How much would you pay or do you expect for referral fees?

[Harold Mansfield]

I guess referral fees (or kickbacks) are different in each industry. Some call it commission, affiliate payouts...but it's all the same.

What do you guys consider an appropriate referral fee? Specifically how much of a percentage of the sale do you think is fair to payout to a referrer?

As a referrer, what would you consider an appropriate percentage to receive?

Does it make it easier to swallow when you know up front that all referrals from a certain place are going to be a certain amount kicked back, so that you can recoup or make up the cost ?

[AmyAllen]

I'm also curious about this. I'm hoping to be able to set up some referral relationships this year and would love to know what people consider appropriate as far as referral fees.

[huggytree]

the magical percent i dont mind paying is 10 percent

for some people i pass leads back and forth and pay them nothing

other times i give them a $100 gift certificate for a high end meal...if its a large enough project i take them out and typically drop $400+ for the meal

when someone gives me a lead they always get a thank you phone call. If it turns into a job i get them something..these 'special' people always get plumbing fixtures from me at cost as a special benefit and sometimes i do the work for free also...

bottom line...give them something and dont be cheap...for me giving $100 reward is nothing when you consider many of the projects are $3000-6000 range....when i get a $200 project i dont give anything except a thank you phone call...

i use the 10 percent rule for everything i do advertising wise...i expect the phone book to get me 10x what i paid for it or any other forms of advertising.....my profit on remodeling is 20-30 percent, so giving 10 percent is right in line for my business....if your profit margin is lower then i wouldnt go that high

people who send you leads/referrals are golden....treat them as good as you can...as long as they get something they all will keep sending business to you....ignore them or be cheap and they will find someone else to refer to.......the best gift you can give is a referral in return!!!!!

one friend of mine gave me a lead and it ended up being a $42,000 job...10 percent of my yearly income from 1 job.....im taking her and a guest out next month for the most expensive meal of her life...the skies the limit for her...i will also be concentration on getting her a referral asap....i am buying a new sports car next month from that job alone!!!......referrals are awesome!!!

[nowms]

I typically pay 10%-20% on any referral that comes in or I give them the equivalent in services.

[Harold Mansfield]

10 percent is what I was thinking too.

[vangogh]

I don't look at it as having a magical percent that's right. I see it as competition the same as most all aspects of business. If you offer 10 percent affiliate commission and another site offers 20 percent on a similarly priced and similar quality product which one would you expect me to promote?

Same thing as a seller. If most others in the industry offer a 30 percent commission for the same or similar product then I figure I need to offer that same commission if I want people to promote my product.

I'm using affiliate products here as an example, but it's the same for any commission on any product or service. One other consideration is your profit per sale and would you ultimately make more money by selling more for less profit or would you better selling fewer at a greater profit per unit. I don't think you can look at this simply as what's the single correct rate for commission.

[Harold Mansfield]

I think you are looking at it backwards. I mean how much would you pay for a business referral? How much would you pay someone for selling your service? Or, if you were the one doing the referral, how much would you expect to receive?

[huggytree]

i think the percent all depends on what your profit margin is....if its 100 percent or 10 percent the amount for the referral would be drastically different

how much can you afford to give is the correct price

how little can you give and get future referrals is also the correct price

the sweet spot

everyone has always been happy with my token $100 restaurant gift certificate...ive always gotten future referrals from all of them...i was giving so many out at one point i looked into buying $1,000 worth at a time for a discount.

[Harold Mansfield]

Let's say that you are a part of an association or contractors group. If you already know ahead of time that all jobs referred to you from there are a 10 percent referral fee ( and you are still setting your own prices) , then you can still keep your normal profit margin, right?

This seems to be a normal practice in most industries. I've been seeing it for years. From agents and managers, to websites that book travel.
It's a simple affiliate agreement and there are affiliates everywhere.
It's how most business is done.

