commission %
 

I do the 10% thing because I'm a nice guy, and I like to show my appreciation for people who refer me business.

As far as a "fee" or a "commission", I think the onus is on the person referring the business to say what they want - in advance. I have had PR people in the past ask me, after the project was bid, shot, edited, and billed - where their cut was. If you want to get your beak wet, you'd better let me know so I can write it into the budget. I have told them NO in no uncertain terms, and told them if they want a piece of the action next time, they need to mention it first, not last.

And while I'm on the subject... my first "industry" gig was DJing weddings. Drag the turntables, amps, and these huge speakers out and do a 4 hour wedding reception. The pay was crap. But extra hours were where the money was - it billed at $150/hr - which worked out to $75 for you (the DJ) and $75 for the DJ company. I had, on occasion, negotiated extra hours at a little less than $150 - and when I turned in my money, they told me it was short. I explained to them we negotiated for the extra hour, and they explained to me that "we" were negotiating with "my" $75. So if I did the extra hour for $100, they made $75 and I made $25.

I have the same deal with my PR folks - I am happy to, on occasion, give a 5% discount, on your request, to meet budget. That does not reduce your cut by 5% - that reduces your cut by whatever dollar amount the discount is.

Re: Sales Commission %
 

I agree - negotiate up first. My biggest question is when does the "gravy train" stop. If a marketing firm introduces you to a client I have no problem paying 10%. 6 months or two years later are you still paying the 10%? I've seen it happen a million times where the client calls the editor directly to get a "recut" or something they need. The marketing company never touched the project - it was a direct deal, so why pay them? On the other hand, you would never have even been with this client in the first place!

I see both points of view, am I being silly?

Re: Sales Commission %
 

Hey Mike,
I don't think your being silly at all. This is a tough subject and frankly there is no cut and dried answer. I agree, I have never had a problem paying a commission to someone who is did a job for me, IE, intro'd me to the head of marketing of a fortune 100 and they've got a 100K burning a hole in their pockets and want all kinds of video work to get rid of the money so they can get more on next years budget. Don't laugh, it happens all the time (well, not to me but still) but when do you STOP paying the guy that made the intro or do you stop paying?
Case by case. No clear cut answer.

Re: Sales Commission %
 

I'm putting life into this thread because I'm considering hiring someone to do commercial sales (i.e. cold calls) I liked the point of making the life span of the commission specific, maybe 10% of the first contract. Even then, if you're blessed, it's good to take care of others.

Have to figure out the tax side of hiring someone, then figure out an employment contract. Good times, and people think it's all about cameras and glory.

Re: Sales Commission %
 

Do you have other employees? I'd consider hiring out creative before I considered hiring out the business side.

Outside that, what about 10% of the first project and 1% of further projects?

Re: Sales Commission %
 

50% to get you the first gig
but that's it - no more for subsequent work from that client.