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33% commission is that enough?

by allegandro
40 replies
After some internal discussions we decided that our new software is worth asking money for.

For our software incl Hosting we will ask 100-200$ a year, with a 30 day free trial.

We thought about a 33% commission for each sale.

Interesting or not?

We are planning to make it a WSO only at the start.

If 33% is to much, or to little, I like to hear why?
#33% #commission
  • Profile picture of the author Alexa Smith
    Banned
    Looking at it very superficially only, 33% of $100 is a very different proposition indeed from 33% of $200, from the affiliates' perspective, because 33% of $100 compares unfavorably with most of the products that professional ClickBank affiliates (for example) are promoting. Many people will perhaps instinctively feel that 33% of $100 is on the low side.

    However, in reality you probably don't need affiliates who are motivated primarily by commission percentages, but by "the whole deal", which is going to revolve, for the most part, on the quality of your product/service, on who you are, on how well established you are, on how long your subscribers stay with you, and on all the more obvious, more important factors of that kind. The people interested in those things will typically be far more successful for you, as affiliates. Be aware that 5% of the affiliates usually make 95+% of the sales, and take care what sort of affiliates you set out to attract.

    "Getting as many affiliates as possible" and "getting as many sales as possible" are two very different (and sometimes even conflicting) objectives.

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  • Profile picture of the author discrat
    Originally Posted by allegandro View Post

    After some internal discussions we decided that our new software is worth asking money for.

    For our software incl Hosting we will ask 100-200$ a year, with a 30 day free trial.

    We thought about a 33% commission for each sale.

    Interesting or not?

    We are planning to make it a WSO only at the start.

    If 33% is to much, or to little, I like to hear why?
    Honestly, I think it seems kind of low at least for a WSO.
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  • Profile picture of the author JensSteyaert
    I think it really depends on how well the product converts.

    Big affiliates tend to care a lot about EPC's, so it'll depend highly on that whether or not 33% is enough or not.

    But i think if it's a subscription product with monthly/yearly payments 33% should be enough to get some good affiliates on board.
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  • Profile picture of the author JakeStatler
    The higher your commissions, the more interested affiliates will be which means more sales which means you build your business faster which means you can scale it quicker which means more profits and customers in the least amount of time.

    You want affiliates, and there are some killer affiliates here on this forum.
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  • Profile picture of the author a2hosting
    Is 33% commission just an arbitrary number? What are your competitor affiliate programs paying out? Have you spoke to any potential affiliates to see what rate would get them on board with your program?
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    • Profile picture of the author allegandro
      Originally Posted by Alexa Smith View Post

      Looking at it very superficially only, 33% of $100 is a very different proposition indeed from 33% of $200, from the affiliates' perspective, because 33% of $100 compares unfavorably with most of the products that professional ClickBank affiliates (for example) are promoting. Many people will perhaps instinctively feel that 33% of $100 is on the low side.

      However, in reality you probably don't need affiliates who are motivated primarily by commission percentages, but by "the whole deal", which is going to revolve, for the most part, on the quality of your product/service, on who you are, on how well established you are, on how long your subscribers stay with you, and on all the more obvious, more important factors of that kind. The people interested in those things will typically be far more successful for you, as affiliates. Be aware that 5% of the affiliates usually make 95+% of the sales, and take care what sort of affiliates you set out to attract.

      "Getting as many affiliates as possible" and "getting as many sales as possible" are two very different (and sometimes even conflicting) objectives.

      .
      As always your feedback is priceless and I value it.
      From your words I understand that if an affiliate will get 33$ commission on the product there is a big chance they will lose on it. But the 66$ commission might do the trick.
      Then I wonder, how much does it cost for an affiliate to sell me service/product. That is for me also very interesting to know.

      Originally Posted by discrat View Post

      Honestly, I think it seems kind of low at least for a WSO.
      33$ or 66$ or are both to low?

      Originally Posted by JensSteyaert View Post

      I think it really depends on how well the product converts.

      Big affiliates tend to care a lot about EPC's, so it'll depend highly on that whether or not 33% is enough or not.

