How to Handle Referral Fees
An intro and help closing a deal are not the same thing.
Referral fees are rarely a money problem.
They’re usually an expectations problem.
Most of the weirdness starts when money forces people to define what actually happened.
Was it just an intro?
Did they help close?
Did either person expect something?
That’s usually where it gets awkward.
To me, referral fees aren’t really about fairness.
They’re about protecting the relationship once something casual starts carrying real value.
What makes this awkward
The fee usually isn’t the uncomfortable part.
The ambiguity is.
A simple intro feels like a favor.
Once money shows up, people start looking back at the same situation differently.
One person thinks they made an intro.
The other thinks they helped win the business.
And the longer nobody says anything, the easier it is for both people to build their own version of the story.
That’s why referral fee conversations get weird.
Not because referral fees are wrong.
Because people are often trying to define the deal after the value already showed up.
The distinction that matters
There are really two different things here.
1. The intro
They make the connection and step back.
2. Help closing
They stay involved after the intro. They join calls, build trust, handle doubts, keep things moving, or help the buyer get comfortable saying yes.
Those aren’t the same contribution.
A friend making an intro is one thing.
Someone using their credibility to help the deal happen is another.
They shouldn’t be treated the same way.
Why I don’t use one rigid rule
Some people want a referral fee.
Some would rather keep it informal.
Some can’t accept fees because of company rules.
What matters is that both people mean the same thing.
When referral fees make sense
Referral fees usually make more sense when the referrals stop being random.
You notice the same person sending work your way.
Their intros are a good fit.
Those intros keep turning into real projects.
That’s usually the moment to talk about it.
The only default I’d use
If I needed a default, I’d just separate the intro from actual help closing.
If they made the intro and stepped back, that’s one thing.
If they stayed involved and helped the deal happen, that’s another.
I wouldn’t treat those the same.
That’s the main logic.
The exact percentage matters less than agreeing on what role they actually played.
A few rules that keep it clean
Pay on money actually received.
Keep it to one referrer per client.
Put a time limit on it.
If someone can’t accept fees, swap it for a gift, dinner, or another thank you.
If the client asks, be transparent.
You just need enough agreement that nobody’s inventing the rules later.
When they don’t make sense
Referral fees usually don’t work well when the inputs are loose.
If someone sends everyone they talk to, paying them only encourages more of that.
They’re also a bad fit when the work is still changing, project sizes vary a lot, or formalizing the relationship would make it worse.
Not every good relationship needs to become a paid one.
Sometimes keeping it informal is the better move.
When to bring it up
The best time is before the next referral.
The next best time is right after the first deal closes.
The worst time is after several deals, when both people have already formed assumptions.
Usually you just need to align on what counts, when payment happens, how long it applies, and whether the client should know.
A simple line works:
“I’m happy to keep doing this. Since these intros have turned into real work, we should set a simple rule so neither of us has to guess.”
Resentment is usually a clue
If I start resenting the fee, the expectation, or the dynamic around it, something’s probably off.
Usually that means the unspoken deal and the spoken deal were never the same.
That’s the part I trust most.
Not whether the percentage sounds fair on paper.
Whether the arrangement still feels right.
My actual view
I don’t think referral fees need a universal rule.
I think they need agreement once the relationship stops being casual.
Some situations deserve a fee.
Some deserve a thank you.
Some deserve nothing beyond appreciation.
And some only get weird because nobody said out loud that the dynamic had changed.
That’s why referral fees are rarely a money problem.
They’re usually an expectations problem.
Thanks for reading,
Gev