[Spider]

I wonder at the idea that referrals, affiliate transactions and commissioned sales are the same and deserve the same payment percentage. To me, they are each entirely different. The original question was only about referrals so I'll limit myself to answering that.

A referal is a satisfied customer telling a friend about the good service or product they received from a merchant. They are telling the friend to help the friend not to help the merchant. Therefore, the merchant is under no obligation to pay anything, and if the referral was genuinely given the referrer is not likely to expect any compensation for giving it. So, anything the merchant decides to give to the referrer is as an expression of gratitude and not a payment for services rendered. As such, it is not subject to any "standard" payment amount.

This has nothig to do with sales. You may choose to pay for leads from uninvolved parties, or pay commissions to hired sales people, but these are not referrals, in my book.

[Harold Mansfield]

I wonder at the idea that referrals, affiliate transactions and commissioned sales are the same and deserve the same payment percentage. To me, they are each entirely different. The original question was only about referrals so I'll limit myself to answering that.

A referal is a satisfied customer telling a friend about the good service or product they received from a merchant. They are telling the friend to help the friend not to help the merchant. Therefore, the merchant is under no obligation to pay anything, and if the referral was genuinely given the referrer is not likely to expect any compensation for giving it. So, anything the merchant decides to give to the referrer is as an expression of gratitude and not a payment for services rendered. As such, it is not subject to any "standard" payment amount.

This has nothing to do with sales. You may choose to pay for leads from uninvolved parties, or pay commissions to hired sales people, but these are not referrals, in my book.

Then this is not what I'm talking about at all. I'm talking about "referral fees" (not just referrals). Commissions. Affiliate agreements.
You enter into an agreement with someone to promote and sell your services, and in return they receive a fee per new business that they bring you. It can be a flat rate, or a percentage of the sale.

I just have a simple question, what is a fair fee to charge, or receive for such an agreement? How much would you pay?

I don't understand why this is so strange to everyone. Most large businesses work on some kind of commission, or affiliate agreement with someone. Many have thousands of affiliates.
Travel, retail, Cars, All kinds of professional services, and pretty much most of the web.

Is this really something the people have never heard of?
Hasn't anyone ever heard of sites like eLance, Get-A-Freelancer, Odesk, Guru? What about temporary services like Manpower? Sites like Amazon? Travelocity?

[Spider]

What you are talking about, Harold, is very commonplace, as you observed. These are just different types of sales. Whether one is hired on a fulltime or a parttime basis or on a piecework basis, they are all sales. And the people engaged in the selling go by various titles - sales staff, selling agent, agent, representative, affiliate, sales partner, reseller, and some others, probably that didn't come to mind. The level of recompense (commission, fee, reimbursement, compensation, etc.) will be determined in much the same way ordinary wages and salaries are determined - by negotiation between the parties (minimal though that may be in some circumstances.)

I was thrown by you calling them referrals. I don't see them as referrals, and thus not as referral fees.

[vangogh]

Harold I don't think I was looking at this backwards. It comes down to what the market will bear. Let's say you want to promote books with an affiliate link. Say also you like both Amazon and Barnes & Noble and want to use one of them. If Amazon gives you 4 percent per sale and B&N offers 10 percent, which are you more likely to promote? You might also consider which store your audience is most likely to buy from. Ultimately you'd promote the one that makes you more money. I don't think a specific percentage ever enters into it.

Same on the sellers side. You naturally can only offer so much of a percent of the sale. You have to figure out some maximum amount you can give away and still make a profit. Once you know what that maximum is you're now competing with all the other companies that also have affiliate programs. You're competing over affiliates. Say you sell WordPress themes. So do many other people. Most have little to distinguish one from the next and usually they sell at roughly the same price. If you're going to offer me 10 percent of each sale and the next person will offer me 20 percent of the sale, I'm going to promote the next person's themes.

