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Help Determining a Fair Commission Percentage
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Author:  Ric Hollander [ Fri Mar 28, 2008 11:04 am ]
Post subject:  Help Determining a Fair Commission Percentage
I'm in the process of finishing a build for a pro musician who makes his living selling his music directly to the public at high end craft fairs throughout the US. He is often asked questions by guitar players about his instruments and he will be taking the guitar I'm building for him to these events (I hope he likes it ;) )

He's expressed interest in selling my guitars to folks and I'm happy to get the orders. I want to offer him a fair commission to compensate him for his efforts. Has anyone had experience with this type of arrangement before and if so, can you please tell what you believe is the correct percentage.

In terms of volume, I'm a part time builder and would be very happy at this stage to keep things small and get a few orders a year.

Thanks for your help!
Author:  Michael Dale Payne [ Fri Mar 28, 2008 11:13 am ]
Post subject:  Re: Help Determining a Fair Commission Percentage
I am assuming you speaking of him referring clients to you and not providing guitars to him to sell IE consignment. Depending on the price of the commissions a 10% finders fee is not unreasonable or more if he is really out pushing you guitars.

But no matter how good your relationship with this person, avoid consignment guitars, especially ones that travel. Things happen; inventory gets stolen, damaged and or lost.

Consignment instruments in a shop is one thing. Consignment instruments with a traveling peddler is something else.
Author:  martinedwards [ Fri Mar 28, 2008 11:44 am ]
Post subject:  Re: Help Determining a Fair Commission Percentage
what Michael says sounds about right.

I'm a hobby builder and I put a flat top mando on Ebay every so often and it always seems to generate at least one commission.
Author:  Ric Hollander [ Fri Mar 28, 2008 12:07 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
MichaelP wrote:
I am assuming you speaking of him referring clients to you and not providing guitars to him to sell IE consignment.


Referrals only for sure! i.e. no consignment.

Thanks Michael for the feedback and the recommendation of 10+%.

Thanks Martin for weighing in as well.
Author:  douglas ingram [ Fri Mar 28, 2008 12:10 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
It goes without saying, but you also need a way to track the referral.
Author:  Hesh [ Fri Mar 28, 2008 1:13 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Ric buddy remember the robot in "Lost in Space" yelling out "danger Will Robinson...." Well you may not be old enough to remember that show....... :D But I am....... [headinwall]

Just beware that the offer to promote your wares happens in many lines of business and it is almost always, but there are exceptions, a tactic to get a discounted price up front on the guitar that you are making for the customer. The idea is that they will provide you with promotional exposure that you would not receive if they did not play one of your guitars. In exchange the customer wants a discount...... In addition, if this is correct it also denotes a price sensitivity that may be a red flag of things to come when money exchanges hands.......

The problem with this is that in many cases the prospective customer is offering to be in a position to recommend your wares PRIOR to knowing what it is like to really play one of your guitars day in and day out...... If you think about this and reverse rolls what does it say for the recommendation.....?

My suggestion for you is to be sure that you are very OK with the price that you receive from your customer at the point when the guitar is delivered and not have any aspects of the original transaction be dependent on a future ability to perform a service for you. If you receive referrals AND if the referrals are qualified for what you sell and what you charge - cool. If not at least you won't risk damaging a client relationship by expanding the deal into futures.
Author:  Terence Kennedy [ Fri Mar 28, 2008 1:59 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Here's another option. I've sold a number of guitars because of exposure at a well known store that sells my stuff and has it on their website. When I discussed a "finder's" type commission with the owner he mentioned 10% as common but said "Why don't you keep track of the amount and build me a guitar when there is enough". That might be an option for you. Every Pro needs two guitars.

Terry
Author:  Ric Hollander [ Fri Mar 28, 2008 4:28 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Hesh wrote:
Ric buddy remember the robot in "Lost in Space" yelling out "danger Will Robinson...." Well you may not be old enough to remember that show....... :D But I am....... [headinwall]


Hey Hesh,

Of course I remember Lost in Space! We're almost the same age (you've got a year on me old man :D )

All good points. Thanks! The price my customer is paying for his guitar has no bearing on any future sales help from him. In fact, we have not discussed the option of a commission for future sales but it's something I want to offer as he is really jazzed about the guitar I'm building for him. It could be a great opportunity for both of us. But your point is well taken as he has not had any first hand experience with this guitar. Any future recommendations will certainly be dependent upon his happiness with it. (Fingers crossed!!!)

Hi Terence,

Good idea! We've already begun discussing a possible 12 string in his future. ;)
Author:  Hesh [ Fri Mar 28, 2008 6:51 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Ric buddy it sounds to me like you are right on track with this. Sorry if I sounded like a nag........ idunno
Author:  Ric Hollander [ Fri Mar 28, 2008 7:18 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Hey Hesh,

No worries... All good...
Author:  Steve Walden [ Sat Mar 29, 2008 12:55 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Hesh wrote:
Ric buddy it sounds to me like you are right on track with this. Sorry if I sounded like a nag........ idunno


Sound like a hint to BillyT...................... laughing6-hehe laughing6-hehe laughing6-hehe :o
Author:  Billy T [ Sun Mar 30, 2008 11:42 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Attachment:
Zebra Hesh.jpg
Author:  Hesh [ Mon Mar 31, 2008 7:15 am ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Well I was waiting for this one - I thought you were going to turn me into Mr. Ed. So now I am a zebra...... :D [:Y:]
Author:  Steve Walden [ Mon Mar 31, 2008 10:57 am ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Billy T wrote:
Attachment:
Zebra Hesh.jpg
Magnifique! bliss

Now this is getting really off-topic! laughing6-hehe laughing6-hehe laughing6-hehe

Ric - sorry for the intrusion into your space. Don't you love this place?

Thanks for being a good sport, Hesh!
Author:  harmonist34 [ Sun Apr 06, 2008 8:44 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Make sure everyone involved understands the extent of his responsibilities before settling on a figure. If he's doing nothing more than advertising your guitars, a discount on the guitar you made for him is compensation enough in my book...maybe a 5% finders fee, if you want to play nice.

If he's going to broker the deal, including handling all shipping, money (credit card acceptance, etc.), customer service before/after the sale, then you've got a legit commission situation on your hands - 10% seems more reasonable to me there.

Now...if he's got skin in the game and is ordering guitars from you on spec for sale to interested parties, we're talking something else entirely and I think he deserves a good bit more than 10%.

Andrew Wright
http://www.guitarmatch.com
Author:  Jody [ Sun Apr 06, 2008 9:10 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
one thing I learned , lets say you agree on a percentage for reffering .... when does he get his 10%( or whatever )... I say when the guitar is finished and payed for in full... if you pay it up front or out of the first installment .. deals can go sour sometimes , and you lose ! Jody
Author:  McCollum [ Mon Apr 07, 2008 12:31 pm ]
Post subject:  Re: Help Determining a Fair Commission Percentage
Make sure that it's a direct referal ! I had a dealer that sold a guitar to a guy , then that guys buddy wanted one too and came to me first
the dealer thought I owed him a commission, I fired him that day!
Lance
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