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I want to hire a few contractors to help me get leads for my business.

I am planning on paying the contractors commission only. i.e. I get $X in sales from there referral and they get a fixed % of $X.

Of course I want to get as many new and repeat clients as possible. My issue is: how do I make the agreement fair for my contractors and give them a strong incentive, but at the same time not have to keep paying for repeat business from a client that was previously referred?

There are three basic situations:

  • Individual one time or first time sale - Obviously I will pay for this.
  • Repeat business from the same client - This is what I want to avoid having to pay for in perpetuity.
  • Bulk Sale - I will pay for this even if it involves previous clients assuming the contractor initiates / prompts the sale and the quantity is above a specified amount.
  • Let me try and understand this, you want a customer to pay for the first copy of your software but not pay you for further copies hmmm that's a difficult one! – KJO Nov 30 '18 at 21:10
  • No, customers will see no difference. I'm talking about what I pay the contractors who bring me customers. – Alex Nov 30 '18 at 21:26
  • Wouldn't it merely be a one time finder's fee? – Scott Dec 1 '18 at 13:38
  • Yes I guess so. I'm looking for what is the common practice and legal terms to use in the contract. – Alex Dec 4 '18 at 5:11
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You might try using a template form for your commission's contracts. Typically with a little due diligence, you can find what you need.

I use RocketLawyer.com for most of my legal documents and haven't had a single issue finding what I've needed.

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I've done been offering incentives to individuals and companies that refer me business for years now and I always use a floating commission in order to keep my referral network motivated and happy. I give them 12.5% of the net for the first time they refer me a client and substantially less for future referrals of the same customer. Once upon a time someone referred me to a contract at Microsoft, that's a huge company, obviously. So, the first time, I gave him 12.5%, then a few months later, I was referred to a different department within M$FT, for which I gave him 6%. Being a web/software development company, this was a recurring fee. You'll definitely want to code a management system to keep track of this information & perhaps even initiate the payments to your referrers. I find that as long as you're making a decent profit, the most important thing that you can do is to keep your referral network motivated to sell for you and not the other guy.

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