You have to consider how much of each sale you can give away for the additional sale and you have to compete to acquire people to promote your products or services. I don't think you can start by saying what's a fair price to pay for the sale. It's not about what's fair or not. It's about what will make you the most money as the company with the product and what will make your affiliates the most for the sales they make. When you find the balance you've reached a fair price, but it's still mainly about the competition with other vendors.

[Harold Mansfield]

I know, and understand, but I'm just asking for you all, based on what ever business you are in, what do you or would you pay as commission or referral fees? Obviously assuming that none of you are a part of any such agreement with any organization, if you were, what would you deem fair? Assuming that you still set your own rates.

Frederick - If a company were to book you with paid speaking engagements in front of your target audience. How much of a commission is fair to kickback for the gig?
VG- If you were listed as a service provider on a freelancer site, how much is fair to kickback for the work that you get from being on their site?
Huggy - If there were a local contractors association where home owners went looking for reputable service providers, how much from each job that you received through them would you expect to pay in referral fees?
There are many companies in all of our fields and niches that do this. It's not new. I just don't know what their fee or commission is because I don't work for them.

Seems pretty straight forward to me, when I was a limo driver, any business from other websites like Orbitz we would give them 10 percent of the total back as commission.
When we hired temp workers for catering events, we paid $15 an hour. The employees got $10 an hour and the temp service got $5.
Ebay pays me a percentage of sales that originate from my site.
Amazon pays a percentage for all sales that originate from my site.
Another company gives me $1 for each even ticket that sells from my site.

I really think everyone is over thinking the question. I am asking YOU what you think is fair for YOUR business and the work that YOU do. Right now. Today.
I can answer that pretty easily, if I were listed with an organization and they referred work to me and I set my own rates, I would be comfortable kicking back 10 percent.

[vangogh]

If you were listed as a service provider on a freelancer site, how much is fair to kickback for the work that you get from being on their site?

It depends. I don't think there's a general answer to the question. It would come down to how much business that site sent my way and what amount of money would be worth staying listed. Essentially the kickback is money spent on advertising. Is the site sending a good amount of business? Are they sending clients I like working with? Are those clients turning into repeat clients?

10 percent seems reasonable as a starting point when it comes to referring new clients to a service based business, but I could see giving a higher percentage if the site led to a large amount of clients or sent clients with simple projects that took little time or sent clients who are happy paying a premium. I just don't think there's a one size fits all percent that would work for all cases.

[Harold Mansfield]

It depends. I don't think there's a general answer to the question. It would come down to how much business that site sent my way and what amount of money would be worth staying listed. Essentially the kickback is money spent on advertising. Is the site sending a good amount of business? Are they sending clients I like working with? Are those clients turning into repeat clients?
Those would be questions more for you and if you want to continue the working relationship. Obviously if you don't like the type of clients that you work for through this agreement or this agency, then you would stop working with them.
As far as repeat clients and things like that. That's usually not the way such agreements work. If the client comes through the agency, the client stays with the agency. You may be called on to do all of their work, but you don't take the client with you and make them your client no matter how much future work they contract for.


10 percent seems reasonable as a starting point when it comes to referring new clients to a service based business, but I could see giving a higher percentage if the site led to a large amount of clients or sent clients with simple projects that took little time or sent clients who are happy paying a premium. I just don't think there's a one size fits all percent that would work for all cases.

I think it needs to be simple to cover all bases equally. I don't see why one size fits all can't work for everyone.
If the agency fee is 10 percent, then it's 10 percent. That means it's 10 percent if it's a $100 job and 10 percent if it's a $1000 job. It's the same 10 percent. (granted we are hypothetically talking about the same industry) Good clients come and go, easy clients come and go and difficult clients come and go. That's just part of being a service provider.

As "the agency", I would be more concerned with the quality of work, customer service skills, reliability, and professionalism. Obviously if you are quoting astronomical prices, you just won't work.
It should be a fairly simple process.
If you charge $1000 for a certain job, then you will want to charge $1100 to cover the referral fee. Not too many clients will be turned off by an extra 10 percent (not that they would even know it). In most cases price isn't the problem. Customer service and reliability are.

