builder asked for kickback today

[huggytree]

i have a signed contract and am getting ready to start plumbing on a monster large house. 6,000 sq ft w/6 baths and all the extra's

the average new house runs about $10,000-14,000 for plumbing

this house is $45,000 worth

the fixture allowance was $10,000 originally on the signed contract...the homeowner has doubled it to $21,000 for fixtures.

when discussing the extra's today with the builder he asked if i can give him a kick back to help him out alittle because of all my extra fixture profit....i said yes...i was a bit shocked though...its going to be a few thousand extra though

i was thinking $300-500 or so...i was thinking of discounting the homeowner a bit because its soo extreme.....now im not

i mentioned it to another builder friend of mine and he said the guy meant $1,000-2000 kick back, not $300

no way ill give more than $500...

the person who got me the lead which lead to the job is going to get a steak dinner and i was planning on giving her a few hundred too...now its just a steak dinner..

i believe in paying back for leads, but not for giving the builder a kick back....he is paid on a percent of the job, so my extra fixtures are getting him alot extra already....

i find the whole idea of a kick back odd and unethical...this job will be 10-13 percent of my yearly income..so ill gladly do a bit....it bugs me though

what would you do? how much?

profit on the job will probably be $5,000-6,000 range

[Harold Mansfield]

That's hard to answer without knowing your industry. As a limo driver in Vegas, it was S.O.P to be shaken down by the strip Casino's Doormen and Bellhops. It's illegal, but it's been going on for years and none of the authorities care enough to stop it...so we had to play the game. It's actually one of the main reason I quit that business.
I have no problem with referral fees, but to me kickbacks, especially solicited kickbacks are more of a shakedown, especially when not agreed upon before hand.

Apparently this particular builder is well known for that and if it's how the game is played, then you have to decide if you want to do business with him again.
Personally, what I make doing my job is no one else's business and I take issue with anyone holding it over my head as if I own them something if they had nothing to do with it.

The question is, is the builder directly responsible for you making so much on the job? If not, then I look at it as a shakedown.
I wouldn't be comfortable giving him $1k either.
But I can't really give that advice to you not knowing your industry and how those things work.

On the outside looking in, the guy seems pretty unethical.

I just wanted to add that I had a similar situation a while back with a friend of mine. They recommended me to one of their friends (that I didn't know) that needed a website.

He called. We talked. And I built him a website.

Soon after I was done (right after) my friend hit me up for a kickback for the referral. He's not in the business. We had never discussed anything of the sort...and to make matter worse, he asked in the begining that I give a good deal (discount) since it was a friend of his...which I did.
Needless to say I didn't kick him back anything and it was a sore spot for a while.

To me, it took a lot of nerve to ask me to give a discount as a favor and then also solicit a kickback.
It really takes a certain kind of selfishness to do that.

[ParaTed2k]

Question, is this a project won through bidding?

[Steve B]

You find it odd and unethical, yet you said "yes" already and you say you'll "gladly do it" since enough money is involved for you. Do you really find it unethical or do you just hate to part with any money? I think you need to answer this question first.

A lot of people I know (and myself) refuse to do things they find unethical regardless of how much person profit is involved.

[greenoak]

i wouldnt even go there...no matter how much i was making......its a slippery slope....
sounds safer for your reputation to just go on with the agreed terms.....
we have done finders fees and referral fees....but its all part of the agreement before we start something...which feels lots more above board....
if you take a job and it doesnt work out like you thought you cant ask the builder for more money.... can you? .
eborg, interesting story.......some people will ask anything...and maybe assume things that arent at all accurate....

[nealrm]

Let look at this from a different angle, from that of the person paying the bills. The home owner hired a contractor to do a job. Part of that job was to hire the best people for the money he can get. What will the owner think if he finds out that one (or all) of the subcontractors paid a kickback? If I was the owner several questions would come to mind 1) If the subcontractors are paying him for the work, are they really the best that can be afforded or just the ones that pay him the best, 2) I paid the contactor once to do the job, why is he also getting paid by the subcontactors, 3) can I trust him to do what is right in other areas.

HT - Are you willing to make the payment in front of the home owner, your family, friends, church? (I'm not say you need to disclose the amount, just that a payment was made)

[Spider]

Just another little reason to get out of penny-anti business deals and direct one's company towards large contracts with serious partners where such goings-on are not only unethical but clearly illegal.

And a good reason for such client's to deal with reputable companies.

[huggytree]

this is definately hidden from the homeowner

i am making above average $$ on this project because of the excessive fixture allowance chosen

i give finders fee's all the time, but I choose to do it...not because im asked....and i will be giving a finders fee to the actual person who introduced me to this builder

this IS a large contract...the largest one ive ever had.....its almost beyond what i can do by myself...

i definitely do not wish to part with the $$....i was excited to hear id be making a few extra thousand

the job was won on a bid, but with a $10,000 fixture allowance...now its up to $22,000...i make about 30 percent profit off the fixtures, so adding $12,000 in fixtures takes me from a 10 percent profit margin up to a 20 percent

bottom line is i lost respect for the builder to ask such a thing...it is unethical...the homeowner would not be happy if he found out.....the dollar amounts and profit are awesome and giving a few hundred back isnt going to hurt me. its definitely a slippery slope and ill have to see if its the normal w/ this guy.

ive been on several slippery slopes with a few customers right now...my 2nd biggest customer keeps pushing me....since im finally successful enough to choose who i work for I may start increasing prices on the problem customers and let them decide to move on or not. this may be a better choice than growing the business.....im not going to do that going into winter though....

remember: this current project were discussing is now 11 percent of my yearly income....its double what my 2nd highest project of all time was...

this is 1 strike against this builder.....if he has any payment problems or quality problems i wont work for him again....

[greenoak]

you can just say no if you are on a slippery slope and they might want to keep using you anyway..
.im a consumer of this kind of stuff and this sounds bad,and not the kind of guys i would want to hire.......my builder was so straight up...and kept the sub contractors to their word...even when it hurt...i cant imagine my builder and the plumbing guy doing this behind my back..
i remember a customer who was a local builder, in the store bragging about how much he made on jobs when the owner upgraded....it was ikky and i think of it everytime i see him... he never made much of a business out of it either...
PS. SPIDER.... i like your idea here...but cant see how to apply it...im in such a depressed area and dont want to move........
your words...Just another little reason to get out of penny-anti business deals and direct one's company towards large contracts with serious partners

[huggytree]

ive met the builders wife before , but today i met the builder....uggghh...his appearance definately gives him a 2nd strike...not someone id build a 5,000,000 home with...i protect myself through the lien process...ill be making extra care with this job....my trust factor is 1/2 of what is should be with him...if there are any payment problems that will be his 3rd strike and i wont be doing business with him again....my gut says to worry a bit