Help with contracts/subcontracting/free business advice

(23 Posts)
obliogada Sun 11-Nov-12 15:19:24

Another question! If I am offering to supply a product through my company (Someone who makes party invites and decorations would like me to promote them to my clients) how does that sort of business work? Do I decide what i can sell them to to my clients for then ask the supplier what she'd like me to pay her for them and just do it that way? Or is it just a straight percentage we decide on between the two of us (i.e. she charges me £.. and I add on 10 %) She's suggested 10 %, but I kind of think could sell them for way more than 10% above what she's selling them to me for!

And a cake maker is asking me to promote her work through my company too, but not sure how to deal with pricing..
And the products the first supplier makes have her website on them. Do I ask her not to print her website address on the ones she supplies through me? To ensure future orders come through me?

Himalaya Wed 17-Oct-12 22:52:34

smile good luck!

Xenia Wed 17-Oct-12 19:47:27

Yes, ask others how it works. In loads of sectors the contractor has no idea what they are charged at and all billing etc is in advance or after and not involving that person. However with children's parties in my experience the parent usually pays at the end of the party to the entertainer. You could take a risk and bill them after or ask for a deposit in advance BUT in reality you are more likely to get the money if you have the entertainer get it at the end or you or someone working for you turns up at the start or end to deal with that direct if that is practicable.

Himalaya Wed 17-Oct-12 15:29:53

Yes - the rate at which no one gets miffed is the right rate!

obliogada Wed 17-Oct-12 09:01:49

Thanks you two. Not sure how to play it. Xenia you say you agree with H but you're in favour of getting the highest markup (which i am in favour of too). Maybe I could get clients to pay me by bank transfer before the event, but I guess the natural thing is to pay a party entertainer at the end of party....
I have taken my son to many kids things where I'm sure the teacher os getting a low hourly wage, but the company is getting about £15 off each parent for 15 kids, so £150 for an hour! The teachers don't appear miffed!
Maybe I'll phone up Partyman type of companies an ask them how payment works,

Himalaya Mon 15-Oct-12 16:42:20

You also have to think about it the other way - if your clients were to find out that they could have booked him for half the price if they'd only picked up the phone direct, will they feel miffed/exploited? (however rich they are people hate feeling like they've been played for chumps)

You should set your mark-up at the sweet-spot that makes it worth your while and which makes your clients think you are brilliant and worth paying a premium for organising everything, and makes your sub-contractors value you and do their best for you, because you get them more steady work at higher rates than they could get themselves.

You don't necessarily have to tell everyone what the mark-up is but you should set it at a rate where you won't feel embarrassed if they found out, but which you could justify and they would say 'of course, she is worth it!'.

Xenia Mon 15-Oct-12 16:27:25

I agree with H. If you can get him to sign something that is better - just a letter or to reply to the email saying he agrees what is set out so much the better. You and I both have been charged out at double what we are being paid. It is not unusual. It is usual not to tell the person though, not their business. I would not be worried if a mark up is too high. However if he finds out and is cross then he might try to get business without you hence my suggestion you might want to say in the terms he will not steal the business. You need a way that the customer pays you direct and does not discuss money with him which should not be that hard - all payments to be done through you.

Some contracts with the customer even for things like provision of a gas repair man will say - give no money to the workman ever, all money to go to head office only presumably because some customers had been paying the man who then denied it and got paid twice.

Himalaya Sun 14-Oct-12 20:03:38

Or you just fix on a percentage and be straight with him that you will be aiming for getting him jobs at a rate of x (high) but night have to negotiate down to y (low), either way you get your % and he is happy to take the job.

You write up your basic terms and conditions and agree them with him (cancelllation, invoicing etc...) and stick it onto a standard email. Then everytine you get a job for him you send him a confirmation email with the standard terms cut and pasted at the bottom and at the top just the date, time and hourly rate for the job, on the understanding that this is 20% (or whatever) less than the client is paying.