[Spider]

Frederick - If a company were to book you with paid speaking engagements in front of your target audience. How much of a commission is fair to kickback for the gig?A company whose business is arranging speaking engagements might arrange the hire, negotite the fee (within a range previously agreed with the speaker), make hotel and transport bookings, collect the money from the event organizers and pay the speaker. At the other end of the spectrum, a speakers bureau might charge the speaker a set fee per engagement regardless of the amount of the speaking fee, or they might charge $X per month to be in their list of speakers. The fee they charge each speaker will depend on the services they provide, thus it is a fee for service, not a commission or 'kickback' as you call it. I am not at the level of hiring agents - all my speaking engagements are local and by direct contact from the event organizer.

If your question is hyperthetical, I would consider "fair" whatever amount was commensurate with the work they had to do to get me the speaking engagement. Therefore, if you want an exact sum or percentage, you will have to determine what work the agency will have to do before I can answer such a nebulous question as, What is fair?

Sorry I cannot give you the answer you seem to be looking for. I certainly do not think there is a single figure that can be considered fair.

[Spider]

Several people have made mention of adding the fee to one's regular price. I think that is unreasonable. Your regular prices include everything that muct be done to get the job and get it done. If you are paying someone else to do what you would normally do yourself, you don't charge double for that element, once for yourself doing the work and again for the other person to do the work.

The cost of selling is already in your regular prices. Either you have to sell this job yourself or someone else sells it for you. I don't see it reasonable to expect the purchaser to pay twice for the selling component.

[Harold Mansfield]

A company whose business is arranging speaking engagements might arrange the hire, negotite the fee (within a range previously agreed with the speaker), make hotel and transport bookings, collect the money from the event organizers and pay the speaker. At the other end of the spectrum, a speakers bureau might charge the speaker a set fee per engagement regardless of the amount of the speaking fee, or they might charge $X per month to be in their list of speakers. The fee they charge each speaker will depend on the services they provide, thus it is a fee for service, not a commission or 'kickback' as you call it. I am not at the level of hiring agents - all my speaking engagements are local and by direct contact from the event organizer.

If your question is hyperthetical, I would consider "fair" whatever amount was commensurate with the work they had to do to get me the speaking engagement. Therefore, if you want an exact sum or percentage, you will have to determine what work the agency will have to do before I can answer such a nebulous question as, What is fair?

Sorry I cannot give you the answer you seem to be looking for. I certainly do not think there is a single figure that can be considered fair.

In this scenario you are responsible for you own logistics, and expenses for each speaking engagement, Including travel.
You are however setting your own fees for each engagement..taking all of those things into consideration.

The agency in this situation acts as the middleman and event coordinator. You are the talent. all you need to do is show up on time and do your thing.

[Harold Mansfield]

Several people have made mention of adding the fee to one's regular price. I think that is unreasonable. Your regular prices include everything that muct be done to get the job and get it done. If you are paying someone else to do what you would normally do yourself, you don't charge double for that element, once for yourself doing the work and again for the other person to do the work.

The cost of selling is already in your regular prices. Either you have to sell this job yourself or someone else sells it for you. I don't see it reasonable to expect the purchaser to pay twice for the selling component.
I dare to say that you have paid that mark up several times in life and business and have never known about it. People don't usually itemize their business expenses to you.
Even if you shop for the best price for something like airfare, unless you buy from the source, who you buy from is getting a commission or referral fee.

In the limo scenario, the middle man... such as Orbitz, charge customers a little bit more than what they would pay by contacting the company direct. Then they also received a percentage of the booking for the first 3 hours booked. We didn't tell people that they paid a little more because they booked through Orbitz. They may have known, but I have never encountered anyone that cared. They cared more about the reliability.

