What should I charge for referrals?

Is there any formula to calculate this?

[BeeDeeDubbleU]

I have a company who want me to promote their software application through my website but I am too busy to take this on at present. I don't have time to actively promote their stuff. I know that if I create a feature on my website for what they offer it will generate enquiries. My preference would be to just forward enquiries to them and charge them for the referral. My problem is that I have never done this before and I don't know what it's worth.

They offer an online service for an annual fee and their charges are dependent on the user's requirements. Typically this can be from £1000 per annum up to £10,000 per annum for small and medium enterprises. This would cover the vast majority of their business but larger companies and enterprise level users could reach 6 figures.

What should I be charging them for unqualified referrals?

[Dinkar]

30% for qualified referrals and 0 for unqualified.

[BeeDeeDubbleU]

Oh yes? You want me to offer unqualified referrals for nothing?

[purplecape]

He wants you not to make any unqualified referrals!

[BeeDeeDubbleU]

I am not sure that you are understanding me here. If someone finds their way onto my website and they are seeking the product advertised there then this is a qualified referral of sorts. If I find prospective clients for other businesses then this clearly has a finite value.

[purplecape]

So really you feel all your referrals would be qualified.

I can't give you a definite answer, but if I were in your shoes I would respond by describing how you would refer people to your site, and asking for what you think is a high amount for each--perhaps 5% of the low-end figure you mentioned.

If they object, ask them what they think would be reasonable, and negotiate from there. After all, they approached you, so I doubt that they will just vanish if you ask too much.

[BeeDeeDubbleU]

So really you feel all your referrals would be qualified.

Yes I do. I have created pages on my website with content to attract this type of traffic, which is closely related to what I offer on my own website. If someone does a search for Business Widget software then clearly they are interested in this and most likely seeking to buy it.

If through their search they find their way to my page and I refer them to the other company then this must surely be classed as at least a partly qualified referral?

[purplecape]

I agree with you. I think this only came up because you asked initially about unqualified referrals.

[BeeDeeDubbleU]

Perhaps it was my fault for not describing the situation properly. If so I apologise but assuming my new explanation clarifies this does anyone have any suggestions about these charges?

[purplecape]

No problem. We were talking past each other there.

I repeat my earlier point--offer to take them on for an amount that you think they will find too high, then negotiate. How do you figure out what that is? Well, you could look around for affiliate programs with similar products and see what the pay-out is. Or look at your AdSense income for similar pages, if you are in AdSense, make some assumptions about CTR, and ask for a perclick payout several times what you get from AdSense...

Without knowing more detail I don't think it's possible to say " you should charge X."

[Geronimo]

The easiest way to work with a company like this is if they use a good ecomerce solution I guess. Otherwise the tracking would be an extra headache that I am guessing you are not interested in.

I am in the process of setting up with a company that makes a sales page that links in with our design. They handle the whole sales setup for us and have the affiliate network.

Anyway, if the company that you are looking to work with would use a similar ecomerce solution, you would just need a simple link and he can set the commission that you agree on. So, simple to setup for you. The cookies for tracking should assure that you get paid for any sales made to leads you have generated. So I don't get the confusion about unqualified vs qualified leads.

Commission wise, I would suggest a 30 to 60% scale depending on the amount of sales.

[tangor]

Leads/Referrals generally reside in the 5-10% of value area. YMMV.