Scale · Partner / Referral Programs
Design Partner Commission Structures
Design a partner commission structure that motivates quality referrals without eating your margin.
When to use
Use before publishing your partner agreement. Most agencies pick a commission rate by guess, then either bleed margin or lose partners. Run this when you have at least 6 months of [SERVICES] gross margin data so the model is anchored in reality, not aspiration.
The prompt
You are a partnerships lead at a digital marketing agency who has built a referral channel that drives 30%+ of pipeline. You understand agency unit economics: gross margin, payback, churn, and how commission interacts with all three. Agency: [AGENCY_NAME] — [SERVICES] | Avg deal: [AVG_DEAL_SIZE] | Gross margin %: [GROSS_MARGIN_PCT] | Avg client tenure: [AVG_TENURE_MONTHS] | Partner type: [PARTNER_TYPE] | Commission basis option: [COMMISSION_BASIS] | Competing program rates partners see: [COMPETITIVE_RATES] Design a commission structure with: (1) recommended base rate and rationale (showing margin math), (2) commission basis (first-year vs. recurring vs. one-time vs. hybrid) with trade-offs, (3) tier mechanics (what earns tier-up, what triggers tier-down), (4) clawback rules for early churn, (5) payout terms (timing, currency, minimum threshold), and (6) edge cases (multi-partner attribution, partner becomes client, partner leaves their firm). - Show the actual margin math — don't just suggest a rate - Tiers must be EARNED on volume + quality, not vibes - No commission structure that incentivizes sending unqualified leads - Clawbacks must be fair to the partner (no clawback for client-caused churn) - Must not violate any reasonable client contract or kickback disclosure rules Markdown doc with a commission summary table at the top, then sections 1-6. Include one worked example using [AVG_DEAL_SIZE] showing exactly what a partner earns on a typical deal across 12 months.
Variables
[AGENCY_NAME]Your agency's name[SERVICES]Service lines being commissioned[AVG_DEAL_SIZE]Average annual contract value[GROSS_MARGIN_PCT]Gross margin % on the service[AVG_TENURE_MONTHS]Average client lifetime in months[PARTNER_TYPE]Partner segment being commissioned[COMMISSION_BASIS]Your preferred basis (first-year, recurring, one-time)[COMPETITIVE_RATES]What other agencies/programs pay partners like these
Example input
AGENCY_NAME: Northbeam | SERVICES: SEO + content retainer | AVG_DEAL_SIZE: $72k ACV | GROSS_MARGIN_PCT: 55% | AVG_TENURE_MONTHS: 22 | PARTNER_TYPE: HubSpot Diamond partners | COMMISSION_BASIS: First-year collected revenue | COMPETITIVE_RATES: HubSpot pays 20% Y1, most SEO agencies pay 10-15%
Example output
## Commission Structure — Summary | Tier | Qualifying Intros (TTM) | Rate | Basis | Payout | |---|---|---|---|---| | Bronze | 1-3 closed | 12% | Y1 collected | Quarterly | | Silver | 4-7 closed | 15% | Y1 collected | Quarterly | | Gold | 8+ closed | 18% + co-marketing | Y1 collected | Monthly | ### Margin Math on $72k Deal (Silver, 15%) - Revenue Y1: $72,000 | COGS: $32,400 | GM: $39,600 - Commission: $10,800 | Net GM: $28,800 (40%) - Still hits payback at month 6 ### Clawback - 100% if churn 180 days OR client-caused ### Edge Case: Multi-Partner First partner with documented intro wins. Second partner gets 5% "influence" if they materially helped close.
Pro tips
- Model the worst case — what if 50% of deals churn at month 4? If you go negative, your clawback or rate is wrong
- Recurring commission >12 months sounds generous but kills program economics by month 18 — cap it
- Pay commission on collected, not booked, revenue — protects you from non-pay
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