[Spider]

In this scenario you are responsible for you own logistics, and expenses for each speaking engagement, Including travel. You are however setting your own fees for each engagement..taking all of those things into consideration.
The agency in this situation acts as the middleman and event coordinator. You are the talent. all you need to do is show up on time and do your thing.Are you asking me what I would consider reasonable to pay the event coordinator? If so, what is the event coordinator doing in this arrangement?

Let's be specific. Acme Engineering is having a Christmas Party and Award Ceremony for their staff and they hire JollyTime Event Coordinators to organize the affair. JollyTime arrange the hall, choose the menu, arrange the festivities, the seating, the decorations, etc. and ask me if I would like to be the After-dinner Speaker. JollyTime ask me what my fee would be, which must be a total sum that includes travel, hotel, and all other expenses, and, Oh, by the way, how much will I kickback to JollyTime for being given this engagement?

Is that the scene and is that what you are asking me?

[Spider]

I dare to say that you have paid that mark up several times in life and business and have never known about it. People don't usually itemize their business expenses to you. Even if you shop for the best price for something like airfare, unless you buy from the source, who you buy from is getting a commission or referral fee.
.. In the limo scenario, the middle man... such as Orbitz, charge customers a little bit more than what they would pay by contacting the company direct. Then they also received a percentage of the booking for the first 3 hours booked. We didn't tell people that they paid a little more because they booked through Orbitz. They may have known, but I have never encountered anyone that cared. They cared more about the reliability.That may be so, but you didn't ask about whether the customer would care, you asked about what we thought was fair.

[Harold Mansfield]

Are you asking me what I would consider reasonable to pay the event coordinator? If so, what is the event coordinator doing in this arrangement?

Let's be specific. Acme Engineering is having a Christmas Party and Award Ceremony for their staff and they hire JollyTime Event Coordinators to organize the affair. JollyTime arrange the hall, choose the menu, arrange the festivities, the seating, the decorations, etc. and ask me if I would like to be the After-dinner Speaker. JollyTime ask me what my fee would be, which must be a total sum that includes travel, hotel, and all other expenses, and, Oh, by the way, how much will I kickback to JollyTime for being given this engagement?

Is that the scene and is that what you are asking me?

Probably not that formal.
I'm thinking really basic.

Jollytime books all kinds of speakers in every industry, and language, nationwide. You are listed on Jollytime's website as a public speaker available for hire. Someone calls and needs a speaker that does what you do. Not necessarily you, just someone. Jollytime thinks that this is perfect for your expertise, calls you, and say's "I need a speaker to go to Dallas, and speak to a small business group about widgets. Are you available?"

You figure out how much it will cost to make this happen and reply to Jollytime with a price.
You do the job and Jollytime pays you.

Jollytime got you the gig, and the price that you asked for.
How much is a fair referral fee to Jollytime?

What makes Jollytime different and why do people call them? Let's say expert panels are big. People are constantly putting together panels of experts for one event or another. Jollytime has the ability to coordinate panels for any event with the needed experts, and you as an expert are a frequent panelist through Jollytime.

So you not only get work with Jollytime as an individual, but, your association with other experts on the Jollytime staff opens up more doors for work than you can do alone.


In my scenario (me being Jollytime) , it would probably just be easier to bill for what I want, and give you what you asked for, instead of asking you what is fair. That way you never have to be concerned with my commission anyway, and you still make your regular rate without having to do any math and have another outlet to get more business that doesn't cost you anything.

I guess in a way it would operate more like a staffing agency, and project coordinator.

[Spider]

Oops! A change in the game! Perhaps I was looking in the wrong directory. I thought you said JollyTime Event Coordinators. You must have been referring to JollyTime Speakers' Agent. No problem.

JollyTime has a website on which I am listed. There are only three possibilities -
. a) I am paying them to list me by a monthly or some other regular fee;
. b) I am paying them to list me by agreeing to pay a fixed sum or a percentage of the speaking fee for each engagement they secure for me;
. c) they are a bunch of idiots and are doing it for free!

