Is This A Good Referral Fee?

Business By glanduners

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glanduners Posted 23 Aug 2012 , 8:16pm
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A woman I have met before, but don't know very well personally, has asked me if I would consider making cakes, etc. as part of party packages she offers through her childrens' themed party planning business. Here is part of what she wrote:

"How it would work is, a mom would order a party from me, either a tea party, a princess party, Under the Sea Party, or a Spa Party, and she would have the option to order a coordinating cake/cupcakes or cake pops, choc covered strawberries as an add on. Any orders that come in, would go to you, and you would provide that through me. I would bill and collect and pay you. In return I would keep a percentage of the sale, say 20% or whatever you feel is fair for the referral."

This is not a typical referral, where she would tell her clients that she recommends me and then gives them my contact information (for that, I would not pay a referral fee). Rather, when she has a client that would like to "add on" a cake to a party package they purchase through her, that client automatically goes to me, so there is regular, guaranteed work involved here. I would be her only cake vendor, so there is no competition. In this case, I don't see a problem with a referral fee. However, I'm new to this - is 20% a reasonable take? If not, what is? Do you foresee any issues I would have to watch out for? Thanks for your input!

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