Should you ask for freelance referral fees?

June 23, 2011 by Dean Rieck
Filed under: Ask Dean 

ask Dean about freelance referral feesI get a lot of questions from readers. Generally, I answer them with a short email.

But now and then I get a really good question and like to answer it as a blog post to share with everyone.

Here’s a question about referral fees I received recently from Trace Conger, a freelance commercial writer.

Hi Dean. Continued thanks for the great site. I learn something new every time I stop by. I was hoping you could throw some of your wisdom my way on the topic of freelance referral fees.

For the first time in my freelance career, I had to turn down work. I picked up three new clients over the course of a month and each had significant projects due ASAP (as if there is any other timeline).

An ex-colleague contacted me today to write a series of online articles and other collateral for a national insurance company. Normally, I would have jumped at the project because it has long term potential and could lead to bigger things.

She had a quick turnaround, and I knew I couldn’t give her (and her project) the attention she deserved with everything else I had going on, so I told her I couldn’t handle the project, but I’d be happy to introduce her another freelance writer (who I personally knew was a great fit for the gig) for the job. (This is, of course, after I inquired about pushing her timeline back so I could handle it myself, which was not an option).

Anyway, my freelance friend was grateful for the lead and suggested paying me a referral fee for the work, if he lands the gig. I didn’t expect this, and didn’t know if it’s an industry practice or what. He’s a friend, and I wouldn’t expect to pay a referral fee to another writer should they shovel some work my way. As far as I’m concerned it’s one friend helping another out, end of story.

We agreed that if he lands the work, that he’ll pick up the tab the next time we get together for beers, which is aces as far as I’m concerned.

I wanted to see if you had an opinion on this. I assume some freelancers might demand referral fees for passing on work, just as others take on work, farm it out to other writers at a lower rate, pass it off as their own copy and pocket the difference, but that’s not my style. If I didn’t write it, I don’t want to get paid for it.

Maybe, I’m stupid, or maybe I just have rugged good looks. Who am I to say? Any thoughts.

Good question, Trace. Let’s think about this.

There’s nothing inherently unethical about taking a referral fee. So if your friend offers it to you, you can take it or not as you wish. It’s intended as a “thank you” for sending business his way. Whether it’s in the form of a check or a beer, it seems fine with me.

The real question is do you demand a referral fee for sending business to someone. Some freelancers do. I’ve known some who refuse to make a referral unless they earn money from it.

This is where I have a problem. If I refer a client or prospective client to someone, I want to be sure it’s someone who will act professionally and deliver good work. If they don’t, it reflects on me and damages my reputation.

So demanding a referral fee means my judgement may be compromised. And in my case, I don’t ask for or expect a referral fee.

More to the point, asking colleagues to pay me to send them the occasional referral would make me look like a jerk. Traditionally, referrals are a professional courtesy, not a profit center. They’re meant to build good will.

As far as farming out work, yes some people do that. And frankly, I don’t like that idea either. If you’re a good writer with a solid reputation, how can you possibly allow other writers to do your work for you? If clients call you, they expect you to do the work. If they wanted someone else, they’d call someone else.

I’m frequently asked if I farm out work. I think the reason people ask is that they’ve had bad experiences with freelancers who deliver poor work from other writers. So I don’t farm out work and always assure potential clients that I and I alone will write every word of their copy.

Of course, these are just my opinions. If anyone has a different take on this, share your comments below.

Related posts:

  1. Freelance fees: hourly or per project?
  2. 8 rules for setting your freelance copywriting fees
  3. Are you losing thousands in freelance fees to PayPal?

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Smart Comments

9 Comments on Should you ask for freelance referral fees?

  1. Lucy Smith on Jun 23rd, 2011 6:28 pm
  2. I wouldn’t expect to take a cut if I referred work to someone, and likewise I wouldn’t expect someone else to want a cut. I agree with it being a professional courtesy – maybe one day it can be repaid, maybe not, but at least in the meantime the client gets what they need.

    I’ve occasionally been invited to join partnership programmes – the idea being that if I refer a client to them, I get a percentage of their earnings as long as they work for the client, and vice versa. The issue I have with that is that, for one party, it wouldn’t be a fair deal …and that would be me. Say it was a web development company, well, they would likely be able to send far more copywriting work my way than I would web dev work to them.