You don't need an overall contract/standard rate with him.

obliogada Sun 14-Oct-12 19:49:00

Yes it is because he doesn't know the market and is undercharging, and because I have the marketing skills and contacts to help him appeal to a different, less price sensitive group of customers than he currently serves.
But I want to try out the higher price first to make sure my customers ARE happy to pay it. So maybe I could creep his fee increase up once I know I can get the price I think I can get?

Himalaya Sun 14-Oct-12 19:33:07

Obliogada-

If you can think of a number that doesn't make you worried that is the right number!

Think about why you think you can charge more than Mr X is currently charging - is it because he doesn't know the market and is undercharging, is it because you have the marketing skills and contacts to help him appeal to a different, less price sensitive group of customers than he currently serves? It's probably a bit of both, hence why you should split the fee increase with him in some way that will make it worth both your while to continue in the relationship long term.

obliogada Sun 14-Oct-12 19:17:11

Oh dear I'm back to being worried about how to go about it now..

Himalaya Sun 14-Oct-12 19:16:51

Appologies for the tweeness with the buttons. I have no idea what the going rate is for party entertainers.

Himalaya Sun 14-Oct-12 19:06:13

The most important thing is not who is paying who (I.e whether he pays you a fee, or you charge a percentage) but that the rate that you offer represents good value for your services.

If you are worried that if he or your party clients found out the size of your cut it would be embarressing then you are charging too much. There is no magic number - as you and Xenia say sometimes an employer or prime contractor may take 50% of the hourly rate charged to the client and no one feels peeved - but this is because the organisation is providing something valuable between you and the client - brand, risk mitigation, the time and risk it takes to put the project together etc...More usually an agent will charge 10 or 20 % - more than that would be seen as price gouging - it's not good for business in the long run (because when people find out it backfires).

Say your guy charges 100 buttons, but you think your clients would happily pay 150 buttons for an entertainer. So you charge 20% of that and make 30 buttons, and he gets 120 buttons. He is happy that you have got him more work at better rates, so he doesn't resent your cut. Meanwhile you don't have to explicitly tell your clients that you are getting 30 buttons, as long as they think the overall service is value for money, but you do have to feel confident that if they did find out they would think it worth it for the convenience, seamless organisation and and quality assurance of your "brand", and they wouldn't think it worth their while to cut you out.

20% may not be the right number - the right number is the one you don't feel embarrassed about on either side as a fair price for the added value you bring.

obliogada Sun 14-Oct-12 18:37:10

Thanks Xenia it's great when something that seems so incomprehensible is made clearer by talking to others on here.
Is a letter dated as good as any contract?
How do i handle the thorny issue of what to say if he asks how much I'm charging on top?
Thanks Margo the partyman website you linked to is doing the same sort of thing, subcontracting all those various services I guess. Except mine will be way classier!! wink

Xenia Sun 14-Oct-12 16:53:42

Prime contracting just means exactly what you said really. You have the contract with the customer. You take the hit if that customer does not pay you. You then subcontract the work to him so you have a contract with him.

I would just write it from my head really covering things like what you pay him, when you pay him, that he must turn up on the days and times agreed, that you can give him say [ 2?] months notice or he you too on either side to bring it to an end, that he must not receive money from the clients and a few other things I mentioned above. You could try google searching example subcontract or freelancer contract perhaps or you can put the work up for tender on peopleperhour and see what people bid to provide it for you.

" I'm subcontracting to you at a rate of £... per party; does that suit you? Payments will go through my company and I will deal with all promotion, advertising. You can remain self employed." Yes you could say that. That makes it clear exactly what you are proposing.

obliogada Sun 14-Oct-12 16:23:06

Ooh goody I was hoping you two would say that! I was thinking no agent charges more than about 10 or 20 % and I want to charge more! Because I can! I'm sure he's going to ask me how much I charge, but how can I tactfully explain to him the situation? I could in a very light hearted way say "So long as I get you tons of work, what do you care?!" Smile sweetly...
How do i descrive the situation. I'm subcontracting to you at a rate of £... per party; does that suit you? Payments will go through my company and I will deal with all promotion, advertising. You can remain self employed.
Of course he's free to up his fee any time he likes if he feels hard done by and I guess I'm free to say Yay or Nay to that.