      But i think if it's a subscription product with monthly/yearly payments 33% should be enough to get some good affiliates on board.
      The conversion is the big question off course, hard to say how well it will convert, depends also on the quality of the affiliate.

      Originally Posted by JakeStatler View Post

      The higher your commissions, the more interested affiliates will be which means more sales which means you build your business faster which means you can scale it quicker which means more profits and customers in the least amount of time.
      You want affiliates, and there are some killer affiliates here on this forum.
      Absolutely true.

      Originally Posted by a2hosting View Post

      Is 33% commission just an arbitrary number? What are your competitor affiliate programs paying out? Have you spoke to any potential affiliates to see what rate would get them on board with your program?
      33% was an arbitrary number. We have little to zero competitors in what we offer. So we have to look to what hosting companies offer, even when we are not such company.
      There we see an average commission is under the 33% (We looked at European companies)
      In the USA some companies offer up to 50%, but in average also under 33%.
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      • Profile picture of the author Alexa Smith
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        Originally Posted by allegandro View Post

        From your words I understand that if an affiliate will get 33$ commission on the product there is a big chance they will lose on it.
        I wasn't thinking necessarily "lose on it", but more "make less on it than they would putting that time/effort into something else", perhaps.

        Originally Posted by allegandro View Post

        But the 66$ commission might do the trick.
        I'm guessing so, for many.

        Originally Posted by allegandro View Post

        Then I wonder, how much does it cost for an affiliate to sell me service/product. That is for me also very interesting to know.
        It is interesting. I think, unfortunately, it's probably "unquantifiable" because it involves a mixture of money and time/effort/energy/skills, and you can't compare like with like, on this basis. Even if you look only at the very small group of "serious, pro-affiliates" (and that's all you need to look at, since they collectively bring in 95%+ of the sales), some will be spending more or less "money only" to bring the targeted traffic, while others (including myself) won't ever spend a single penny but will put a lot of time and effort into it. So it's really very hard to say.

        Also, I don't think there's a fixed "amount of money" that interests serious, pro-affiliates, anyway: some are selling $27 products by the thousand; others are selling $297 products by the hundred.

        One thing is for sure: the serious affiliates will be the ones interested in the other factors I mentioned in my post above. Affiliates whose main concerns are percentages and/or amounts of commission will be the ones almost entirely in the "other group": the 95+% of affiliates whose sales collectively add up to under 5% of the total sales. This is just one of the inevitable realities of "being a vendor".


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  • Profile picture of the author gcbmark20
    Hi,

    It all depends on your END GOAL.

    1. Are you looking for high volumes of sales - Revenue?

    2. Or do you want more customers?

    You see if you have any up-sells etc then you can look at bumping up
    those commissions and allow that to attract more affiliates.

    Then of course you'll have more buyers to sell those up-sells to.

    But if you only have the one product or service and that is your
    only income source then obviously you'll need to lower your
    commissions based on that.

    You see I like to offer high affiliate commissions based on the fact
    that I can then allow my buyers to pass through my funnel and buy
    more of my products and services where they see fit.

    So now it is up to you.

    What are you looking to achieve?

    Pure profit.

    Or a HUGE wave of customers that can then go onto buy more
    products and services further down the line.
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    • Profile picture of the author allegandro
      Originally Posted by gcbmark20 View Post

      Hi,

      It all depends on your END GOAL.

      1. Are you looking for high volumes of sales - Revenue?

      2. Or do you want more customers?
      Our END goal is to become the number 1 In our niche.
      In size, in volume, in reach and in turnover.

      But let's be honest, that is what we all want.
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  • Profile picture of the author trevord92
    So much depends on what you're selling and where you're selling it.

    33% is low for a WSO or Clickbank commission but high for somewhere like Commission Junction (although they take an extra management fee as well as the amount the affiliate gets).

    There are also specialist software sites - Code Canyon, One Network Direct and lots of others - that offer a more specialist marketplace if you fit better in one or more of those although most of the ones I've come across in those marketplaces don't include hosting unless I've not looked hard enough.

    Programs like Carbonite offer 30% to affiliates and that includes a mix of software and storage.
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  • Profile picture of the author Vendzilla
    I would rather have 25% of something I can sell 1,000 times than 33% of something I can't at all.

