Frequently Asked Questions: Who has to pay when there are commissions involved with vendors?
August 17, 2010
The clients have to pay. Yes, one way or another, clients are the victims of these scams. Recently I had a meeting with a wonderful colleague from the Los Angeles area, and I was shocked to hear that the concept of commission is a rather common practice.
I am not suggesting it is not also happening in my neck of the woods (New York) or any other city for that matter, but I still don’t get it. I have written about this before–collecting or paying commissions without our client’s knowledge is one of the ugliest dirty secrets in our industry.
- The practice of paying commissions gives planners and other vendors the power to say, “If you don’t pay up, you don’t get the job.” This is just wrong on so many levels.
- If you are a vendor and you do agree to pay commission, either you are going to make less profit, or you are going to short change the clients with the quality or quantity of what they get.
- f you are a planner or vendor, and you lowball the cost of your services to get the job with the explicit purpose to charge your vendors commission, you are doing a huge disservice to our industry. By doing this, you are undermining what other honest planners or vendors are charging. No wonder why most clients are so confused about what services and things actually cost.