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One time sales vs reoccurring commissions?

by 52.ct
15 replies
Few weeks ago I downloaded an excellent, free book that extolled the virtues of focusing exclusively on selling affiliate products with reoccurring commissions. It made a strong case based the principle of "making one sale" and "getting paid forever".

There is a contrarian article that explained the downsides of reoccurring commissions. They are:
1. You make less money in the short run.
a. There is such a huge difference between one time commissions and reoccurring commissions that it may take years for reoccurring commissions to be equal to or greater than the one time payments
2. Lifetime commissions do not last a lifetime.
a. Vender end the reoccurring commissions affiliate programs or negatively change the terms.
3. Residual income from each referral will drop over time.
a. Attrition rates can be between 10% to 30% and as high as 50% for bad programs according to my research.

You can read the article here (not my blog) "Why Recurring Commissions Are Not Always As Good As They Appear"

What do Warriors think?
#commissions #reoccurring #sales #time
  • Profile picture of the author lukeblower
    I have found that recurring commissions require more selling. That is someone joins your team and then usually does nothing and complains every month when their paypal/credit card gets hit up for the recurring payment. Because the turn over of affiliates seems to be quite high anyway, in practice many people only end up making one or two payments anyway.
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    • Profile picture of the author Zodiax
      I think it doesn't matter which model you chose.

      It matters on the value you provide.

      Now, the goal is to make something so well put together that it can almost sell itself. When you solve someone's problems there will be no shortage of commissions.

      Profitability is in direct proportion to the amount of value you are willing to provide.

      As an affiliate, buy the program yourself and thoroughly go analyze it before you resell it.

      /end rant.
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      • Profile picture of the author 52.ct
        Originally Posted by Zodiax View Post

        I think it doesn't matter which model you chose.

        It matters on the value you provide.

        Now, the goal is to make something so well put together that it can almost sell itself. When you solve someone's problems there will be no shortage of commissions.

        Profitability is in direct proportion to the amount of value you are willing to provide.

        As an affiliate, buy the program yourself and thoroughly go analyze it before you resell it.

        /end rant.
        Excellent response. So if I am understanding you right, be sure to carefully screen reoccurring commissions programs. Make sure they provide genuine value be fore promoting them?

        Buying the program first can get expensive real fast.
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  • Profile picture of the author Walter Cyclid
    Originally Posted by 52.ct View Post

    Few weeks ago I downloaded an excellent, free book that extolled the virtues of focusing exclusively on selling affiliate products with reoccurring commissions. It made a strong case based the principle of "making one sale" and "getting paid forever".

    There is a contrarian article that explained the downsides of reoccurring commissions. They are:
    1. You make less money in the short run.
    a. There is such a huge difference between one time commissions and reoccurring commissions that it may take years for reoccurring commissions to be equal to or greater than the one time payments
    2. Lifetime commissions do not last a lifetime.
    a. Vender end the reoccurring commissions affiliate programs or negatively change the terms.
    3. Residual income from each referral will drop over time.
    a. Attrition rates can be between 10% to 30% and as high as 50% for bad programs according to my research.

    You can read the article here (not my blog) "Why Recurring Commissions Are Not Always As Good As They Appear"

    What do Warriors think?
    Another downside that I have read more than once, is that the average length of a recurring (monthly) membership, is about 3 months. I guess that it's sort of the same thing as 3a above, but just stating the length instead of the rate.
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    • Profile picture of the author benjamenjuan
      i would say just do both instead of focusing on one. build your list while promoting affiliate products and offer all kinds of products based on what your subscribers are interested in. no need to neglect one off sales, they are great too and can lead to subscription buyers
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  • Profile picture of the author lotsofsnow
    Recurring commissions are great... in theory.

    Yes, they are great if the product is brilliant. Most of the time
    the product is not really that good and the customers drop
    out after a few cycles.
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  • Profile picture of the author Tamalkrishna
    According to me, you should focus on both type of products. Recurring commissions are great as long as the product you are promoting is a great quality product. If the product is not good, your customers will drop. So I would suggest you to focus on quality of the products before you want to promote it.
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  • Profile picture of the author Brent Stangel
    Most of the affiliate programs I promote any more are recurring. It's the nature of the niche. A lot of $1 trials and such. I like it just fine.
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  • Profile picture of the author Alice12345
    As for my opinion, software or application that people needed will be good on recurring. Because once they stop paying, they will no longer using that machine. If the software is really good, they will never stop. Recurring is not good in information product.

    One time payment is usually for informative product and other that you can think off. But hey, you can offer them both to choose.

    Let them make the decision and you wait for the money to come in.
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  • Profile picture of the author MaxGalitsyn
    The type of payment depends on the nature of the product. If a product includes some services then recurring subscription is almost a must. Because in the opposite a vender may appear to drop but not customers since cash-flow won't let him support and develop the product.

    Recurring subscription may attract those who are not ready to invest big money in advance especially if a product is new. Also it will work for those who consider your product as a solution for not first needs but temporary or trial projects. Low price may also be a factor for some affiliate networks.

    The main disadvantage here is that you're stuck with your product in regards of constant maintenance and support.
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  • Profile picture of the author wikiklix
    Really great post. It certainly makes you question if reoccurring commission is always the best option. We all like one off payments but strive for that reoccurring income to provide a a salary and thus stability. Seems as though mixing it up a bit is the answer.
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  • Profile picture of the author altonroot
    Both are different concept and both are based on the niche. For example, there are products like garment which people don't buy same every time. There are products like toothpaste which people use almost one brand for years. So reoccurring commissions programs is suitable for second one but not suitable for first. I think both are useful. One needs hard work but generate more money while the other is easy but generate less money.
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  • Profile picture of the author Horacioplus
    Residual income! I love this!
    As long as you help your buyer get results! you can easily build 5k-10k business in 2-3 months.
    The formula that i fallow is 2+ sales per day. If you can do this, after 60-90 days you can quit your job.
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  • Profile picture of the author TrumpiaTim
    I think the main point is looking at the lifetime value of a customer and their churn rate. Assuming that the churn rate is low and you make more in the long run, it would be a silly decision to go with the one-time payment.
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  • Profile picture of the author joaquin112
    You missed an important point: many customers don't like recurring billing. The moment you mention the word "monthly payments" a high percentage of your potential customers will run away from your offer.
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