As an incentive to include my business in such a list or as a recommendation to your clients, I am willing to offer you a flat rate of $500 plus 3% of the total contract price, as an intermediation fee/commission for any contract I sign based on your recommendation. Regardless of what freelancers who charge a fee for referrals claim, referral fees for freelancers are simply not an industry standard. You can`t expect a referral fee just because it`s something that exists. If someone claims that their late mention of a commission is completely normal, you might consider not working with that person in the future. I know a retired entrepreneur who wants to work with me on a rolling referral fee (from 10% for less than $2,000 to 4% for projects over $10,000) where they would get a percentage of any job they recommend to me. He has a list of 200 to 300 customers he would contact. Claims that he has always paid fees to others for years, including other contractors, designers, architects and clients. He also feels like he deserves a fee for every subsequent recommendation I receive from the first client. To give you other reference system templates, you can check out Bobby Darnell`s referral system, which you can download from my blog, where it rationally increases compensation based on the depth and quality of the referral – a soft referral is a $100 gift card, a full press meeting, and the introduction results in a significant commission. The reasoning behind this variation is logical; At the upper end, the referrer essentially acts as a sales representative for your business and can reasonably be expected to receive a significant portion of the budget you would allocate to a final commission (that Stone sets a separate item/budget in business expenses). The only surefire way to implement referral fees is to be completely open about it with both parties. Contract of $1 million at 8% contractor fees = $80,000 x 10% intermediation fee = $8,000.

I know this thread is a bit old, but I hope Mike or Devon can clarify a point for me. With respect to the percentage of sales commission for specialized subcontractors, what percentage would you consider current for a subcontractor with an average contract amount of $2,500 (median of $2,000 taking into account orders of $50 for repeat or modification orders up to a maximum of $200,000)? Thank you very much for this post, by the way, it answered all the questions except one I had on this topic. A: I have used the intermediation fee for external people or consultants who bring us business on certain occasions. The rules are simple: there are no fees for leads. Too often, people tell us about an opportunity and don`t want to be paid for more than one phone number – it`s not worth the intermediation fee. People who have an insider lead with the client and can provide us with a negotiated contract on their introduction are worth an intermediary fee. Only recommendations that lead to exclusive meetings with the customer are considered paid leads. When the seller generates the lead, they should receive a referral fee. A smart project manager will actually tell sales teams that in addition to the agreed sales commissions, they will receive a referral fee if they generate their own lead that will be sold. Yes, the client and freelancer you referred can now simply close the deal without giving you a dime.

But both know they`re working with you for a reason. Don`t assume that everyone will stab you in the back as soon as they get the chance. Honesty is the best policy when it comes to paid referrals. Second, the freelancer who actually does the work should be aware of the referral fees and thus give them a few options. You can negotiate with the customer a payment slightly higher than its usual price to compensate for the cost of the reference. Fooling people into this option with an unexpected referral fee application is simply not good practice. There is really only one very simple way to deal with people who ask for recommendations afterwards. Stand firm and say no. Until there has been full disclosure from the beginning, you are not legally obliged to pay someone something they only need out of the blue. Two main issues concern the case before the chamber: (1) Engineer A, who makes recommendations to his clients and (2) receives a commission for the transfer to his clients and others.

Referring Engineer A to his clients is a definite conflict of interest since he received a commission for it. Contractor X does not propose that Engineer A disclose his conflict of interest to his client in accordance with Section II.4.a. of the Code. In addition, section II.4.c. prohibits the receipt of commissions or other valuables from a contractor. Contractor X`s proposal constitutes a violation of this section. During section II.5.b. a broad interpretation of the section would indicate that an engineer receiving contributions (commissions) or other valid considerations would also constitute a violation of the Code.

The decision regarding the exact sponsorship fee or commission you would pay to someone referring you to a freelance project is up to you. Referral fees should be based on the total selling price, not gross or net profit. There is far too much room for an argument and disagreement over gross or net profit, as the referring party may want to see your company`s books to verify the amount. I don`t want a party to snoop on my books from the outside. In special circumstances, suppose a recommendation for a project that exceeds $750,000 offers a gift instead of a referral fee. A trip to Hawaii for two. A cruise. Calculate what works best for your business. Most people make this “payment for references” much more complicated than it should be. I think you can tell anyone and everyone that you are paying a referral fee, but you, not them, are setting the standard. If you pay someone 10% for a referral and you have an advertising budget of 4%, it means that you will take that extra 6% on your earnings. If you`re willing to work for nothing, that`s fine, but sticking to your advertising budget makes a lot more sense.

So if someone asks you for a fee after you`ve already agreed to do the work or even started doing it, just say no. Unexpected referral fees are unprofessional, are not viable as a business model, and frankly, are disrespectful. It is important that an engineer has an arm`s length relationship with contractors, vendors, etc. who enter into or may have contractual arrangements with the engineer`s employer or client. The Commission examined this relationship in Case 81-4. In this situation, three clients or employees of a consulting firm provided their developer clients with a list of recommended contractors. From time to time, during holidays or birthdays, those contractors and salespeople with whom engineers dealt would give engineers personal gifts or significant value. Citing previous cases and the wording of the Code (Articles II.4.c., II.5.b. and III.5.b.), the Commission concluded that there is a reasonable suspicion for others, and in particular for other contractors and suppliers, that the acceptance of gifts by engineers would imply preferential treatment. The Commission noted that the acceptance of gifts in these circumstances was unethical. We received a question from an entrepreneur in the Philippines who asked us about sales commissions and agency fees. You can read part of his note (edited for clarity) here: Of course, Stone assumes (and highly recommends) that you promote the company, a position you might think I would enthusiastically support, given that my company derives more than 95% of its revenue from ad sales.

However, I have always believed that construction companies can start picking the fruits at hand first, especially by more effectively promoting rehearsal and referral activities. If you need additional help setting industry standards in conjunction with sales commissions paid and brokerage fees for your southern California land development, please contact one of the experienced business and real estate lawyers at Retz & Aldover LLP. If you are on commission, should you pay the percentage when the company receives payments? And should you pay a referral fee when you receive a deposit? Networking is the backbone of self-employment. Often, you`ll find that you`re spending freelance referrals on client projects – and sometimes you`ll even get a referral fee. While there isn`t necessarily something wrong with paid referrals, it`s important that they`re done right! In many ways, I think Michael Stone is right, at least in the consumer market. You don`t need to be generous with recommendations, especially if you`re running an organized, budget-focused advertising campaign. However, if your referring bird dogs behave much more like field workers, a compensation scale similar to Bobby Darnell`s may make more sense. This is the approach I take with my own company in adjusting the compensation of our internal sales reps to the costs of additional leads (and sales reps rarely, if ever, object to this as work becomes an “easy sale”). Construction brokerage fees should not exceed the amount you normally budget for marketing and advertising.

If you`re building new homes, this can be one to two percent of your total annual income. If you are a specialized contractor, it can be one and a half to three percent and if you do renovations, it can be three to five percent. However, I would set a cap on the amount you pay for a job referral. I would add a non-overrun clause, maybe $1,000 or $2,000, $2,500; Make a number that seems reasonable. However, you decide to charge your referral fee, specify it and say it in advance. The final commission should only be based on the total selling price, not on gross or net profit. A salesperson has little or no say in the production of a project, so they should not be penalized if an order overflows due to inefficiencies in production. Some entrepreneurs prefer to pay on gross or net profit because they believe it forces the seller to make a more accurate estimate. .