    The product and the page is sells on is more important than he percentage paid out.
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  • Profile picture of the author AlexSchneider
    The range $100-$200 is quite large. Are you thinking of doing a normal and a pro version of your software?

    If you are also thinking about commissions - what about increasing the commissions for the first year to at least 50% and then no commissions on the prolongations?

    As many others have stated - it really depends on your target market and the services you want to sell.
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  • Profile picture of the author hardworker2013
    It all depends on what kind of software you are selling, 33% seems to be a good rate
    for IM software for example.
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    • Profile picture of the author allegandro
      Originally Posted by Vendzilla View Post

      I would rather have 25% of something I can sell 1,000 times than 33% of something I can't at all.
      The product and the page is sells on is more important than he percentage paid out.
      100%True, that is why we asked a good media company to make our logo/brand book

      So when prospects come on the website, the get a good feeling about it.
      The quality of the product has to show itself in the future.

      Also the software will be multilingual from the start.

      Originally Posted by schneidera View Post

      The range $100-$200 is quite large. Are you thinking of doing a normal and a pro version of your software?

      If you are also thinking about commissions - what about increasing the commissions for the first year to at least 50% and then no commissions on the prolongations?

      As many others have stated - it really depends on your target market and the services you want to sell.
      Yes, we are thinking about 3 levels, from Basic till premium. That is why a price from 100 - 200$

      I like the idea to have a higher commission in the first year, will discuss it with the team.

      Originally Posted by hardworker2013 View Post

      It all depends on what kind of software you are selling, 33% seems to be a good rate
      for IM software for example.
      It will not be IM software, it will be refreshing new, and still so familiar.
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  • Profile picture of the author goodsoloads
    I think, it is not enough. It must be more than 50%.
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    • Profile picture of the author allegandro
      Originally Posted by goodsoloads View Post

      I think, it is not enough. It must be more than 50%.
      Why do you think that?
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      • Profile picture of the author nitro37
        I would suggest you split test and see what works best as far as 33% commission vs higher % commission and go from there.
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        • Profile picture of the author allegandro
          Originally Posted by nitro37 View Post

          I would suggest you split test and see what works best as far as 33% commission vs higher % commission and go from there.
          And how do I split it, using 2 kinds of affiliate programs?
          Example: CJ & Clickbank
          Or do you mean in Time, first 4 weeks one, then 4 weeks other?
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  • Profile picture of the author barbling
    If you want serious affiliates to jump aboard from this particular community..... 30% is 'way too low. That's our list you're asking us to share with you.

    Hope that helps!
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  • Profile picture of the author one1
    It's decent amount I guess but I am not expert so can't sure it's enough.
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  • Profile picture of the author WillR
    I bring you a customer and I don' even get half of the sale? That wouldn't cut it for me and you'll struggle to get many serious affiliates interested at such a low percentage.

    The question you need to ask yourself is this. Would you rather have a smaller percentage of a big pie or keep the whole small pie to yourself?
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  • Profile picture of the author allegandro
    Thank you to all for responding, it gives great value to us.

    Originally Posted by trevord92 View Post

    You can split it between 2 kinds of affiliate programs by having 2 different landing pages (or even a subdomain for each program) and setting the affiliate program to the appropriate page.

    It's also worth testing a monthly payment option instead of/as well as annual.
    Good idea, we will look into the different landing pages.
    We thought about monthly, but that will give us a lot of work, also our is not useful for one month.
    So for the moment we will keep it on an annual price.

    Originally Posted by barbling View Post

    If you want serious affiliates to jump aboard from this particular community..... 30% is 'way too low. That's our list you're asking us to share with you.

    Hope that helps!
    Yes it helps.
    Like I understand now it depends on product and price.

    Originally Posted by one1 View Post

    It's decent amount I guess but I am not expert so can't sure it's enough.
    I’m also not an expert, that is why I’m asking

    Originally Posted by WillR View Post

    I bring you a customer and I don' even get half of the sale? That wouldn't cut it for me and you'll struggle to get many serious affiliates interested at such a low percentage.

