I have a friend Z who has been acting as the middle-man between me and his clients. Z contributes to less than one percent of my business' revenue. The projects that Z refers usually amounts to $1k to $3k each. Z has a full time job with another company, so these referral/freelance assignments are by no means his main source of income.
About two years ago, Z referred person Y to me for a small project. Person Y himself is also a middle-man. So the relationship between my business and client X is
Me to Friend Z to Person Y to Client X
I haven't talked to Y since 2 years ago. Today, Y reached out to me via email and wants to work with me directly without involving Z. Unlike Z, Y performs his work as a sales lead generater and client manager on a full time basis. Based on some things Y mentioned in his email, it seems like the assignments he has are at least 20 times greater in budget than Z's projects.
A while ago, Z once said that if I do business with anyone in his network, he gets a 20% commission on all revenue from now until the end of time. I didn't respond to his request because I never had time to engage his network of contacts.
Now that Y has approached me, I think 20% commission on all sales to Z seems like a lot of money, especially when he does not contribute to the projects. If I agree to this, Z would make about $60k a year for doing nothing, which is almost as much as his salary full time job.
So my questions is, is 20% commission to Z from now until end of time considered too much? If it is, then perhaps I only give him a small commission on the first assignment from Y..even this is generous considering he doesn't even maintain relationships with Y. But Z is my friend after all.
