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I want to hire a few contractors to help 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, the goal to get as many new and repeat clients as possible. My issue is this:

How do I make the agreement fair for my contractors and give them strong incentives to work hard without having to continue paying for returning business from previously referred clients?

There are three basic situations:

1.Individual one-time or first-time sale - Obviously, I will pay for this.

2.Repeat business from the same client - I want to avoid having to pay recurring commissions on.

3.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.

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  • No, customers will see no difference. I'm talking about what I pay the contractors who bring me customers.
    – Alex
    Commented Nov 30, 2018 at 21:26
  • Wouldn't it merely be a one time finder's fee?
    – Scott
    Commented Dec 1, 2018 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
    Commented Dec 4, 2018 at 5:11

2 Answers 2

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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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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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