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  Post #1 (permalink)   01-08-2019, 01:54 PM
HD Newbie
 
Join Date: Jan 2019
Posts: 15

Status: BoxObsessed is offline
Hi folks,

I don't know if this is the right place to ask these questions. As we could get better insight from potential affiliates directly.

But what is by your opinion fair affiliate commission rate and payout terms?
Also, should it be one time or recurring?

We have different ways, and we are ready always to negotiate fair terms with our affiliates. But for example, we had some kinda unfair requests where one website (I won't name it) asked us for like $200 per sale. Which is like a lot above our selling fee, not to mention true earnings.
 
 


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  Post #2 (permalink)   01-09-2019, 10:46 AM
HD Addict
 
Join Date: Aug 2015
Location: Omaha, Nebraska
Posts: 235

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
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  Post #3 (permalink)   01-11-2019, 12:40 AM
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Join Date: Oct 2017
Posts: 27

Status: bountysite is offline
How does affiliate commission generally work in Hosting Industry?
Does it vary for VPS/Dedicated/Shared hosting?

@bigredseo: Do you have experience running affiliate campaigns in the past?
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de facto for all Hosting Environments
 
 
 


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  Post #4 (permalink)   Today, 02:56 PM
HD Addict
 
Join Date: Aug 2015
Location: Omaha, Nebraska
Posts: 235

Status: bigredseo is offline
Quote:
Originally Posted by bountysite View Post
How does affiliate commission generally work in Hosting Industry?
Does it vary for VPS/Dedicated/Shared hosting?

@bigredseo: Do you have experience running affiliate campaigns in the past?
It definitely varies depending on the host and depending on products.

For us, we ran it as 10% across the board (hosting, domains, SSL, PCI Compliance, servers, VPS, management), and then 15, 20 and 25% for tier levels and power users. So the more you send, the bigger the overall commission becomes.

Again, it completely depends on how you want to run your business model, and how you want to reward.
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