Affiliate Marketing: How Do You Determine Commission?
Writing by Nick Stamoulis on Wednesday, 28 of November , 2007 at 11:08 am
How should you determine your commission for affiliate marketers helping you sell your products?
There are various ways to determine commission rates, actually. You can give an automatic 50% commission or you can base it on the amount of work an affiliate has to do to sell your product. You may base it on the benefits you expect to gain from the sell of your products. Whatever method you use to determine commissions, keep this one thing in mind: Affiliate are helping you build your business; treat them well.
One method of determining commissions that is very popular is the cost-production method. You determine how much it costs you to produce one product. An e-book, for example. If it takes you five hours to write and produce an e-book and you value your time at $50 an hour then it cost you $250 to produce the product. Since it is a digital product and you may not have any other expense, that is the total cost to produce one unit of your product. Remember, a digital product requires no inventory so all you have is one unit. The cost-production method says to price your product according to the number of units you expect to sell versus the cost of producing it. As you can see, this method doesn’t work too well for digital products because of the low cost of production. Selling your e-book at $10 a unit will turn a profit for you on the 26th sell, or the 52nd sell if you give out 50% commissions.
I think you should check with your competition. What are they doing? For most digital products, a 50% commission is adequate. But I’ve seen even bigger commissions than that. Whatever you decide to do, keep your chin up and sell a lot of products.
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Category: Affiliate Marketing
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