    The question you need to ask yourself is this. Would you rather have a smaller percentage of a big pie or keep the whole small pie to yourself?
    I understand you, but what if I offer you a product that has a great value for money and of a very high quality?
    Do you want to promote a product that gives you 1% sale with 75% or 10% sale with 33%
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    • Profile picture of the author WillR
      Originally Posted by allegandro View Post

      I understand you, but what if I offer you a product that has a great value for money and of a very high quality?
      Do you want to promote a product that gives you 1% sale with 75% or 10% sale with 33%
      Sorry but that argument is silly.

      I would never be promoting your product in the first place if it was crap. So that has no bearing on anything at all.

      But since you asked, I would much rather promote a quality product that my customers love and pays me 60%+ per sale. And there are plenty of products out there that do just that. So I would be promoting them over your product every day of the week.

      A commission of 30% right away sends your affiliates the message that you don't value what they are giving to you very much. It's not the way to develop strong relationships and get people excited about promoting for you.
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  • Profile picture of the author Mark Hess
    There are a lot of variables in play here so without knowing exactly what the product is or how much overhead you have to keep it maintained, it's hard to answer...

    But you can always manipulate the numbers...

    For instance, if you raise your commission percentage from 33 to 50+%, you can make the money you "lost" elsewhere in the form of a downsell or OTO where you keep all the money.

    You can incentivize affiliates through bonuses or extra commissions after they reach a certain sales threshold.

    Since you have a 30 day free trial, at the end of 30 days, people either buy or leave. (yes, you can keep after them to buy after the 30 days, but for the very vast majority, that's decision time) So after 30 days, you essentially have a targeted list of people that can be monetized through affiliate marketing or even solo ad types of deals with advertisers.

    Only you know what's good for your business and what you can withstand to give away in terms of commissions.

    Never assume that you're going to "make it up in volume". I've seen that play out horribly a TON of times throughout the years.

    You can always adjust things down the road after you know things like conversion and retention rates.
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  • Profile picture of the author travlinguy
    This whole discussion has little meaning without knowing what you've got. If it's some revolutionary program then maybe 33% is too much. Since you've got it completely finished (I assume or you wouldn't be bringing this up) why not let us know what it is. You'll get much better responses.
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    • Profile picture of the author allegandro
      Originally Posted by Mark Hess View Post

      There are a lot of variables in play here so without knowing exactly what the product is or how much overhead you have to keep it maintained, it's hard to answer...

      But you can always manipulate the numbers...

      For instance, if you raise your commission percentage from 33 to 50+%, you can make the money you "lost" elsewhere in the form of a downsell or OTO where you keep all the money.

      You can incentivize affiliates through bonuses or extra commissions after they reach a certain sales threshold.

      Since you have a 30 day free trial, at the end of 30 days, people either buy or leave. (yes, you can keep after them to buy after the 30 days, but for the very vast majority, that's decision time) So after 30 days, you essentially have a targeted list of people that can be monetized through affiliate marketing or even solo ad types of deals with advertisers.

      Only you know what's good for your business and what you can withstand to give away in terms of commissions.

      Never assume that you're going to "make it up in volume". I've seen that play out horribly a TON of times throughout the years.

      You can always adjust things down the road after you know things like conversion and retention rates.
      Thank you for your thoughts and I agree with you.

      The last days we are making up our mind, and agreeing on a structure with flexible commission rates.
      Thanks to so great comments and private messages, my eyes opened in a way of working that I not thought of before.
      We will go for sure for the quality of affiliate partners.

      Originally Posted by travlinguy View Post

      This whole discussion has little meaning without knowing what you've got. If it's some revolutionary program then maybe 33% is too much. Since you've got it completely finished (I assume or you wouldn't be bringing this up) why not let us know what it is. You'll get much better responses.
      Our Beta version of the product is ready, now our jurist is looking at the terms and conditions and our designer is fine tuning the design that is made for us.
      We worked on it for 3 years (Full time), and when we go open, we want to do it good. It means also at that moment we need to have a good sell strategy, to have maximum exposure against the cost we can afford ourselves.
      All I can say now is, that it's not and IM product at all.
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  • Profile picture of the author dawoodkhan97
    I personally think commissions don't matter anymore
    The only thing that matters is how well that product converts!
    Thanks
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  • Profile picture of the author yogyogi
    Your price of web hosting is quite high , $100 for 1 year is just too much , reduce it by at least 30% before you can thing of selling something.
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    • Profile picture of the author allegandro
      Originally Posted by dawoodkhan97 View Post

      I personally think commissions don't matter anymore
      The only thing that matters is how well that product converts!
      Thanks
      Agree with you 100%, even when a product would pay 100% commission, but nobody buys it, it makes no sense to promote it.

