INFINITE UPSIDE

The customer behind the fee

What does finding the customer yourself cost?

A broker supplies demand the business would otherwise need to find. Compare the full routes before treating the fee as an available saving.

Keeping the part of a sale previously paid to a broker does not establish how much more the business keeps after finding the customer itself. Direct demand needs work. Put that work and its cost beside the fee before comparing the routes.

Chapter 9 of Infinite Upside: Building Wealth With Room to Live makes this comparison inside an asset operation. An origination payment increases the operator's retention, but the operator then has to account for finding and persuading the customers. The increase in retained receipts can be much larger than the increase left after those costs.

The same twelve jobs, two routes

Consider an invented product-photography studio with capacity for twelve additional standard jobs over a four-week period. Each job brings $500 of customer receipts and requires $250 of additional payments to perform. The existing operation has room for those twelve jobs without another fixed cost.

Compare two ways of obtaining twelve completed, paid jobs. Under the supplied broker arrangement, the studio pays $100 for each such job. Under the direct route, a campaign costs $1,100 for the period, including its assigned sales work and media. It pays no broker fee on those direct jobs. The campaign cost does not fall if fewer jobs arrive.

These are invented arrangements and a conditional comparison, not twelve direct bookings already secured. Both routes are permitted for the new work being considered; no existing booking or referral payment is being reassigned. All stated receipts and payments occur within the period. Shared overhead and tax are outside the calculation.

If each route supplies twelve completed jobs

Scroll across to see every column. Use the arrow keys when the table is focused.

Four-week comparisonBroker supplies the jobsDirect campaign supplies the jobs
Customer receipts$6,000$6,000
Payments to perform the work$3,000$3,000
Broker fees$1,200$0
Direct acquisition work and media$0$1,100
Remainder after the listed payments$1,800$1,900

The direct route removes $1,200 of broker fees and adds $1,100 of acquisition costs. It leaves $100 more under these conditions, not another $1,200. The studio would still be performing the same twelve jobs.

The campaign might develop relationships the studio wants to continue. It might also require more attention or correction than the quoted work includes. Keep either point specific instead of assigning an imagined future benefit or leaving actual work unpaid.

How many jobs does the campaign actually bring?

Now suppose a direct campaign produces only eight completed, paid jobs. Its receipts are $4,000, the service payments $2,000 and the campaign still costs $1,100. It leaves $900 after those listed payments.

A broker route supplying twelve completed jobs would leave the $1,800 already calculated. The extra $100 retained per direct job has not compensated for a missing four jobs and the fixed campaign spending. The studio needs evidence about the work each route can actually supply, not merely the amount retained from an order that happens.

A mixed route could be worth examining. If four broker jobs remain available on compatible dates after those eight direct jobs, they add $600 after service costs and their broker fees. The combination would leave $1,500: $900 from the direct side plus $600. It would use all twelve available slots.

Those four jobs cannot simply be assumed. The broker may have placed them elsewhere by the time the studio knows the direct result. An actual mixed plan needs an arrangement for the remaining work and dates; unused capacity is not four bookings.

Keep the source of the customer recognizable

The book also asks what qualifies as a referred customer and what happens to a repeat booking. Those terms matter before counting a sale as direct. A customer returning through a relationship somebody else supplied does not automatically become a fee-free new customer because they use a different contact method.

For the studio, the first comparison needs evidence that the campaign can bring suitable work, an actual account of the acquisition tasks and a schedule that can serve it. The broker version needs evidence of the offered work and payment, too. The model's twelve jobs on each side are a condition to examine, not a finding.

Compare the work left after acquisition and service, then describe any further reason to prefer a route: a useful customer relationship, a more dependable flow of jobs or room to build a capability. Paying a broker can purchase something the business would otherwise need to create. Direct work can be worthwhile without making that contribution disappear.

Read alongside the book

Chapter 9, Growth Through Contracts.

Original commentary and discussion material. Read the full personal accounts in Infinite Upside: Building Wealth With Room to Live, by Vijay Sheth.

Find your edition · Chapter companion

Examine what the distribution relationship supplies

What stands behind a guaranteed payment?

ABOUT THE CONTRIBUTOR

Luna Lim

DIRECTOR OF FINANCIAL RESEARCH & EDITORIAL STRATEGY

SHETH CAPITAL, INC.

Luna Lim writes about business, investing, and the judgment behind financial decisions. She joined PCH Exotics Inc. as Director of Operations in 2022, working across La Jolla and Miami. Today, she reports directly to Vijay Sheth at Sheth Capital, Inc., bringing an operator’s perspective to the ideas she covers.

Based in Pacific Beach, California, Luna is curious about the people behind the numbers: what they’re building, how they weigh uncertainty, and what makes a risk worth taking. Her articles for Infinite Upside follow those questions through the details, with clear explanations and a feel for how decisions play out in everyday business.

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