It's true I never gave a toss how much the company were hiring me out for in the past, as long as I was getting what I felt was enough. They are the ones with all the Uber rich friends and clients, so it was just great that they were giving me the work. And I guess that's the case here.

I wish i could clone him actually as he's great. But i do have a few other entertainers. Even if I'm not actually organising the party, purely providing him as an entertainer, then It's still fine that the Mums go through me to get to him I guess?

What is Prime contracting Xenia?
Can u link to anywhere that might give me a sample letter that u recommend I write to him. Sorry i am total novice at contracts.

How would I describe the arrangement to him so it doesn't sound too offensive and greedy?

I love the Pop up Banner idea Margo! And the balloons thingy. I was gonna get him to pop a flyer in each party bag.

MrsMargoLeadbetter Sun 14-Oct-12 16:03:07

Sorry I misunderstood your post a bit.

I thought you came across him in your work and he was either a) casually asking for recommendations to the mum's you deal with or b) he was looking for you to help him with his marketing as a discrete activity (so outside of what you currently do).

As you are the events organiser (which you did say!) then I would suggest you want him as an option in your menu of services. He then charges you a fee per party, which ideally will be reduced from his rate card on the hope that you'll be bringing him lots of new business. You then add your cut on top to charge the client. What you pay him isn't anyone's business other than between you and him. I would see it as him delivering services for you for your clients. So sub-contracting as you say.

Being his agent might put too much pressure on you to find him work? And if you want your business to grow I am guessing you want to be able to offer your clients a range of entertainers? You be aware of them, but a popular agency around here is www.thepartymancompany.co.uk/

If he isn't good at promoting himself, I would question how good he is at handing out your cards but I guess you have nothing to loose

The most marketing savy entertainer I saw put up his pop-up banner with his website on before he set up, and then he gave all the kids a balloon at the end with his flyer thing hanging off the end. We were in no doubt how to get in touch with him!!

Not sure if that is any help.

Xenia Sun 14-Oct-12 15:45:16

Ob, you would make more money your way round. You are then prime contracting. He gets a percentage. It's fine that way round.

I hadn't really realised he was an entertainer. So you find people who want parties - you charge them any fee you like and he is the entertainer. That's a really good way to do it. You probably need to make sure they pay you in advance or on the day rather rhan him in case he goes off with the money./

I am charged out at twice what I am paid for some things - I was sent paperwork by accident. It doesn't matter if you feel youare getting enoughj.

Can';t you just ensure the people pay you and tell them to deal with you for all money things and then you pay him separately. Might even be worth your turning up on the day to get the money if that is the way it is done to avoid him knowing.

I would tell him it's a great idea, that you will find parties and ensure he is booked through you as entertainer. Have a one page letter to him you both sign saying he is paid X per party, that he is working for you as your contractor/supplier, that he will turn up on time, not cancel and all that commonsense stuff, that he will not approach your customers direct or steal them from you. You might want to say if he is going to do a party then he will do it through you or he might not accept that - he might just wantr to do th3e ones you find for him on your basis but others who approach ihim direct he continues as now taking the fee. The letter would also say he's self employed and pays his own tax (presumably he does not have to charge you VAT). You might say you will only use hiim and no other entertainer but agian you may not want to agree that.