    So they win. It’s also why I don’t do contra – it always works out better for one party than the other, and it’s not usually you.

  3. Susan Greene on Jun 24th, 2011 8:48 pm
  4. I may be in the minority here but I DO take referral fees for work I send to colleagues. My website ranks high and brings in 3-6 new prospective clients per week. I can’t take them all on, nor would I want to. Some are a fit for me, and others are not for various reasons ranging from budget to type of copy needed.

    I have a half dozen colleagues whom I trust and feel confident referring. I know they will take good care of any client I send. And I know what types of clients/projects are their specialty.

    How do I justify my referral fee?

    1) It takes a lot of work to get and keep my website placed high on the search engines, which is how new clients find me.

    2) Before passing along a client, I spend time either by phone or in writing clarifying the client’s needs, so I can refer him/her to someone who is a good fit.

    3) When I refer a colleague, I don’t simply pass along a name and phone number. I write a detailed letter to the prospective client telling him/her something about the colleague and why I specifically recommended him/her for the client’s project.

    4) I write the colleague an email and provide any insights I’ve otained as to the client’s projects and needs.

    I see the referrals as a win-win-win situation. The client gets a qualified copywriter to work on his/her job. The copywriter gets a new client without having to invest in advertising or put forth any effort in selling. And finally, I get a referral fee that compensates me for my time in making the connection. Everyone gets what they want.

  5. Dean Rieck on Jun 24th, 2011 9:16 pm
  6. Susan: Thanks for the alternate viewpoint. But I have a question. Do you only refer clients to those who pay you a fee?

  7. Susan Greene on Jun 25th, 2011 12:05 pm
  8. Dean,

    You asked: “Do you only refer clients to those who pay you a fee?”

    My answer: No, not necessarily. If a client is seeking a specialist, and I have knowledge of someone who fits the bill but with whom I don’t have a referral agreement, I’ll happily give the referral “for free.” I’m a business person, but I do enjoy helping people too.

    Having said that, in most cases, I’m able to refer the client to someone who not only is qualified to do the work but also has a prior referral arrangement with me. I’ve been in business a long time and have a well established network of talented freelancers on whom I can call.

    I think your readers and possibly you, Dean, feel it’s noble to give referrals for free. While, as I said, I like helping people as much as the next guy, I also realize that giving referrals takes up time and provides others, the client and the freelancer I refer, a valuable service, for which both are appreciative.

    There’s nothing wrong with making money. After all, I’m running a business not a nonprofit company or government agency. Setting up referral arrangements is a common business practice used by attorneys, doctors, accountants, realtors and many other professionals.

    Copywriters and other freelancers shouldn’t be made to feel guilty about expecting a fee for making a successful connection. They are providing a useful service, one in which all parties benefit. The referral fee is simply payment for that service.

  9. Dean Rieck on Jun 25th, 2011 6:43 pm
  10. Susan: I don’t recall any referral taking me more than 30 seconds. “Sure, I know someone who can help. Here’s the phone number.”

    Also, nobility has nothing to do with it. I think it’s just a difference in what someone expects from a referral relationship. I’d like to build a relationship that brings referrals back to me occasionally rather than a small one-time fee. A $5K to $20K project and possible longtime client worth hundreds of thousands from one referral is far more valuable to me.

    But thanks for the different point of view. I know there are others who would agree with you. This has been a debated topic for a long time.

  11. Susan Greene on Jun 25th, 2011 9:04 pm
  12. Dean, as I explained in my initial comment, I do more than simply give a client a phone number when passing along a referral. I listen to the client’s needs, ask appropriate questions, and then refer a colleague who I know has the right skillset for the job.

    I then contact the colleague and quickly bring him/her up to speed on what I’ve learned. The time invested is more than the 30 seconds you say you spend, and I believe it’s why most of my referrals work out well for both the client and the freelancer.

    Additionally, as I mentioned, I put in ongoing work to keep my website at the top of the search engine rankings so that it brings in a steady flow of new customers. Referral fees help me “pay” for that work.

    You say that you prefer to “build a relationship that brings referrals back to me.” I’m not sure why you assume that the system I’ve established means I don’t receive referrals. I get plenty, both from other professionals and clients. And, when appropriate, I’ve paid referral fees. I’m happy to do so if someone has sent me a quality project or client.

