Common Mistakes: Paying or Receiving Commission
February 25, 2010
This is a delicate subject in our industry, and one I feel very strongly about because many years back, besides bad pricing, this was one of the main reasons I almost went out of business. For me, it is very simple: if you accept commission without your client’s knowledge, it is THIEVING (and I’m not the only one who feels this way–this practice is against the law). Someone along the way has been short changed and it’s usually your clients.
Here is the dilemma:
I have been approached by many planners with the question, “Do you pay commission?” (meaning do I pay commission without my client’s knowledge). No, I do not pay or receive commission. Of course, they then go on to work with another person who does and I lose out on the job. My advice to you: LET THEM. The reason is simple. As I discussed in my entry on pricing, if your goal is to make a 40 – 50 percent profit, and you give away 10 – 20 percent of your profit, you’ll be losing money BIG TIME. Your other option if you pay commission is to spend less money on your flowers or materials in order to cut even which leads to producing an inferior product that causes you, in the long run, to lose (your clients lose too).
I understand that taking a stand in not paying or accepting commission might make you feel like you are losing out on jobs, but as times goes on, you and your brand will develop a reputation of quality and integrity. Do not get me wrong. If someone recommends me for a job, I have no problem sending them a present as a thank you to show my appreciation with the promise that if the opportunity emerges (and it always does) to recommend them in return, I’ll do so.
It you are a planner or any other vendor and you make your living by a commission structure with your clients knowing, fine. Otherwise, I think it’s time for this practice to be completely discontinued. The part I resent most is the power trip these few folks have in our industry. They form alliances with vendors not only for the quality of their work, but for their own greedy reasons. On top of losing money, we also have to mention the anger one feels, after busting one’s butt to do a great job, to then have to turn around and give away part of one’s profit.
What is your opinion?