Charging referal/introductory fee to client for candidates?

[PharmaContractor]

Thanks for your comments everyone.

Well, yes, I would provide them with some form of insurance by not invoicing them on day 1 of the contractors start date! The trams can be lethal over here for most newcomers! So would invoice them monthly, pro-rata like.

As for the actual fee, perhaps a bit high for some. Think their employees get an introductory fee of 5k for employee referals.

Thanks,

PC

[SueEllen]

Your figures are very high. I know people who provide a service like that and they charge much less.

If you are willing to provide a factoring service where you pay the contractor weekly/monthly within 7 days and the end client will pay you for all the contractors you introduced 30-90 days later then your fees are fair. Otherwise you need to charge less.

[monobrow]

Well I have seen some of the ridiculous prices they have been paying for some external vendors and some of the sh1te CVs, so am thinking they may consider it. It all depends on what they are getting from the agencies.

Thanks,

PC

As much as i'm not a fan of agencies, they do more than introduce a CV. They have the contract between your ltd co and the client. They pay your ltd co (and if you opted "in" guarantee it) and other stuff, so to say... The agency takes Xk and i'll take Yk minus a little bit and bring great value for just introducing is not apples with apples. What happens if the contractor walks out, falls ill, gets hit by a bus within the first week? are you going to give your client the 10k back?

You need to be far more realistic. you could start by looking at what they pay their internal staff for referrals. That way you also have a credible comparison.

[PharmaContractor]

Well I have seen some of the ridiculous prices they have been paying for some external vendors and some of the sh1te CVs, so am thinking they may consider it. It all depends on what they are getting from the agencies.

Thanks,

PC

[ratewhore]

The figures do seem high.

On a general note, only you know the relationship you have with the client and how trying this approach will affect that relationship.

[d000hg]

If you actually charge the other person out to your client (i.e you hire them) then it's a sensible business proposal. Charge what you charge and pay them less.

If it's simply a 'finder's fee' then who knows. I don't think I'd consider it reasonable to go above about £1k if ALL I do is pass them some CVs.

[PharmaContractor]

Hi there,

Recently managed to get a 12 month contract direct with a client. No middleman shenanigans so am lot$ better off $$ wise. They have just started advertising for another role (same position as me) through the usual agencies. These agencies are charging a much much lower daily rate that I am on, so they are likely to be making €20-30k over the year.

And speaking to the hiring manager, they are usually sent a bunch of CVs that simply should not have been sent to them in the first place. I have a number of people that I could personally recommend and have been thinking about having this as another ‘offshoot’ from my main consulting services. I don’t however wish to have the admin and general hassle of an agency setup (i.e. I don’t wish or have the time to become a semi-agency) so was thinking of charging the client a one off introductory fee and then allowing the candidate and client to negotiate a daily rate independently of me.

I’d like to think that the client would favour any candidates that I could refer to them (simply because I have personally worked with them), but obviously it would have to be in line with what most agencies are charging them.

So I am thinking of charging the client a referral fee of €10k for a 12 month contract followed by €5k for any contract extension thereafter. This is likely to be cheaper than any candidates that the agencies come up with and I’d introduce better caliber candidate too.

Just wondering what people’s thoughts are on this approach. As I see, it’s a win situation for all:

- Contractor gets to deal with client direct (and as I would be making less ‘commission’ than an agency) the contractor has more bargaining power than they would through an agency.
- Client gets a contractor whom I can personally recommend and may also be paying less (again, as I would be making less ‘commission’ than an agency).
- And obviously I’d be making money for referring people that I personally have worked for and know are able to do the job. Less risk for the client.

Comments/thoughts welcome!

Is my approach flawed? Charging too much?


PC