    I’m proud to say that I’ve helped many freelancers build their businesses with my referrals. Those people are immensely appreciative of the clients I’ve sent their way, especially when the one-time project turns into a long-term account, as many have.

    Just so you know, I only ask for a referral fee on the first project. After that, the freelancer “owns” the client free and clear.

    Furthermore, I never ask a freelancer to pay me out of pocket for a referral. He/she pays me only if and when the project comes to fruition, is successfully completed, and the client has made the final payment.

    I believe one of the keys to being successful as a freelancer is creating multiple sources of revenue. For me, one of those revenue streams is referral revenue. I think freelancers who continually make referrals and don’t establish a revenue-generating referral system are missing out on an opportunity to grow their business.

  13. Trace Conger on Jun 29th, 2011 9:46 am
  14. Susan, thanks for the detailed explanation. While I tend to lean more to the non-referral side, it’s refreshing to hear the other side of the story. I’m curious though, how do you first bring up the topic of paying you a fee to someone in your network. I understand that if you have a long standing relationship with a writer, they’re probably already aware of your policy and know what to expect, but how do you bridge the topic with writers who might not be “in the know?” Have you ever had a writer not agree with your policy and pass on the job as a result?

    Also, when someone sends work your way, but doesn’t mention a referral fee, do you bring it up or only enter the conversation if the one referring the work broaches it first?

    Lastly, how do you determine the amount of the fee? Do you work off a flat fee or a percentage of the project cost? Thanks again for the alternative perspective.

  15. Susan Greene on Jun 29th, 2011 4:05 pm
  16. Hey Trace,

    I’m happy to answer your questions:

    1. “How do you first bring up the topic of paying you a fee?”

    When I get to know a freelancer who impresses me with the quality of his work and service, I ask if he would be interested in client referrals. If so, I have a standard document that explains my terms. In most cases, the freelancer says “yes” immediately. After all, he’d appreciate having new clients handed to him with little or no sales effort needed on his part.

    In some cases, I work out a reciprocal agreement, in which the referrals/referral fees can go either way. Reciprocal agreements usually occur between myself and freelancers offering a service that is complementary to copywriting such as graphic design, website design or video production.

    2. “Have you ever had a writer not agree with your policy and pass on the job as a result?”

    No. They pretty much all agree to the policy. It’s never a problem. However, I tell writers that they always have the option to pass on any job they don’t want, and this does happen frequently.

    They pass for a variety of reasons, the most common being that they have a full plate at that moment and can’t take on a new project or client.

    Another reason they might pass is if the project requires a certain expertise or level of experience, and the writer feels he doesn’t fit the bill.

    I should explain that before sending a freelancer a client referral, I first tell him about the project/client and ask if he’d like the referral and feels qualified to handle the work. If so, then I make the necessary introductions. If not, I go to the next qualified freelancer on my list.

    3. “When someone sends work your way, but doesn’t mention a referral fee, do you bring it up or only enter the conversation if the one referring the work broaches it first?”

    If someone offers me a new project or client as a referral, I will ask if he’d like a referral fee. I’m happy to pay one for a good referral.

    In some cases, however, it’s an ad agency or web design firm sending me the referral, and my bill will go to them. In those cases I don’t offer a referral fee because they are treating me like a sub-contractor and most likely marking up my price by 20%-50% when billing their client. Their mark-up of my price is essentially their referral fee, and a substantial one I might add.

    4. “Lastly, how do you determine the amount of the fee? Do you work off a flat fee or a percentage of the project cost?”

    I charge a set percentage of the project cost. I only ask for a referral fee off the first project. After that, the freelancer “owns” the new client free and clear. As I mentioned in a previous answer, I have helped many freelancers build their businesses in this way when clients I referred for a single project turn into long-standing accounts.

    Hope that answers all your questions, Trace. If you have any more, feel free to hit me up here or contact me through my website, http://www.SusanGreeneCopywriter.com.

  17. Susan Greene on Jul 19th, 2011 4:59 pm
  18. Thank you, Dean, for raising such an interesting topic. After the lively discussion here on how to handle copywriter referrals, I wrote an article on the subject. It expands on some of the points I made above.

    http://www.susangreenecopywriter.com/articles/copywriter-referral-service.html