Negotiating help

[tguzda]

If I have a product (beverage) that is being presented to a company (for purchase) by a representative, how much percentage is standard for that rep to receive if the deal goes through or an offer is made? I'm currently in a unique situation and I'll have more questions to follow... but this is the first. Any insight would help. Thanks

 

[quincy]

If I have a product (beverage) that is being presented to a company (for purchase) by a representative, how much percentage is standard for that rep to receive if the deal goes through or an offer is made? I'm currently in a unique situation and I'll have more questions to follow... but this is the first. Any insight would help. Thanks

I hope your other questions are easier to answer.

I cannot tell you what a standard percentage would be for your representative. I cannot provide you with this information for several reasons but one important reason is that I do not know from what state in the U.S. you are posting or, if you are not in the U.S., from what country.

 

[tguzda]

I hope your other questions are easier to answer.

I cannot tell you what a standard percentage would be for your representative. I cannot provide you with this information for several reasons but one important reason is that I do not know from what state in the U.S. you are posting or, if you are not in the U.S., from what country.

I'm writing from Connecticut, but this deal is being worked out in New York City. A buddy of mine says 10-15% is a baseline area to start when I have to work out the numbers. Does that seem like the right amount?

 

[Zigner]

I'm writing from Connecticut, but this deal is being worked out in New York City. A buddy of mine says 10-15% is a baseline area to start when I have to work out the numbers. Does that seem like the right amount?

Yours is not a legal question. The "right" amount is whatever amount the parties agree to.

 

[tranquility]

I'm writing from Connecticut, but this deal is being worked out in New York City. A buddy of mine says 10-15% is a baseline area to start when I have to work out the numbers. Does that seem like the right amount?

I have heard of few that work purely on commission.

What I have seen is a fairly large up front fee with a declining percentage amount for units sold. (Solely as an example as each industry is different: Something like 3% for 1-1000, 2% 1001-10000, 1% 10000+) The hard part is access, not selling. Once you get access, you won't need the representative in the future. That's why they want a big chunk up front.

 

[LdiJ]

I have heard of few that work purely on commission.

What I have seen is a fairly large up front fee with a declining percentage amount for units sold. (Solely as an example as each industry is different: Something like 3% for 1-1000, 2% 1001-10000, 1% 10000+) The hard part is access, not selling. Once you get access, you won't need the representative in the future. That's why they want a big chunk up front.

I have heard of something like that, and I have heard of a gazillion other commission plans. It all depends on the industry and the industry norms. It can also vary within products within the same company. Commissions can be higher on products that the company wants to push, and lower on products that sell themselves.

In the industry I was involved in for many years it was 5% for lower end products and 7% for higher end products.

 

[tguzda]

I have heard of something like that, and I have heard of a gazillion other commission plans. It all depends on the industry and the industry norms. It can also vary within products within the same company. Commissions can be higher on products that the company wants to push, and lower on products that sell themselves.

In the industry I was involved in for many years it was 5% for lower end products and 7% for higher end products.

This is the beverage industry. I have someone pitching my special drink to be bottled by a distributer. Things are moving along pretty fast, and it was never discussed how much he would get if an offer comes in. I want to open this dialogue with him prior to any possible offer. I just didn't know what was an appropriate percentage would be for him (my rep). No numbers have come in yet, but I plan on investing in a lawyer to guide me through the process if that happens. I just don't want to spend money that I don't have too at the moment.

 

[quincy]

This is the beverage industry. I have someone pitching my special drink to be bottled by a distributer. Things are moving along pretty fast, and it was never discussed how much he would get if an offer comes in. I want to open this dialogue with him prior to any possible offer. I just didn't know what was an appropriate percentage would be for him (my rep). No numbers have come in yet, but I plan on investing in a lawyer to guide me through the process if that happens. I just don't want to spend money that I don't have too at the moment.

First, thank you for providing the state names.

Everyone who has posted so far is correct in that the compensation offered your representative will hinge on what both you and your representative agree is fair and reasonable. The representative may prefer being paid on a commission with his costs coming out of your proceeds, or he may prefer an up-front fee with a percentage, or he may prefer to collect a flat fee for his services. It depends.

