You send a client you cannot take on to another freelancer, they land a good project, and you both vaguely agreed you would get a cut for the referral. Then payment time comes and the number you remember is not the number they remember. A client commission agreement turns that handshake into something enforceable: it sets who gets paid, how much, what triggers the payment, and when. Here is what a commission agreement is, what to put in one, and how to handle it as a freelancer.
What is a client commission agreement?
A client commission agreement is a contract that sets the terms for paying someone a commission, usually a percentage or a flat fee, when they bring in business. For freelancers, this most often comes up as a referral arrangement: you refer a client to another freelancer, or someone refers a client to you, and a commission is owed on the work that results.
The same document is sometimes called a referral agreement, a finder's fee agreement, or a sales commission agreement. In a corporate setting, a commission agreement covers a salesperson earning commission on deals they close. For freelancers, the structure is the same, but the situation is usually simpler: one person sends work to another and gets a defined cut for it.
Either way, the agreement exists to remove the guesswork from a payment that is otherwise easy to dispute.
When freelancers use a commission agreement
The most common case is a referral. You are booked solid, or a project is not your specialty, so you pass it to a freelancer you trust and agree on a referral commission for the introduction. Putting it in writing protects both sides: you know you will be paid if the work goes ahead, and they know exactly what they owe and when.
It also comes up in partnerships and ongoing arrangements. A designer who regularly sends overflow work to a developer, an agency that pays freelancers a finder's fee for bringing in clients, or two freelancers who cross-refer and want a clear split all benefit from a written commission agreement instead of a running mental tally that turns into an argument.
What to include in a commission agreement
A commission agreement does not need to be long, but it needs to be exact about the money. At a minimum, include:
The parties:: who is paying the commission and who is receiving it, with full legal or business names.
What triggers the commission:: the specific event that earns the payment, such as a referred client signing a contract or paying their first invoice.
The commission rate:: the percentage or flat fee, and exactly what it is calculated on, such as the project fee or the first invoice only.
Payment terms:: when the commission is paid, the method, and the deadline.
Duration:: how long the arrangement lasts, and whether it covers only the first project or future work from the same client too.
Exclusivity:: whether the referral is exclusive, and what happens if the client would have found the other freelancer anyway.
Signatures:: both sides sign and date it before any referral is made.
The most disputed of these is what the commission is calculated on. "Twenty percent" means nothing until you state twenty percent of what. Be specific: a percentage of the first project's fee is a world apart from a percentage of everything that client ever pays.
How the commission rate and payment usually work
Referral commissions among freelancers commonly run from 10 to 20 percent of the first project's value, though the number is whatever both sides agree to. A one-time referral often pays a percentage of the first project only. An ongoing arrangement might pay a smaller percentage on all work from that client for a set period.
Decide the trigger carefully, because it controls your risk. Tying the commission to the referred client actually paying, not only signing, protects the person paying the commission from owing money on a deal that falls through. State the payment deadline too, on terms like net 30 after the triggering payment, and add a late fee so the commission does not sit unpaid. The clearer the trigger and timing, the less room there is to argue later.
If you want the agreement signed before you make the introduction, FileCurrent lets you send a contract for a legally binding e-signature and keep the signed copy on record, so the commission terms are locked in before any work or money changes hands.
Common mistakes with commission agreements
No written trigger. "You will get a cut" is not a trigger. Define the exact event that earns the commission and when it is paid.
Vague calculation base. State what the percentage applies to: the first project, the first invoice, or all future work. This is where most commission disputes start.
Relying on a verbal deal. A referral commission agreed by text or over coffee is hard to enforce. Get it signed before the referral, the same way you would any client agreement.
No end date on ongoing splits. If you agree to a commission on all future work from a client, set a time limit, or you may owe a cut indefinitely.
Frequently asked questions
What is a client commission agreement?
It is a contract that sets the terms for paying someone a commission when they bring in business, usually a percentage or flat fee. For freelancers it most often covers a referral, where one person sends a client to another and earns a defined commission on the resulting work.
What is a typical referral commission for freelancers?
Referral commissions among freelancers commonly range from 10 to 20 percent of the first project's value, though the exact figure is whatever both sides agree to. One-time referrals usually pay on the first project only, while ongoing arrangements may pay a smaller percentage on future work for a set period.
What should a commission agreement include?
The parties, what triggers the commission, the rate and what it is calculated on, payment terms and deadline, how long the arrangement lasts, any exclusivity, and signatures. The most important detail is stating exactly what the percentage applies to, since that is where most disputes begin.
When is a commission payment due?
That depends on the trigger you set. A common and safer approach is to tie the commission to the referred client actually paying, with the commission then due within a set window such as net 30. Put the trigger and the deadline in the agreement so there is no ambiguity.
Do I need a written agreement for a referral fee?
Yes. A verbal referral deal is easy to misremember and hard to enforce. A short written agreement covering the trigger, the rate, and the payment terms, signed before the referral, protects both the person paying and the person earning the commission.
A commission you were promised only counts if it is written down and signed. FileCurrent gives you contract templates with a legally binding e-signature and invoicing in one place, so your commission and referral terms are on record and easy to bill when the payment comes due. $15/month or $129/year. 7-day free trial, no card required.