You can’t get new affiliates if you don’t set attractive affiliate commission rates. The best affiliate commission rate structure impacts both your revenue and your partnership with the affiliates.
Affiliate commission rate plays a dual role in attracting new affiliates and retaining existing affiliates. This way, setting the best affiliate commission rate creates a win-win situation for both the business and the affiliate.
In this blog, let’s get a basic overview of average affiliate commission rates, their types and how to set affiliate commission rates for your affiliate marketing program.
Without further delay, let’s jump right in.
Offer attractive affiliate commission rates using WPRelay and attract new affiliates
What is typical affiliate commission rates?
A typical affiliate commission rate lies between 5% and 30% but varies largely depending on the type of industry, product and competitors against whom you compete in the market.
Generally, affiliate commission rates ranging between 15% and 20% are considered fair and best to attract new affiliates. However, it is you who need to set attractive affiliate marketing commission rates depending on your budget.
Keep in mind that the average affiliate commission rate that you set must be both attractive and within your affordability to pay the affiliates.
Affiliate commission types
There are 3 main affiliate commission structures,
Percentage rate commission:
The most preferred commission structure by affiliates is where you pay a percentage of sale or a percentage of the customer’s total order.
Fixed-rate commission:
A simple commission plan where affiliates are paid fixed commission rate based on the number of sales they make.
Tiered commissions:
Tiered commission structure is an advanced plan where affiliates are paid based on achieving a pre-fixed number of referrals or sales.
5 benefits of setting attractive affiliate commission rates
Attract high-quality affiliates:
Competitive and attractive affiliate commission rates drive high-quality affiliates to choose your affiliate marketing program over others. Over time, you can create a strong base of affiliates to promote your service.
Increased affiliate’s performance:
Setting commission rates drives affiliates to invest significant efforts into promoting. This increases promotional activities like creating content, running ads and email campaigns.
Increased brand visibility:
For the given high affiliate commission rates, the affiliate will work ardently in the promotional activities. In the long run, this increases your brand’s visibility and reaches a wide audience.
High ROI:
Setting attractive commission structure increases your return on investment (ROI) as you need to pay commission only on the successful completion of target sales or conversion.
Increased conversion rates:
Affiliates driven by high affiliate commission rates tend to attract potential customers using compelling promotional strategies. This increases the conversion rate of the affiliate marketing program.
5 key elements to set the right affiliate commission rate
Average affiliate commission rates depend on your industry type and budget. However, these 5 key elements are common and must be considered before setting up a commission plan.
Commission structure:
First things first, choose the type of commission structure that you prefer to pay your affiliates. It can be either fixed-rate or percentage-based.
Typically, percentage-based commission type is the most common and most preferred by affiliates. However, ensure that your affiliates prefer the type of commission structure that you set.
Average customer lifetime value (CLV):
The average affiliate commission rate you set must be less than your average customer lifetime value to sustain the affiliate marketing program. Affiliate marketing commission rates equivalent to CLV won’t get you fair ROI.
In case, you have a high customer retention rate, you can set high affiliate commission rates.
Competitor’s commission rates:
Analyze your competitor’s commission rates and plans who are targeting the same affiliates as you do.
Plus, study the commission structure of successful affiliate marketing programs and set your own competitive commissions.
Initial commission from the low range:
Set a range for commissions and start your base commissions from the lower end of the range. With time, you can retain affiliates by increasing their commissions to the higher range.
Complimentary bonuses:
In addition to commissions, rewarding special bonuses to top affiliates for achieving target conversions will keep your affiliate marketing program interesting while retaining existing affiliates.
How to set affiliate commission rate?
WordPress doesn’t have any built-in feature to create an affiliate program. So it demands a plugin to add an affiliate program. WPRelay is the best affiliate program plugin with which you can create and take full control of the affiliate program. You can recruit, track and manage affiliates from WPRelay’s centrailsed dashboard.
WPRelay provides various affiliate commission structures that can be set and accessed within a few taps. Based on the commission plan, there are 2 types of affiliate programs in WPRelay,
- Simple affiliate program – Basic commission structures like fixed, percentage or no commission
- Advanced affiliate program – Special commission structures like the number of referrals, total sale amount or number of sale’s count.
With these 2 programs in hand, you can set competitive and attractive affiliate commission plans. Now, let’s look at the step-by-step process to set commission rates in both simple and advanced affiliate programs using WPRelay.
Step 1: Install WPRelay
- Go to WordPress dashboard → Plugins → Add New
- Click on the upload plugin button at the top.
- Browse and choose the downloaded WPRelay plugin zip file.
- Click install now → Activate plugin
Step 2: Create an affiliate program
- Go to WPrelay dashboard → Manage → Create program
- To create an affiliate program, enter the title and description.
- In the affiliate commission section below, set the commission type to simple or advanced based on your business needs.
