How do you arrange payments when doing outsource arbitraging?

John Durham

14 years ago

What does the word arbitrage mean? Dammit Michael Hiles!

I checked it out on wiki... but still dont understand it.

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impact-productions

14 years ago

You take the payment, as you're ultimately responsible to see that the client gets what they've paid for.

If you're just talking about taking a commission, you could have the client pay the person who does the work directly (in that case the expert would pay you a commission). However, now you've made the introduction, and so there's no reason for the client to ever go through you again for subsequent work. So, I'd suggest keeping the client and the expert separate.

Thom

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Jacqueline Smith

14 years ago

Originally Posted by impact-productions

You take the payment, as you're ultimately responsible to see that the client gets what they've paid for.

If you're just talking about taking a commission, you could have the client pay the person who does the work directly (in that case the expert would pay you a commission). However, now you've made the introduction, and so there's no reason for the client to ever go through you again for subsequent work. So, I'd suggest keeping the client and the expert separate.

Thom

I agree completely. I would bill the client for the full amount and then pay the designer as a contract worker.

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Zayne Kendrick

14 years ago

Thom, I really appreciate your awesome tip... I knew there was something really obvious I was missing.

@ John Durham - The way I understand arbitrage is that you're simply profiting from a price difference in the market.

Thom do you have any other tips or important resources I can check on how to set up this type of arbitrage business properly? Any books you recommend? Thanks!

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kos818

14 years ago

Hi Zayne,

your "finders fee" irritated me to be honest ;-)

First off all, when you say your customer, that you do the job on your own, you are responsible for ANYTHING. I did that on my own for "basic" programming work and for design jobs.

Programming worked out pretty cool. Payed $35 on freelancer.com and charged round about $600 net (company is registered in Germany, so I charge Euros) for my customer, who also appreciated the job.

BUT: I didn't control it at all ;-) My freelancer didn't copy / paste as said, but typed it on his own. Ups. Looked pretty gibberish... That wasn't the worst case, but it let me left like a damn fool, haha.

Webdesign outsourcing didn't work out! Never and I tried it a couple of times. Once I have had a freelancer from Mexico, who communicated until the point where I paid the money asked for (was next to nothing) into escrow. Afterwards communication stopped up to the point where I got a notification from the freelance site, that he requested to get paid. Dumb ass... He ended up earning nothing for sure, but I ended up doing the job on my own. It sucked and that was the reason why I thought about outsourcing in the first point.

Payments: You'll have a pretty hard time finding somebody doing anything without getting payed anything upfront or into escrow. Use milestone-payments and request an upfront payment from your customer.

BUT BE AWARE: If you have no glue what you are talking about, your customer will find out for sure. You might be a great sales person, but when it comes to details, an informed customer might figure out that you are a fly by night cowboy within minutes and that will be the end ;-) No offense here!

Another approach would be hiring a webdesigner on your own, train him and THEN look for customers. The great thing with that approach? You now who to ask IF your customer requires some changes afterwards (I have a status called freeze, where I and only I make the decision if I change something or not).

Enough for today! All the best and take action ;-)
Sven --> Headed towards the Warroom, this was the reason why I came in first place ;-)

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Zayne Kendrick

14 years ago

Originally Posted by kos818

BUT BE AWARE: If you have no glue what you are talking about, your customer will find out for sure. You might be a great sales person, but when it comes to details, an informed customer might figure out that you are a fly by night cowboy within minutes and that will be the end ;-) No offense here!

I'm not quite sure what you mean by "fly by night". I'm just setting myself up as a business hiring independent contractors in my team to do the work on stuff I know nothing about like programming. The experts get more clients because of me so they're happy, I get paid to do the marketing and make the connection just like an agent or broker and the client who needs the work done quickly by an expert is happy. Nothing unscrupulous here.

Thanks
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John Durham

14 years ago

Originally Posted by Zayne Kendrick

I'm not quite sure what you mean by "fly by night". I'm just setting myself up as a business hiring independent contractors in my team to do the work on stuff I know nothing about like programming. The experts get more clients because of me so they're happy, I get paid to do the marketing and make the connection just like an agent or broker and the client who needs the work done quickly by an expert is happy. Nothing unscrupulous here.