Client calls, JollyTime thinks I am the man for the job, I state my price, I do the job and JollyTime pays me. Ho, ho! JollyTime pays me, not the Client. No problem, just drawing attention to the fact. It establishes that JollyTime are my agent and not a event coordinator hired by the client.


Jollytime got you the gig, and the price that you asked for.
How much is a fair referral fee to Jollytime?Nothing. Zero. I am already paying JollyTime for listing me on their website. I am not going to pay them again for referring me - that's why I paid to be listed on their website. I am paying them for a service they render to me. That service includes receiving a call regarding their website listings and arranging the hiring, billing the client and paying me, all according to the service they offered for the fee I agreed to pay. They are already being paid according to the agreement we set up when they agreed to list me.

[Harold Mansfield]

B) is pretty much the business model I am going after. In the working examples that I have seen, Jollytime would just bill the client directly, adding their fee, and everyone gets their normal rate.

[Spider]

But my B is not what you describe.

And, how did we get here from there ('There' being - How much would you pay or do you expect for referral fees?)

[Harold Mansfield]

. b) I am paying them to list me by agreeing to pay a fixed sum or a percentage of the speaking fee for each engagement they secure for me;



If it were a percentage, how much is fair?
Or do you care what Jollytime bills, as long as you get your fee?

[Spider]

If it were a percentage, how much is fair?
Or do you care what Jollytime bills, as long as you get your fee?We are talking about two different things, now.

1. I said: . b) I am paying them to list me by agreeing to pay a fixed sum or a percentage of the speaking fee for each engagement they secure for me;

2. You said: Jollytime would just bill the client directly, adding their fee, and everyone gets their normal rate.

In 1, you will notice that I am paying JollyTime. In 2. JollyTime is paying me.

In 1. JollyTime is providing me with a service. In 2. I am providing a service to JollyTime.

In 1. I have hired JollyTime. In 2. JollyTime has hired me.

These are not in any way compatable, comparable nor interchangeable.


You can't keep changing the question and expect to get a sane answer! So, what are we talking about now, Harold? Referral fees? Listing fees? Speaking fees? Agency fees? Finder's fees?

[Harold Mansfield]

We are talking about one thing.

. b) I am paying them to list me by agreeing to pay a fixed sum or a percentage of the speaking fee for each engagement they secure for me;

If it were a percentage, how much is fair?

[Spider]

This is a great departure from the original question. This is not a commission for a sale, not a "kickback." It is a service offered and a price set for it -- "My price for unblocking your drain is $40." - "Sure, I'll sue your neighbor. My price is $500 retainer and X-percent of whatever we collect from him." - "Yes, I'll build you a website with green clocks all over it for $1200." - "The box of cornflakes has a sticker of $2.65 on it. That is the price." This is not a question of what is fair, It's a question of would you rather have the service and part with your money or keep your money and go without the service.

But you seem to want a figure. I'll say that I would imagine a service offering a listing on a website that seems capable of getting me some speaking engagements might charge 25 - 30 percent of the speaking fee. But please do not quote me as saying I think this is fair. It's neither fair nor unfair because 'Fair' doesn't come into this.

It's not in the least like, "Is it fair for the awarding officer of a selection committee to receive a kickback from the winning bidder?"

[Harold Mansfield]

It's not in the least like, "Is it fair for the awarding officer of a selection committee to receive a kickback from the winning bidder?"

That's just corrupt.

I didn't know this would be such a difficult question to ask. Our whole capitalistic system is riddled with middleman, commission sales, agents, managers and affiliates.

I think I have the answers I need. Don't ask. Just book the work and pay your people what they need to get it done.
No since in reinventing the wheel. This system already works and has for years.

[Spider]

I think it became difficult to answer because you kept changing the question. Commision on a sale is not the same as a 'Thank you' payment for a referral, which is not the same as hiring someone to perform a service. And none of these are kickbacks.

Still, I'm glad we muddled through and got you the answer you wanted.

