Free Referral Commission Calculator
Model referral commission splits for recurring or one-time deals. See total commission, profit after commission, net margin, and break-even timing.
Deal Details
Commission Terms
Commission Analysis
Total Commission Owed
$6,000
on $120,000 in revenue
Net Margin
50%
Break-even
2.2mo
Typical agency referrals: 10% for 12 months on recurring revenue, or 10-15% one-time on project fees. Avoid lifetime commission unless the margin can support it.
How to Use This Calculator
Choose whether the deal is recurring (monthly retainer) or one-time (project). For recurring, enter the monthly deal value. For one-time, enter the total fee. Set the commission percentage and, for recurring deals, how many months commission is paid plus the expected client lifetime.
Enter your deal gross margin, the percent of revenue you keep after direct delivery cost but before commission. If you're not sure, use 50-55% for standard agency work or run the profit margin calculator first to dial this in.
The tool shows total commission owed, profit after commission, net margin, and for recurring deals the break-even month. Compare the net margin to your normal direct-sold margin to decide whether the referral is worth the trade.
Key Insights
- Cap the commission period. 12 months is standard. Lifetime commissions create permanent margin drag and disincentivize new referrals.
- Pay as you collect. Never pay upfront on revenue not yet received. Client churn becomes your problem entirely.
- Model before you commit. A 15% lifetime commission on a 55%-margin retainer leaves 40% gross margin, which after overhead is barely profitable.
- Different tiers for different partners. A partner who closes enterprise deals with 12-month sales cycles deserves different terms than a friend who made one warm intro.
Frequently Asked Questions
What is a typical agency referral commission?
10% for the first 12 months of recurring revenue is the most common structure. For one-time projects, 10-15% of the project fee paid on receipt of client payment. Some agencies offer higher initial splits (15-20%) on the first month or two only, rather than a longer 10% tail.
Should I pay commission monthly or upfront?
Pay monthly as you collect, never upfront. Upfront commission on a year of revenue you haven't collected is a recipe for partners getting paid on churned clients. Monthly pay-as-you-collect aligns incentives and protects cash flow if the client leaves early.
What margin do I need to afford a referral commission?
If you pay 10% commission for 12 months, you need at least 40-45% gross margin after that commission to still be meaningfully profitable. Below 40% gross margin, commission plus delivery cost plus overhead leaves almost no profit, making the referral not worth the effort.
When does a referred deal break even?
Break-even is when cumulative profit after commission equals zero. For a recurring deal, break-even is typically reached in the second or third month once the initial commission burden is offset by margin. The calculator shows this directly. One-time deals break even immediately if they have positive margin after commission.
Should I offer lifetime commission?
Generally no. Lifetime commission looks generous but creates a permanent drag on client profitability and discourages partners from bringing new referrals (they ride the annuity). Cap at 12 months for most agencies. Exceptions: very high-value strategic partners who close enterprise deals.
Run a referral program that pays for itself
AgencyPro tracks partner-sourced deals, automates commission payouts, and reports on partner ROI so you can scale the right relationships.