I am friends with the owner of a small cafe near my job, she found out I make cakes and offered to display some dummy cakes and to refer clients to me.
My question; what should I pay her for displaying the cake dummies and referring clients to me? I know she is not doing it for free, as she has other vendors for other items in displayed.
I have no Idea what to charge, and I want to be prepare for what she may ask, I want to be fair.
Please help!
Let me make sure I understand ... SHE made the offer to you and didnt' mention what her "normal fee" is for doing this at the time SHE made the offer?
Dont' tell me she's planning on racking up a few referrals then just asking you for a check or something?
This kind of stuff should be clarified up front.
Yes, she made the offer, she also mention in between that the other people she refer clients to give her "something" for the referral.
I am interested becaused she does have a lot people coming in and out for breakfast and lunch and she seems to know everyone. I don't mind giving her something, but how much? a percentage? or a flat rate for everyone that orders a cake?
please advised, I am new to this.
I offer a 5% refer credit .... Alice sends Betty to me. Betty spends $300. Alice earns $15 credit to apply toward her next order.
I do not write checks for referral credit. It is to be applied to future orders only.
Most vendors I work with just do referrals on a you-scratch-my-back-I'll-scratch-yours thing. We just refer clients back and forth to each other with no compensation.
I was just about to give you the same advise Debi gave you since that's what I do for my customers 
I would make sure you keep track of things, maybe have a file somewhere that states who she sent to you, how much their paid order was for, and how much her credit is for and then when the time comes for you to "scratch her back" you can let her know she has racked up xxxx amount in referal credits and she can use them towards COMPANY purchases ONLY! No cash or check given only company credit/store credit.
I think it's best that way and doing it at 5% or 10% which ever you feel comfortable doing or something in between, I think is perfect! No need to give her a huge hunk of what you're making and no need in giving her tons of free cakes... it won't be worth it.
I would also put a cap on it so that this situation does happen... say she racks up $500.00 credit "points", her daughter is gettin married so she calls you up for a cake and expects you to make her a $500.00 cake for free and use her credits for it in full. You have to foot the bill for all of it, even though she's earned those credits by sending people to you, I'd suggest a cap on each order...
I allow my customers to use their credits towards orders totaling over $50.00, but depending on how much credit they have there is a cap that $30.00 is the max off of a $300.00 order so even if they have $50.00 saved up in credits, and they order a $400.00 order, they can only use $30.00 of their credits towards THAT order
Hope all this makes sense and doesn't confuse ya hun don't mean to be so long winded but I've been working 8+ hour days the past three days at a new job and I haven't gotten used to being away from CC so much yet lmao.
I would also put a cap on it so that this situation does happen... say she racks up $500.00 credit "points", her daughter is gettin married so she calls you up for a cake and expects you to make her a $500.00 cake for free and use her credits for it in full. You have to foot the bill for all of it, even though she's earned those credits by sending people to you, I'd suggest a cap on each order...
I'm not disagreeing with the above ... I can see the value in having a policy like this.
But you know Debi ....let's do the math and look at the numbers.
For someone to rack up a $500 credit with me, that means they've sent me Ten THOUSAND dollars worth of business. For me to do a $500 cake for them (which would be a small wedding cake of 150-175 servings), it would only cost me out of pocket about $100 or less.
So .... would I spent $100 out of pocket for me to gain $10,000 worth of business? Absolutely.
Would I consider it a great marketing tool to tell people "I had one bride earn her wedding cake completely free with her referral credits" as an incentive for them to send me more business? YOu betcha! As a matter of fact, that line is included in my intro email to brides and it's on my website ("Save Money This Way" page).
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