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If someone refers work to you, what percentage do you give them?

by AussieCoz
18 replies
I have some partnerships set up with some colleagues and they send work my way. The arrangement is great, I do great work for their clients and they get the benefit of great copy so they can set up their SEO campaigns and web pages... win win really.

When we started the partnerships we discussed a percentage of the job, however we haven't really formalised anything and apart from taking them out for a beer or sending work their way to compensate I would like to formalise the process so that I know what the amount is and I can ensure I am making enough from the project when I quote to the client.

My question - what rate / percentage of a job to you pay to referrers as a referral fee.

I have thrown figures around - maybe 10% or 15% - is this an ok rate.

At the end of the day, I wouldn't be getting this work if it wasn't for the referrer however I can't give too much more away otherwise it's a super cheap project.

What's your rate for this sort of arrangement? or do you use the beer economy?
#give #percentage #refers #work
  • Profile picture of the author dcbeckster
    Well the first thing I would determine is the level of effort and / or value of the work you are receiving. I have usually provided around 10% for referrals. If it's a really big job that will earn a great deal for me then I may increase the percentage to perhaps 15%. But for average jobs that are typical I usually keep it 10%.

    Hope this helps!
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    • Profile picture of the author AussieCoz
      Originally Posted by dcbeckster View Post

      Well the first thing I would determine is the level of effort and / or value of the work you are receiving. I have usually provided around 10% for referrals. If it's a really big job that will earn a great deal for me then I may increase the percentage to perhaps 15%. But for average jobs that are typical I usually keep it 10%.

      Hope this helps!
      Thanks - I appreciate your comment. Yes, I totally agree the effort needs to equal the referral fee as well. I have it in my mind that 10% is fair and I know this is fairly standard for some of my colleagues as well.
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  • Profile picture of the author neshaword
    10% is fair enough. Of course, I would make sure that we are perfectly clear about one thing. You get paid, when I get paid. It is good to hear someone knocking on my door, but until I do the job and get the money, we have nothing.
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  • Profile picture of the author Gambino
    It really depends on your business, profit margins and set up.

    I've given up to 50% for physical products, which after costs is essentially our break even point. But, the lifespan of our customers brings in at least 2 more product sales and more money on the back end. So for me, any up front sale is basically a hot lead that will bring us income down the pipeline.

    Granted, it's not a service and we don't have to do anything. So, you need to figure out if the lifespan of your customer continues after the first project, how much your customer is willing to pay, how much your referrals consider fair, and how much you're willing and able to do the service for without feeling ripped off.
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  • Profile picture of the author agmccall
    how about a quid pro quo arrangement. They send you business and you send them business

    al
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    • Profile picture of the author AussieCoz
      Originally Posted by agmccall View Post

      how about a quid pro quo arrangement. They send you business and you send them business

      al
      Ideally I would prefer this arrangement however often it can be feast or famine and the work doesn't always come in equally to reciprocate with the partners. I'm a big fan of contra and I would much rather work in that way.
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  • Profile picture of the author luciesmazanska
    it depends how much I earn, Im earning for example 20 000 month and I have 5 people working for me so I will give them 600 Dollars each per month
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  • Profile picture of the author superowid
    10%-20% range is fair enough.
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    • Profile picture of the author AussieCoz
      Originally Posted by superowid View Post

      10%-20% range is fair enough.
      Yep, that's about the range I would say too.

      I think it would also be interesting to note that these people usually get a direct and cheaper affiliate rate when I invoice them directly, so they also have the added benefit of being able to skim the top off any additional work I do when they bill the client directly.
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  • Profile picture of the author Oziboomer
    The rate could vary according to referral level.

    Have you looked at a third party rewards type program to manage the referrals?

    There are companies like https://loyaltycorp.com.au who may be able to help.

    Everybody of course likes cash but you may be able to leverage things by implementing a loyalty type program where the referrer can aim for a certain level.

    Smaller commission may be acceptable if there is a major reward for the top referrers.

    Take a look at gamification.

    Not that you need a third party to manage things but you should look at what solutions and systems are on offer and then modify and adapt them to meet your needs.

    best regards,

    Ozi
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    • Profile picture of the author AussieCoz
      Originally Posted by Oziboomer View Post

      The rate could vary according to referral level.

      Have you looked at a third party rewards type program to manage the referrals?

      Ozi
      Interesting, it's not something I have thought of to be honest as we are usually talking nothing more than a few hundred max if I am doing a referred business or marketing plan however there could be something there for people who are interested in that.

      My referral partners are growing every year and it has all been rather adhoc so it's probably time to suss out what everyone else does as I want to continue the relationships and keep it all fair and appealing.
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  • Profile picture of the author writeaway
    If it is a custom job, I give them 50%
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    • Profile picture of the author AussieCoz
      Originally Posted by writeaway View Post

      If it is a custom job, I give them 50%
      Wow - that's really generous. I'm a bit more cheap than that

      My 10% seems a little sad now.
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  • Profile picture of the author needtshirtsnow
    10% sounds like a good place to start.
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    • Profile picture of the author AussieCoz
      Originally Posted by needtshirtsnow View Post

      10% sounds like a good place to start.
      I'm really comfortable with this amount. To be honest I would pay 15% if the job was out of left field and there was no way I would have got it without my referrer didn't dangle the work in front of me.

      I have a system where I do send thank you gifts now and again to partners - just a personalised 1 litre jar of M & M's - which is a small token when people have gone out of their way for the business.

      While a lot of the time I just give the people a good deal and 'mates rates' for their own work - 10% seems like an incentive to me if it was documented as the going rate for referrals.
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  • Profile picture of the author Tokama2542
    Hello! I think 10-15% is a justifiable rate. After all, you do most of the work... Then again, it also depends on how close your relationship to your partners as friends. If you are good friends, then maybe that so-called beer economy can also work...
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    • Profile picture of the author AussieCoz
      Originally Posted by Tokama2542 View Post

      Hello! I think 10-15% is a justifiable rate. After all, you do most of the work... Then again, it also depends on how close your relationship to your partners as friends. If you are good friends, then maybe that so-called beer economy can also work...
      Thanks for your message.

      From this thread it's good to know that my 10 to 15% referral bonus is fair, that is mainly what I wanted to check and ensure my partners are getting a good deal and I am not undercutting myself.

      I'm all for the beer economy, and I'd rather do everything this way - not sure if my accountant would like it though

      I find these partnerships really do bring in some great work, particularly during times when work is slow and so I do want to take care of everyone so they similarly reciprocate and we can scratch each others back so to speak.
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