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  Post #2 (permalink)   01-09-2019, 10:46 AM
bigredseo
HD Master
 
Join Date: Aug 2015
Location: Omaha, Nebraska
Posts: 286

Status: bigredseo is offline
Affiliate commissions are a tricky subject as the amount offered is sometimes it's directly dependent on the Lifetime Value (LTV) of the sale, and other times it's just on the initial sale.

The correct number is something that you will need to talk to your accountant about and also what marketing you're doing and how things will offset.

For example, if you're selling a server for $200/month, and you offer a 100% commision on the initial sale ($200), I personally don't think that's unreasonable. Depending on your churn rate, you could keep that client for 6 months or 5 years - again, this is going to be something you need to evaluate.

Affiliate commissions MUST be treated as your marketing channel. You're paying that individual for marketing your services, and as such, it must be worth their time too.

Every price point is different. I've seen some hosts pay out $35 for a $5/month account (700%), and others pay $0.50 for $5/month recurring (10% lifetime recurring).

As a person selling the product of a business, most will want the initial payout as there's no telling how your support is and if you will lose the client due to actions of your own. As a result, I could have received $35 in one shot, versus $0.50 for 1 month, after which the client cancels due to poor communication with staff.

So determining the rates is something you need to determine the value of, and what that marketing is worth to you.

In real estate and car sales, 0.5%-2% are commonplace, but the ticket item is much higher.

You really need to talk to someone about your Value Proposition, and then what exactly you can afford to hand out.

When I ran hosting, our commissions were 10-20% recurring monthly (Tier Commissions), even on servers at $400/month. Spending $10k in commissions was not a problem as the income far outweighed the expense.
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Conor Treacy
Big Red SEO - Omaha, NE
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