[Harold Mansfield]

No. I keep asking the same simple question over and over again. You keep changing the parameters and adding all kinds of variables that are not part of the original question. I'm sure you understand what I mean. I don't want to get bogged down in semantics.
Commission, Kickback, Affiliate fee....for the purposes of the web...it's all the same. How much the does the middle man get for making the sale or booking the work for you?
I thought we got close here:


. b) I am paying them to list me by agreeing to pay a fixed sum or a percentage of the speaking fee for each engagement they secure for me;


and then you started going in circles again when I asked How much?

I can't ask you the question as a web developer, because you aren't one. So I hoped to get some answers based on everyone's industry and see what averages out.
But like I said, it's best not to even involve people and give them a voice.
I'll book the work, you do the job, and I'll pay you (hypothetically) . No need to try and include anyone else in the decision making and take it any further than that.
I guess someone has to be in charge.

I thought I put it plainly here:



Frederick - If a company were to book you with paid speaking engagements in front of your target audience. How much of a commission is fair to kickback for the gig?
VG- If you were listed as a service provider on a freelancer site, how much is fair to kickback for the work that you get from being on their site?
Huggy - If there were a local contractors association where home owners went looking for reputable service providers, how much from each job that you received through them would you expect to pay in referral fees?


Pretty straight forward. No one is paying your expenses. You are responsible for them just as you are when you book any other job.
You are an independent contractor, just as you are normally.

What fee would you pay to an agency that gets you the work?
I can't put it any plainer than that.

[Business Attorney]

Among lawyers, referral fees vary from zero to 33 percent. Personal injury attorneys (who typically get a third of any damage award) often will pay 1/3 of their fee to the attorney referring the matter to them. But those are really special circumstances for a number of reasons. First, their fees are based more on the risk the attorney takes (because they get nothing if the plaintiff loses and often even lose money by advancing expenses) and not on actual hours. Second, for many personal injury attorneys, the bulk of their revenues comes from all the non-PI attorneys who funnel matters to them.

At the other extreme, and much more common, are the referrals where no compensation is paid. That is the norm in my own practice area. While there is no tangible compensation, there are other factors at work - personal relationships between the attorneys, expectations of reciprocal referrals at some point in the future or simply taking good care of a client that is important to the referring attorney,

When I have seen referral fees, I would say that 20 percent was the norm. Typically, within a law firm, partners are paid primarily based on a combination of fees received for the work they did and fees received for the work they brought into the firm. There may be many other factors that are less tangible but the two ways that a partner contributes to the revenue are seldom ignored. If you would credit a partner with 25 or 30 percent of the gross fee, then it is not difficult to justify paying another lawyer outside the firm a similar amount for referring you work.

So, take your pick: 33, 20 or 0.

[Harold Mansfield]

Among lawyers, referral fees vary from zero to 33 percent. Personal injury attorneys (who typically get a third of any damage award) often will pay 1/3 of their fee to the attorney referring the matter to them. But those are really special circumstances for a number of reasons. First, their fees are based more on the risk the attorney takes (because they get nothing if the plaintiff loses and often even lose money by advancing expenses) and not on actual hours. Second, for many personal injury attorneys, the bulk of their revenues comes from all the non-PI attorneys who funnel matters to them.
.

That's interesting. It seems that there are a lot of attorney referrals, especially across state lines.
What's a non-PI attorney?

[Business Attorney]

That's interesting. It seems that there are a lot of attorney referrals, especially across state lines.
What's a non-PI attorney?

What I meant was attorneys other than those who regularly handle plaintiff's personal injury cases. That would include, for example, commercial litigation, corporate law, estate planning, etc...

At least in urban areas, most business law firms do not take on personal injury cases as it does not fit their economic model or skill sets. Similarly, many sole practitioners don't have the resources to take on a personal injury case that may require large outlays of cash (such as for expert witnesses) with the eventual payday possibly years in the future.

