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In affiliate marketing, the reward an affiliate gets for promoting someone else’s product is called a commission. With commission-based earnings, you have to out in effort in order to reap these rewards.
Different merchants may choose to reward you commissions in different ways but it depends on what they first get out of your promotions. For example, they may get a sale and choose to reward you with a percentage of that sale. This is probably the most common scenario.
But there are other ways of rewarding commissions. In this article, we’re going to look at some ways in which the affiliate can get rewarded, 5 different commission types that merchants can pay affiliates.
You may or may not be familiar with them all but you should definitely be trying to get some of these commissions if you haven’t already.
1. Sales Commissions
The first type of commissions is pay-per-sale where you’d get paid a percentage or a flat rate for every sale of a product. This is the most common and probably where everyone starts.
You send traffic to a merchant, the customer buys the product and the merchant rewards you commissions for this sale. It’s that simple and as long as you’re sending traffic, you’ll be able to get sales commissions when your readers buy the product you recommend.
Now, there are different types of products where you can have sales commissions and depending on the type of product, you may have to go about marketing them differently. Below, I’ll outline how these different product types can change the way you do your promotions which can affect your success rate.
Physical products are products that are tangible and usually have to be shipped to the customer. The best example of sales commissions via physical product promotion is Amazon Associate affiliate marketing.
Unless you’re selling really expensive products on Amazon, the majority of these products are going to earn you very small commissions as Amazon’s commission rate is between 4-10% for most items depending on the category.
These physical products include toys, household items, sports equipment and so on and the best thing about them is that most people already know what they want when they visit Amazon. Amazon is also a highly trusted brand and household name so there is very little resistance to buying. In other words, you’re going to make easy commissions if you’re promoting Amazon products and offering value.
Because the commission rates are low, you’re probably not going to spend money on Facebook ads to sell a toy. A better strategy would be to build a content website or blog and create content and reviews around these products targeted to a specific niche market. The commissions are low but if you’re getting good traffic, you’ll make up for it in volume.
Digital products are products that aren’t tangible and may include stuff like ebooks, courses, music downloads, software, stuff like domain names and WordPress themes. These products would never go out of stock and can be sold indefinitely.
This means that the merchant does not have to spend a lot to product these so they can share more of the sale with the affiliate. On Clickbank, you can earn up to 75% (or more in rare cases) on a lot of these digital products.
A lot more effort can go into promoting digital products than physical products because you stand to make more per sale. Marketers usually build funnels to promote these products, using Facebook ads and email marketing as a way of sending targeted traffic to the product.
Digital product creators don’t have the brand recognition that Amazon has and will usually have to work harder at establishing trust. Affiliates can help by being the third party who creates trustworthy, valuable content to presell to the potential customer.
Services and software-as-a-service (SaaS) pay per sale when the customer pays for a service such as logo creation, proofreading, SEO and anything else which isn’t tangible but isn’t exactly owned by the customer after payment.
Most merchants in this category would pay a low flat rate allowing the actual service provider to keep most of the sale. On Amazon for example, you’d get a 1 time bounty for referring certain Amazon services. The customer you referred may go on to purchase these services over and over from Amazon.
High Ticket Products
Where to find: Listings on JVNotifyPro
High ticket products are products that are mainly digital in nature where the cost is very high usually over $500 and running into thousands of dollars. For example, a digital course of $2995 is considered high ticket and buyers are often given the option to make payments in installments. Commissions on these products are very high and you can make tens of thousands in sales in a short time if you have the resources and the influence to do it.
Most people aren’t going to just buy these high ticket items on an impulse so a lot of care and effort has to go into affiliate promotions which may involve exposing the potential customer multiple times to the offer.
This means that in many cases, the best way to get sales for high ticket products is to capture the email address of the prospect then market to them through emails. Giving them something valuable (free high quality digital product) such as a free course or showing them how a process is done via a webinar are two strategies used to get high ticket product sales.
As said before, getting paid whenever a sale is generated is the most common commission type in affiliate marketing and some of the different types below may also include this type of commission.
