We don't do hosting reselling per se, but we do make sites and web DB apps. We've been around for a few years but have only recently started doing it full-time.

We have a referral program, which is something like 10%, and then 20% over a certain level. We currently take a 10% deposit (which we're going to bump up to about 25% or so).

Anyway, we're having a disagreement over when the referrer gets paid.

I'm of the opinion that the referrer gets the bonus when the site is finished and we get paid. I feel this way mostly because our current cash flow doesn't easily permit it and we need the customer's deposit for things like paying the office rent.

My partner says that as soon as we sign them and get the deposit, the referrer gets the full bonus. He thinks that if we don't pay the bonus right away the referrer will be less motivated to send business to us, even though the whole reason he's even in our picture is because he has been friends with my brother for years and years.

If we were rolling in cash I probably wouldn't mind so much. My issue isn't if we'll pay, just when we'll pay. Anyway, what do you guys think? Does anyone in our situation (developers, not just a host) have a referral program, and how do you go about things?

Thanks.

You should pay when you are done with the work. This will also help keep your affiliates honest. There are some affiliates that do bogus sign-ups.

Read some of the other affiliate agreements. Most say they will pay you when you have accumulated a certain amount or after a certain number of days.

You should pay when you are done with the work. This will also help keep your affiliates honest. There are some affiliates that do bogus sign-ups.

Read some of the other affiliate agreements. Most say they will pay you when you have accumulated a certain amount or after a certain number of days.

Agreed.

This is the way it is in hosting as well. Companies wait until after their 30 (or whatever) money back guarantee to issue payments.

If you do it in full as soon as the client signs, what happens if they ditch the last portion of their bill?

You will have some clients that won't pay you. If you've already paid the referrer, you will then have two choices: Eat the cost, or ask the referrer to give you the money back (not going to happen).

Your referrers will respect you more if you don't pay them until you are paid. It makes your company seem more financially stable, which will make it easier for them to have confidence that they are sending their referrals to the right place.

You should wait a month to verify the customer is a legit customers, I've found many places do this and I have done it myself. So far so good. Lets say you offer $50 per person and the plan is only $6.00, some people you'd find have no problem spending $6.00 if they are going to gain $50.00 in instant cash back. As everity said you will get more people respect you until you have gotten paid then they are paid, this keeps things fair for both sides and further more honest. I wish you the best of luck!