Step 3: Setup commission rates for affiliates
WPRelay provides 6 flexible affiliate commission rate structure,
- Fixed commission type
- Percentage commission type
- No commission type
- Number of referrals
- Total sale amount
- Number of sale’s count
Scenario 1: Fixed commission type
To set fixed commission type in a simple affiliate program,
- Select the type as ‘Fixed’
- Enter the commission amount you pay to the affiliate in the amount section.
Scenario 2: Percentage commission type
To set percentage commission type in a simple affiliate program,
- Select the type as ‘Percentage per sale’
- Enter the percentage of commission you pay to affiliate in the percentage section.
Scenario 3: No commission type
To set no commission type in a simple affiliate program,
- Select the type as ‘No commission’
Scenario 4: Number of referrals
To set advanced affiliate marketing commission rate based on the number of referrals,
- Set ‘Number of referrals’ in the tier-based section.
- Select ‘Fixed’ or ‘Percentage’ according to your preference.
- Enter the commission rate or percentage for number of referrals.
- Click on ‘Add tier’ if you want to add multiple tier systems.
Reward your affiliates with advanced commission rates using WPRelay’s tiered commission structure to retain existing affiliates
Scenario 5: Total sale amount
To set advanced commission rate for affiliates based on total sale amount,
- Set ‘Total sale amount’ in the tier-based section.
- Select ‘Fixed’ or ‘Percentage’ according to your preference.
- Enter the commission rate or percentage for the total sale amount.
- Select the currency type of your choice from ‘Select currency’.
- Click on ‘Add tier’ if you want to add multiple tier systems.
Scenario 6: Number of sale’s count+
To set advanced commission rate for affiliates based on the number of sale’s count,
- Set ‘Number of sales count’ in the tier-based section.
- Select ‘Fixed’ or ‘Percentage’ according to your preference.
- Enter the commission rate or percentage for number of sale’s count.
- Click on ‘Add tier’ if you want to add multiple tier systems.
Step 4: Setup recurring options
To set affiliate commission rates for lifetime or specified number of orders,
- Enable recurring option.
- Click ‘Lifetime’ or ‘X number of orders’
- Enter the number of orders in ‘Interval’ based on your preference.
- Save the program.
Create customized commission rate structure with WPRelay to expand your affiliate commission plans
Conclusion
Setting the best affiliate commission rates plays a significant role in attracting new affiliates. Plus, it encourages existing affiliates to perform better. As discussed in the above scenarios, you can customize your commission structure based on percentage or fixed or tiered commissions depending on how you want to pay your affiliates.
With WPRelay, you get the freedom to choose the type of commission structure that meets all your business needs and implement it accordingly.
Commission rates between 5% and 30% is a good commission rate for affiliate programs. However, setting the affiliate commission rate to 20% will be both attractive and within your affordability to pay.
Niches with high-ticket and more in-demand products and services are affiliate niches with more profits.
Example: Products or services based on finance and technology are some
of the most profitable affiliate niches.
Affiliates are paid through payment gateways like PayPal, Tremendous or Stripe. They can be paid manually too if that is what the affiliate prefers.
Affiliates are third-party publishers who promote your product or service but have no relationship with the business. On the other hand, referrals are satisfied customers who refer your product or service to their family and friends. Both the affiliate and referral receive commissions or incentives.
Affiliate commissions are payments made to affiliates on the successful completion of target sales or conversions. Referral fees are incentives that existing customers receive on referring to new customers.
Affiliate bonus is an alternative to affiliate commissions. You can reward bonuses instead of or in addition to base commissions.
Some of the major advantages of affiliate commissions are,
1. Cost-effective program: You pay affiliates upon completion of target sales or conversions making it a cost-effective program.
2. Captivate affiliates: You can get new affiliates and retain existing affiliates by setting the best affiliate commission rates.
3. Flexible commission structure: You get a space to structure flexible commission plans based on your preference.
Some profitable payment models for affiliates are,
1. Fixed-rate: Affiliates earn a fixed amount for a sale.
2. Percentage-based: Affiliates are paid a particular percentage for a sale.
3. Tiered commissions: Affiliates earn commissions either in percentage or fixed rate for reaching targeted sales, referrals or revenue.
Advantages of one-time affiliate commissions are,
1. Immediate payout: Affiliates are paid immediately after the sale is made providing fast cash flow.
2. Fixed income per sale: One-time affiliate is straightforward and a fixed percentage or amount is paid.
Advantages of recurring affiliate commissions are,
1. Long-term income: Affiliates earn commission on a long-term basis as long as the referred customer continues using the service or subscription.
2. High lifetime value: Recurring commissions have high lifetime value as the referred customer retains for a long time.
Some key factors to consider when evaluating affiliate marketing programs are,
1. Commission structure
2. Product or service quality
3. Affiliate support and resources
4. Payment method and schedule
5. Affiliate terms and conditions