Is your representative from Connecticut and traveling to New York, or is your representative a New Yorker? Is he a legitimate, experienced representative with an impressive track record and a good reputation, or is he relatively green? What sort of arrangement do you have with him right now? Do you have any sort of written, signed agreement?

A lot of facts and factors must be considered.

What your friend told you about 10-15% being a good introductory percentage to offer in a discussion of fees is not unreasonable, but I recommend you consult with an attorney now rather than later. You will want a solid contract with this representative before any negotiation with any distributor begins. Because the representative is acting on your behalf when he introduces your product to the distributor, you need to protect yourself and a contract is the best way to do that.

You need a carefully drafted contract, not only to define the terms of your arrangement, but also so you can avoid liability for any act performed by your representative that is not specifically authorized by you. The contract should also address termination of your work relationship (refer back to tranquility's post for one reason why this can be important).

Again, tguzda, you really need an attorney in your area to personally go over all of the facts and specifics. That is impossible to do in a forum setting (and personal reviews are not allowed on this forum). The attorney you see can better advise you on the representative's compensation after a review of the facts, and the attorney can draft for you a necessary contract that meets your specific needs and satisfies your representative.

Good luck.

 

[tguzda]

First, thank you for providing the state names.

Everyone who has posted so far is correct in that the compensation offered your representative will hinge on what both you and your representative agree is fair and reasonable. The representative may prefer being paid on a commission with his costs coming out of your proceeds, or he may prefer an up-front fee with a percentage, or he may prefer to collect a flat fee for his services. It depends.

Is your representative from Connecticut and traveling to New York, or is your representative a New Yorker? Is he a legitimate, experienced representative with an impressive track record and a good reputation, or is he relatively green? What sort of arrangement do you have with him right now? Do you have any sort of written, signed agreement?

A lot of facts and factors must be considered.

What your friend told you about 10-15% being a good introductory percentage to offer in a discussion of fees is not unreasonable, but I recommend you consult with an attorney now rather than later. You will want a solid contract with this representative before any negotiation with any distributor begins. Because the representative is acting on your behalf when he introduces your product to the distributor, you need to protect yourself and a contract is the best way to do that.

You need a carefully drafted contract, not only to define the terms of your arrangement, but also so you can avoid liability for any act performed by your representative that is not specifically authorized by you. The contract should also address termination of your work relationship (refer back to tranquility's post for one reason why this can be important).

Again, tguzda, you really need an attorney in your area to personally go over all of the facts and specifics. That is impossible to do in a forum setting (and personal reviews are not allowed on this forum). The attorney you see can better advise you on the representative's compensation after a review of the facts, and the attorney can draft for you a necessary contract that meets your specific needs and satisfies your representative.

Good luck.

It's hard to determine whether he's experienced or green. I know for a fact he's a successful business owner with ties to celebrities. The circumstances that brought us together were through a middle man I know and trust. The 'rep' is close friends with 'people at the top' of this major distributor. So basically I'm grateful to have a 'short-cut' to the top to get a deal done. But the answer you provided was VERY insightful... and I thank you for that. I've been hesitating with getting a lawyer because I don't have disposable income... I have a wife that is a stay home mom with my 2 kids. So I fear spending tons of money on legal representation. What if I spend that money, then the deal dies. I'm left in a bad spot. As my situation stands at the moment... my rep and I are waiting for a 'plan' from the distributor as the next step. So it looks like we are going through formalities. I'm trying to time this the best way possible so I don't spend money that would be for nothing. I thought getting an understanding where rep percentages should be establish.... as first step... then I can go from there. I really appreciate all the advice I'm getting from this forum.
To answer a few more of your questions. He's lives right outside Manhattan. In regards to a written agreement, we have a 1 year confidential agreement saying he and I are working together for one year. I can't go to anyone else until that expires. The document details our partnership to embark in a business operation to go public with a alcoholic refreshment drink... both domestic and international.