Merging with design firm - cost for referrals?

I need to know what percentage I should ask for referrals

[Nealreal]

I'm a self-employed web designer that has now taken a career in web design with a web design firm. I want to merge my current clients into the new company that I work for, so that I do not have to handle them outside of work. How much should I charge for referrals?

I was thinking 25% per client.

* Is 25% reasonable? Should this be lower or higher?
* What is the going rate?
* Should it be per project or just the initial project?
* Is there anything I need to be aware of when it comes to referrals?

Your answers to the above questions are greatly appreciated. :)

[le_gber]

How about a gradual scale?

I would go with something like 50% of all the money invoiced to your 'old clients' the first year, 25% for all the money invoiced the second year, 10% the third and none after that.

25% seems a bit low as you did all the ground work of getting them originally.

[Nealreal]

Not sure about a gradual process. Thank for your comment though. Please explain how this would benefit my employer.

[le_gber]

It shouldn't benefit your employer it should benefit you :)

As I said, you are the one who did all the work in finding them in the first place. It cost a lot to get new client and less to 'retain' them.

The gradual scale is because the first year the clients that hire the new firm will do it because of you. As years passes they stay less and less because of you and more because of the new firm - hence gradual scale.

[Nealreal]

OK. Sounds good. And how should it work? Let's say a project is $2500 - and my referral fee is 50%, thats $1250 for me. How do they pay their employees or how do they make any money on the project?

I'm just trying to understand it so when I make the offer, I know what I'm talking about and how it should work. This is the first time I heard of a "Gradual referral". And I really do wanna benefit both sides.

[le_gber]

As you get 50% during the first year, may be you should be the one working on the sites. You may also have to put a couple of extra hours a week - say 75% of the project is done on the company's time and 25% on your personal time (extra hour in the evening - working some hours during the weekend).

BTW the figures I've given you are figures I pulled out of thin air. There's no 'industry standard' that I am aware of. It must be something you are comfortable with if you want to be able to 'defend' them.

[aspdaddy]

How big is the new company? How bigs youre client list? You may be better off negotiating for shares in the company.

[Fortune Hunter]

I want to merge my current clients into the new company that I work for, so that I do not have to handle them outside of work.

Are you sure this is the last job you will ever have? Are you sure this company will never lay you off, fire you, or otherwise remove you from their payroll at some date in the future?

My point is that jobs are very temporary, are you really sure you want to hand over your hard won clients to your new employer? Having clients outside of your new employer could be the absolute best unemployment insurance/plan you could ever have.

[Nealreal]

Here's an update on the situation.
The employer doesn't wanna do paid referrals, they made it sound like they were open to it, but now they don't (he says he's not opposed to it, he just wasn't gonna pay me). I'm not going to give them my clients, I'm gonna keep them instead and then I'll slash my work hours to part-time. This way I won't be limited to making just a set amount per year from the employer and I can use the rest of the time to work with my clients, or pursue other business ventures.

Thank you guys, for your comments.

[edited by: Nealreal at 11:54 am (utc) on Nov. 14, 2007]

[Fortune Hunter]

I can use the rest of the time to work with my clients, or pursue other business ventures.

Very wise move on your part.

[carguy84]

Yup, great way to approach it. It will take a lot of the pressure off of you to always be finding new clients, and you can be a little more picky in choosing clients who fit you well.

Chip-