2. CPA (Lead Commissions)
Where to find: These CPA networks
CPA is short for cost per action or sometimes cost per acquisition and is a type of commission paid by an advertiser when their goal action is completed.
For example, an advertiser may pay $30 whenever a sale is generated for a product that initially costs $9.95 to ship and $25 for the unit. He is paying on the sale to acquire a customer who will rebill and order more of the product. This can happen in the case of supplements.
Another common type of CPA commission is a lead commission where the advertiser pays for a form submission. The customer does not have to enter any credit card information for you to be credited with a commission, all they have to do is to fill out and submit a form. Advertisers can pay a small fee for these types of actions because they’re acquiring a potential customer who they can market to over and over.
I’m usually wary of promoting these types of products because sometimes, advertisers may sell the info they’re collecting or even reverse leads that don’t pan out. If you’ve ever seen ads that ask you to submit a zip code to play a game or submit your email to get the results of a quiz, then these are examples of CPA (lead) campaigns in action.
It’s great when you can earn per lead because you don’t need to make sales. However, a lot of times these advertisers are short-lived and can stop their campaigns leaving the affiliate to find replacements.
3. Recurring Commissions
Recurring commissions are the best way to earn passive income with affiliate marketing. When you’re paid this way, you make the sale one time and earn every time the customer rebills ie on products that require monthly payments.
There are many products on Clickbank that pay recurring commissions but the best example that I have had experience with is Wealthy Affiliate, a membership site that teaches people how to build an online business using affiliate marketing.
With their affiliate program, you can earn approximately 50% of referred members monthly fees, every month for as long as they remain a member and you can also earn commissions on annual memberships which rebill yearly. Even if I don’t get any new sales for a month, I’ll still make money on the members who renew their memberships. There are commissions that I’ve been earning every month for at least five years.
Sometimes, people cancel their memberships and you lose those commissions but you can still maintain your level of income and grow it by continuing to promote the product. If you have several of these recurring commission programs, you can make money with very little effort by doing the majority of the work once.
Some web hosting affiliate programs offer recurring commissions but you’ll mainly find these types of programs for courses and membership sites.
4. Bonus Commissions
Where to find: Example: WP Engine
Bonus commissions are commissions too. They’re given by merchants as incentives for earning a certain volume of sales or even for earning your first sale. Some merchants may give you bonus commissions as reward for winning a contest.
Using WP Engine as an example, they will give you $100 bonus for making 5 sales which already comes up to $1000 (5 x $200). Then they’ll give you a $250 bonus if you make 10 sales and this is on top of the $100 bonus they already gave you. So you’ve made $350 in bonus commissions for making 15 sales. In total you’ve made $3000 in sales commissions and $350 in bonus commissions, for a total of $3350.
Another program that I’m using, credited my account with $100 for making my first sale by a specific date. If you’ve signed up for an affiliate program but haven’t had any sales, you can usually get these types of incentives for taking action.
Bonus commissions also come into play if an affiliate program is holding a contest. They may credit the first, second and third place for the most sales with bonus commissions.
These commissions aren’t always regular but they help boost your income if you qualify for them.
5. Tiered Commissions
These are not so common but you earn tiered commissions when you refer other affiliates to promote a product and those affiliates make sales.
This is another great way to sit back and relax while earning some passive income. The problem though with tiered commissions is that you’re going to sign up a lot of affiliates who won’t even do the work and only a small percentage will end up making any sales.
There are some 2-tier commission affiliate programs within the Shareasale affiliate network and they’ll pay you when you get other affiliates to promote them. Using WP Engine again as an example, if you manage to sign up an affiliate who makes sales, you can collect $50 commissions on each sale they generate.
Some affiliate programs operate differently and will only pay you a small one time commission, say $10, for each affiliate you sign up who refers at least 1 sale.
For me, it doesn’t matter what type of commissions I’m earning so long as I’m helping someone solve their problems. However, recurring commissions and bonus commissions as well as 2-tiered commissions when I can get them, are my favorite.
How many of these types of commissions have you earned? Tell me about it in the comments section below.