Does anyone pay referral fees? Is it a percentage or a flat fee?
Referral from who?
If you are talking about the fee a venue charges to "allow" a vendor to come in, then what I did was just pass it on to the bride .... explaining to her WHY she was paying it. Example: One place I catered to a LOT charged $300 for me to walk in the door. I billed it right on my bride's invoice as "XYZ VENUE ACCESS FEE: $300" and I also explained this was part of the cost of catering at that place and my pricing was not structured to eat that cost. Anotehr place charged 10% of the catering bill. So my bride who had a $4000 catering bill ALSO had to pay $400 on top of it to cover "ABC VENUE ACCESS FEE: $400".
If you are talking about, for example, a wedding planner who wants a referral fee to send you a bride looking for a cake, I never paid those. A very close friend who is a professional wedding planner tells me that LEGIT planners do not operate that way and she highly recommended that I stay away from anyone who did. I worked with a number of planners so it's not like she was trying to steer me just to her or anything.
Bottom line .... if someone charges you above and beyond for something, then it gets passed on to the bride. It's the cost of doing busienss at that venue or with that planner.
And don't kid yourself .... I was VERY up front with the bride on why she was getting charged thsi fee. you'd be surprised how many had no idea their vendors were being high jacked this way. More than one was mad because the venue's policy was costing her a few hundred or even thousand dollars more than she thought it would. (because DJ's, photog's, florists, etal were also passing this fee on to her.)
I don't pay fees to anyone. Some people only want to do business with people who will pay them for referrals, but I won't do it. Most people look down on that kind of scheme and know that it's shady.
Sorry, I should have included more details to my question. I was thinking of paying/tipping a caterer who sends me tons of business as a thank you and to keep the business coming my way. I would like to thank her in some way(other than a yearly Christmas gift). I was thinking of sending her a referral fee for the wedding cake orders that I get from her recommending me. I think it is tax deductible and I believe other types of businesses do it.
Thanks for your responses.
Sorry, I should have included more details to my question. I was thinking of paying/tipping a caterer who sends me tons of business as a thank you and to keep the business coming my way.
There are two possibilities here:
1. The caterer is planning to stop sending business your way if they don't get a referral fee.
2. The caterer sends you referrals because she trusts you and the quality of your work.
In the first case, you don't want that caterer's referrals anyway. In the second case, giving the caterer referrals will make no difference and could potentially lead to a very expensive "gift", even after the tax deduction.
I would stick with a more traditional gift at the holidays as a thank you. Up to $25 of a business gift is usually tax-deductible.
Jason_Kraft, it is possibility #2. I will stick with the holiday gift.