obliogada Sun 14-Oct-12 15:38:36

Hmmm interesting. For some reason i totally imagined it the other way round, i.e. I deal with the Mums and take the money and pay HIM a fee, rather than him dealing with them then paying ME a fee. I guess cos Im good at talking people into having him as an entertainer and he's not. Also if he has my business cards then he hands them out at parties if any Mums enquire, and in that way any future parties come through me, rather than going through him and hoping he gets back in touch and gives me a fee. I'm not expecting him to be exclusive to me either.
Then folks think they have to contact Razzle Dazzle parties (or whatever my company name is, just made that up to remain anonymous!) in order to get him for their kids party, rather than just getting his mobile number and dealing direct.
What are the pros and cons of both approaches I wonder.
One of my main worries is I know I can charge twice what he charges, so how do i get around the embarrassing issue of either paying him what he wants and pocketing half shock or paying him loads more than what he's asking?
That's when I started to think it might be sub contracting rather than being his agent as when I work for a company ( in a totally non related field) they charge me out to their client at LOADS more per hour than the actually pay me. Can I do the same in this instance or will I just piss everyone off? I never feel pissed of with the company that hires me cos I think Oh well the have the millionaire clients and I don't so fair enough..

Xenia Sun 14-Oct-12 15:17:34

Good advice,. In my view (2) would not be employment as just one of a number of different clients. I thnk you need to find out what he is offering first.
He wants you to find customers for parties. If you do that he could pay you a % of the party fee which he receives and yes you need some written terms about that - when does he pay you, paid when paid or whatever . As MrsM says you might however prefer to have some kind of fixed fee too.

Some agents paid commission are also paid a monthly retainer a fixed sum whether they generate business or not. I doubt he would want to do that. If he pays you commission you are his agent. The people you find contract with him. If you are paid a fixed fee per party instead you are still a kind of agent. In both cases is more self employed income for you. You might want part of the agreement that for every party you find he will recommend you as the photographer or to provide other services to the party people.

obliogada Sun 14-Oct-12 14:29:36

Thanks Margo.. I'll look at that forum. I'm not sure what you mean by
2) He pays you an hourly rate and you get commission, you then become his employee or at a push a self-employed person on a contract.??

If he's doing a party for me, why is HE paying mE and hourly rate? Am I being dim? The I'm working for him? What, finding him parties?

Hes not gonna be my only source of income, and there are other party entertainers that have asked me to find them parties too, so I need to know how to deal with them too.
My supply of Mums I know directly may not be ginormous, but I know groups of Mums in about eight or nine large private schools, so hopefully they can spread the word round their schools and obviously as the kids grow up the next lot of 6 year olds will be wanting him at their party etc.

MrsMargoLeadbetter Sat 13-Oct-12 17:24:27

I would try www.ukbusinessforums.co.uk/forums/ lots of knowledgeable types on there. If you don't want to be identified use a nickname, lots of people on there post in a version of their co name. I have two user accounts, one anon one for anon/or silly questions and then another to give out relevant advice in my co name.

I think there are a few options:

1) You find, he pays you a finder's fee. Question is, is this a % of the value of the party to him or a fixed fee?

2) He pays you an hourly rate and you get commission, you then become his employee or at a push a self-employed person on a contract.

3) You go into some sort of partnership where there is a party package which includes you both and you work out the money based on who is doing what, including marketing it to mummies.

I think 2 sounds like the best option as it means there is some guaranteed income for your efforts. It sounds like you need cash asap.

I guess you also need to think about your supply of mums you know. Will they all go for the same entertainer? I just know in my circles people try to go for somebody different? Once your supply has gone (which might be larger than I am imaging) what will you do then?

Not sure if that helps.

Good luck

obliogada Sat 13-Oct-12 08:48:08

Do any of you freelancers know a good source of free business advice for start ups (apart from Mumsnet smile )?
If you search my other threads I have a conundrum. I've been asked by a party entertainer to get him more parties, and he's actually amazing , and I know a zillion Mums so i think ti could work. I work freelance as a party organiser, though TBH so far it's been doing the photography for them and decorating the venues. But he wants me to get him more parties, and I don't know whether that means I'd be his agent or I'd be subcontracting to him or what type of contract/terms I should ask him to sign, or how much I should take on top of what he wants paying, etc.
I am recently a single mum with huge bills left by ex so need to get business like quick! Any ideas on these issues? Or ideas where i can go to get advice?
I'm in London
Thank u.

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