Thank You.

I dont have to know how to build a car to sell one better than the guy who builds em... whats more: I give him a job.

Thanks

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mrmanpower

14 years ago

Originally Posted by Zayne Kendrick

Thom, I really appreciate your awesome tip... I knew there was something really obvious I was missing.

@ John Durham - The way I understand arbitrage is that you're simply profiting from a price difference in the market.

Thom do you have any other tips or important resources I can check on how to set up this type of arbitrage business properly? Any books you recommend? Thanks!

Hey Zayne,

I've setup a couple of these deals before...

2 things to keep in mind if you are paid in full:

1. you are responsible for it to be done. If you want more clients in the future, make sure it gets done and gets done right and have all the 'fail-safes' into place.

2. you gotta make sure you don't get cheated or else you're out a client, have problems with payments etc.

Having said this. I have a rolodex of people that I can depend on. I ask for the best price and i'm lucky to be in a place where there is an abundance of workers/freelancers.

So i can have it done. I have a physical office. so they can chase me down for whatever-- this allows me to have flexibility with contracts etc. since they know where I am located and that I am legit.

Pay them in full once everything is set into place.

all the best,

f

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kos818

14 years ago

Hi Zayne,

what I refered to with my IF was that one:

I position myself as the company and charge him $1500

I'm totally cool with your business, but you should keep in mind that you should know what you are selling. I could open a restaurant for sure and offer some standard dishes, but IF somebody would ask a specific question, they would figure out immediately that I don't have a glue.

My response wasn't meant to be offensive, so sorry for that ;-) My Chinese is becoming better then my English and I know lingua franca problems from other friends...

2 things to keep in mind if you are paid in full:

1. you are responsible for it to be done. If you want more clients in the future, make sure it gets done and gets done right and have all the 'fail-safes' into place.

2. you gotta make sure you don't get cheated or else you're out a client, have problems with payments etc.

Totally agree with MrManPower. Also about the Rolodex. But it takes time and you might figure out that there are the so called fly by night programmers and designers around, that only send you replies like "Sir, I don't understand where the problem is Sir". I've been there ;-)

Best
Sven

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marketingspartan

14 years ago

I think Thom is correct, but there is one more piece that I would add. I am not a lawyer or accountant so this is my disclaimer-seek professional advice. You asked about legal stuff and my answer is yes, there is legal stuff. If they are in the US and you are outsourcing you may have to 1099 them. And, the most important piece is if you are the client contact and the web developer is your sub, you need a non-compete and confidentiality with them, meaning they cannot go and take the client. Many a businesses have closed due to the failure of having non-compete and confidentiality agreements.

You need an accountant and/or lawyer. Not a lot of money, just a quick consult.

Annie

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Zayne Kendrick

14 years ago

@ kos818 - any escrow service you recommend?

Thanks.

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theory expert Banned 14 years ago

Originally Posted by Zayne Kendrick

@ kos818 - any escrow service you recommend?

Thanks.

escrow.com i hear is the only trusted one to use
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Zayne Kendrick

14 years ago

Thanks janok!

Thanks

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kos818

14 years ago

Janok is right. Escrow.com is the way to go.

Always keep in mind, that you are paying THEM upfront. If they shut down operations, you lost all your money...

Best
Sven

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Zayne Kendrick

14 years ago

Thanks for all the great tips!

Thanks

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myeanne

14 years ago

You may also ask for an agreement or NDA.. You need to include all the necessary things you need when outsourcing. You can also ask your clients to put / revise the things he thinks is not necessary to both parties.

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hometutor

14 years ago

I always believe it's best to kewewp your ousaorcing sources to yourself

Rick

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hometutor

14 years ago

I always believe it's best to kewewp your ousaorcing sources to yourself

Rick

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How do you arrange payments when doing outsource arbitraging?

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