I know a few writers (and other professionals who sometimes refer writers) who charge a referral fee. I have a strict policy on not accepting referrals for freelance writing jobs that come with this kind of fee, and I never charge one. How do you feel about them?
How Referral Fees Work
Here's an example of how a referral fee might work, based on a referral I recently gave a colleague for some content writing and copywriting work. In reality, my client contacted me about a project. I didn't have time to work it in immediately, and it wasn't really in my specialty area. I knew a writer who specializes in similar topics, so I referred the client to her. He hired her. All went well.
If I charged referral fees, that colleague then would have had to pay me after agreeing to take on that gig (or after being paid, depending on the fee terms - and obviously they would have to know about it before the referral was made). So, for example, I may have charged a flat fee (like $50) or I may have charged a percentage of the total contract (such at 10%).
Why I Don't Charge Referral Fees
I don't believe in charging referral fees for things like writing jobs for a few reasons:
- I know that networking plays a huge role in successfully working in a service-oriented field like freelance writing. To me, that networking should involve free and honest communication if it's going to carry any weight.
- When I do refer freelance writing gigs to someone, I want them to know that I referred them because I honestly believed they were a good fit for the job, and not because I wanted to make a quick buck off their back.
- Frankly, there are better ways to earn money as a service-provider without having to risk integrity in your network.
- I know that referring gigs freely and honestly leads to more of the same (the goodwill you earn with colleagues by treating them as more than just competitors can earn you far more money than referral fees ever will, as we often return the favor as we learn about those coveted unadvertised writing gigs).
Why I Don't Accept Jobs with Referral Fees
On top of not being willing to charge referral fees to colleagues, I also refuse any referrals that come with a fee attached. Why?
- I put a lot of effort into my marketing and networking to bring a regular flow of natural referrals in for my services. For me to take a gig with a referral fee, I would either have to work for less than what my time is worth based on the demand for it (once committed, I would likely have to turn down a gig at my regular rates), or I would have to charge the client more to cover it - neither is acceptable in my book.
- Even if I didn't happen to already have gigs lined up when the referral fee offer came in, I know that my time would be better spent marketing to attract more future clients at my full rates. When I set my rates, I set them where they are for a reason. I do make exceptions once in a while for clients I have long-term relationships with or those I desperately want to work with (doesn't happen often), but the return I'd get from the cost on a referral fee for a new client can't generally be justified compared to those situations.
- Alongside that issue of working for less money comes another issue - you have to deal with more administrative work. You have to not only collect your client payment, but then issue another payment out. I just don't have the patience.
- There's really no good excuse for referral fees these days. The colleague or client always has the option to hire you directly as a sub-contractor instead, marking up the services to the end client to their heart's desire if they want to earn from the referral. I let people know that's an option available to them (I still get paid my full rates without extra admin work, and they can still set their price / profit).
- Perhaps most importantly, I simply think it's a bad practice, and I choose not to support it (even if a referral fee gig did come in for a client I'd kill to work with, I'd turn it down and pursue working with them in other ways in the future if it meant that much to me).
You have to decide what kind of image you want to build in your freelance writing circle and whether or not charging referral fees will help you achieve that. For me, it wouldn't. I don't want (nor would I give) any kind of referral that isn't 100% honest and based on ability - not financial gain.
What about you? How do you feel about referral fees, whether charging them or paying them?