Conversely, the first person that many injured people turn to is the attorney who handled their real estate closing, their parents' estate or lives on their block. While that attorney may not be in a position to actually handle the case, he or she is often able to recommend an appropriate attorney to handle the personal injury claim. As a result, for many personal injury (PI) attorneys, their most significant source of business is the attorney network they have developed.

[Business Attorney]

I should note that there are also restrictions on referral fees paid to or paid by attorneys. In Illinois, and I assume in most or all other states, it is illegal to pay any portion of a legal fee to a non-lawyer. Even referral fees among lawyers are restricted, although recent changes in the Illinois Rules of Professional Conduct have loosened them somewhat. In any division of fees based on a referral, the client must agree in writing, the share each attorney receives must be specified, the total fee must be reasonable, and each attorney must assume joint financial responsibility for the representation. Those factors certainly create more of an obligation on the referrer than someone referring business to you would have, so that may affect the amount of the split as well.

[Spider]

Realtors have similar restrictions, too.

[vangogh]

Harold I think I understand what you're ask now a little more than I did earlier. Given the JollyTime example I would think 10-15 percent would be fair. I don't really see this as a commission or referral fee though. The situation seems more to me like one where I hired a programmer to do some of the work on a project of mine. The programmer gives me his fee and I then add a little above that fee in addition to his fee to the total cost for my client. In that case I likely would have a standard percentage.

When you asked


If you were listed as a service provider on a freelancer site, how much is fair to kickback for the work that you get from being on their site?

I took it to mean the kickback was coming out of my price, which is why it would depend. In the scenario you described with JollyTime I make the same amount no matter what you charge the client. In fact I wouldn't even see myself as working for the client. I'd see myself working for you since it would be you paying me.

[Harold Mansfield]

I don't think I had the actual process figured out correctly in my head. I was confusing two different business situations.

[vangogh]

No worries. Maybe how we answered originally help you think this through to where you have a more solid grasp on a business model. I do think 10-15 percent seems reasonable for what you're now thinking. One question you may want to ask is where are you adding value to the process. Are you more helping the client find speakers of helping speakers find gigs. Whoever you're helping more is really who should be paying your costs.

[Harold Mansfield]

By far the client is served more. I'm hoping to capitolize on a few short comings that my clients keep reminding me of when they look for services outside of what I offer, and I'm tired of sending people out into the world to fend for themselves.

[vangogh]

Makes sense to have the client pay your fee then. Thought that's where you were adding more value, but figured I would ask.

[Harold Mansfield]

Makes sense to have the client pay your fee then. Thought that's where you were adding more value, but figured I would ask.

Yeah. That's how I've always seen it done. I guess the old limo driver in me had me confusing the two models. As a limo driver we just paid straight cash kickbacks. It's actually extortion on the street level.
But when it's company doing business with another company, the other booking company usually takes theirs off the top.
And that's the model I'm most interested in after seeing that example.

As a local limo company in Vegas, there are a lot of companies to choose from and tourist don't know one from another, but a site like Orbitz can offer all of the travel services that you need in one place and thereby attracts more eyes. Plus they have credibility. Even if people understand that they are an affiliate, they still trust that they only do business or offer reputable services.

So the partnership makes sense.

[PodBiteRadio]

I think the fees businesses pay do vary. I am looking into a referral system and we will be looking at £75 flat fee. That comes down to what we do as being something that requires no selling on the refers part. We are looking at offering credits too. The credits will be worth a lot more than the referral fee. I think if you doing something like this its best to keep it simple.

Sean :)

[Toney]

It's all in the relationship. Who it is, how often they refer you, and how big the deals are. I pay fees all the time and I get fees, it's networking at it's basic level. Share the wealth, we all gotta make a living. I float from 3% to 20% depending on the margins and the relationship status. Bigger deals tend to have smaller margins so weigh it out and find what you are comfortable with and will it be enough to entice them to refer you again and again? Only you can determine the number.