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what to take in commission for a deal

 2:59 pm on Aug 2, 2006 (gmt 0)

lets say you have found a contact in another country who is willing to produce a product there, which you normaly sell for another company1, now the company1 is very interested in this.

The company in the other country talks only to me untill there is MAYBE a deal for this, this company is maybe producing a million units a year at 10currency a unit and they have to pay a 140.000currency for licence and 3% royalty per unit, what is the commission for such a deal and how to proceed if the the company accept the price and contract.



 3:29 pm on Aug 2, 2006 (gmt 0)

what is the commission for such a deal

As much as you can negotiate ;)


 6:34 pm on Aug 2, 2006 (gmt 0)

its just, its a pretty big deal IF it gets final, so if they get A LOT out of it i should also get a big bonus right, 20% or what, hmm I think its a hard question to many things is involved.


 7:39 pm on Aug 3, 2006 (gmt 0)

Commission is relative - I worked for an agency who negotiated a deal and offered me $70 an hour for my services which was pretty good. I later found out the client was paying the agency $140 an hour for me. The agency netted about $400,000 dollars during the life of that contact.

So dont pitch too low - ask for more than you want and deal down.


 11:09 am on Aug 4, 2006 (gmt 0)

Charge what you feel would be fair given the amount of work or knowledge you put in. Be sure to include all your costs and add some profit for yourself.

Made a similar deal once where I charged 8% of what they made or something. Sounds small but I got a pretty good deal for just some e-mailing and faxing around, and the same client keeps coming back.


 2:38 pm on Aug 4, 2006 (gmt 0)

20% is a bit high for this sort of deal as you aren't taking any finacial risk. i.e. you aren't buying the goods then reselling.

If it is an introductory thing and you have no admin to do then go for an introductory lump sum payment as a finder's fee and a small residual commission of 2-3%. This is because if you are not in control of the ordering process you are not seen as being in the loop so you will eventually be resented and phased out or cheated so get the bulk of the money up-front.

A better deal would be that the buying company sends all orders to you you pass them to the selling company who then sends you a copy of the invoice. You then invoice the selling company monthly for your commission. Commission rates vary by industry but 5 -10% would be "normal" in my industry. The big advantage of doing it this way is that you are seen to be obtaining every individual order, so you become an important link in the chain of business and you are less likely to be seen as an unessecary expense.

If you are buying the goods then selling them on then 20% should be your absolute minimum. That's 20% off the selling price i.e. you buy for 0.80 and sell for 1.00. We aim for 45% off (buy at 0.55 and sell at 1.00) on some products we settle for 35% but where we can we get more depending on the market situation. You have to factor in the cost of transport , warehousing, admin, marketing and finance in such a deal and you also need to have a good understanding and agreement of who bears the cost when things go wrong, i.e. what happens to customer returns under warranty and out of warranty.

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