      Originally Posted by WillR View Post

      Sorry but that argument is silly.

      I would never be promoting your product in the first place if it was crap. So that has no bearing on anything at all.

      But since you asked, I would much rather promote a quality product that my customers love and pays me 60%+ per sale. And there are plenty of products out there that do just that. So I would be promoting them over your product every day of the week.

      A commission of 30% right away sends your affiliates the message that you don't value what they are giving to you very much. It's not the way to develop strong relationships and get people excited about promoting for you.
      My argument isn't that silly, because I just want to find out, how you guys think.

      Don't forget, I'm mainly a developer, with some IM background, but not that much. So by asking question and getting responses from you guys, I start to get a picture how we have to do it.
      Thant is why, I'm really happy with all your answers and thoughts.

      Originally Posted by yogyogi View Post

      Your price of web hosting is quite high , $100 for 1 year is just too much , reduce it by at least 30% before you can thing of selling something.
      We don't sell hosting; we will sell a unique hosted product
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      • Profile picture of the author olayinka00
        In my own view the commission is too small, but if the product will be hot selling product in town -- so be it.
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      • Profile picture of the author WillR
        Originally Posted by allegandro View Post

        Don't forget, I'm mainly a developer, with some IM background, but not that much. So by asking question and getting responses from you guys, I start to get a picture how we have to do it.
        You need to look at affiliate sales as exactly what they are -- sales that you would never have made if it were not for that affiliate. Therefore you need to reward your affiliates accordingly and you should be happy to do so.

        If you are paying 60% commissions to your affiliates, do not look at it as though you are paying them 60% of each sale. Instead look at the reality which is that the affiliate is actually bringing you 40% of a sale you would otherwise have never made.

        Once you look at things that way (ie: not what you are giving but what you are getting) you will start to treat your affiliates better and you'll have a much stronger affiliate program.
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        • Profile picture of the author allegandro
          Originally Posted by olayinka00 View Post

          In my own view the commission is too small, but if the product will be hot selling product in town -- so be it.
          That is what we are aiming for in our niche, to create a product that people want to use.

          Originally Posted by WillR View Post

          You need to look at affiliate sales as exactly what they are -- sales that you would never have made if it were not for that affiliate. Therefore you need to reward your affiliates accordingly and you should be happy to do so.

          If you are paying 60% commissions to your affiliates, do not look at it as though you are paying them 60% of each sale. Instead look at the reality which is that the affiliate is actually bringing you 40% of a sale you would otherwise have never made.

          Once you look at things that way (ie: not what you are giving but what you are getting) you will start to treat your affiliates better and you'll have a much stronger affiliate program.
          Yes, I agree with this, and we are discussing it, to come with a combination between a top product, a good price and commission offer to affiliates that makes them active and valued.
          In your opinion, how do you reach out to those affiliates, how do they know that this offer exists?
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  • Profile picture of the author Ardral
    Normally, I would say 33% is too low for a one-off payment WSO but since you suggest this is a recurring charge then it's probably alright.

    I would normally think 25%-30% for a recurring product is pretty reasonable to be honest. So long as it's a good product (ie, low refund/cancellation) then it would definitely be worth promoting as an affiliate.

    I'd say go with 33% so long as you're still making good profit yourself.
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  • Profile picture of the author Corey Taylor
    At least 50%. If you don't treat your affiliates with respect then start doing it now

    Plus, if you prefer to choose 33% to keep more money for you, it's even better to have at least 50% in the first place. Why?

    If you sell something for $100 for example, with 33%, SOME of the affiliates will choose to promote you.
    So it's better to have 100 with 50% revenue rather than 10 sales with 67% revenue for yourself.

    Keep your affiliates happy and you'll be happy too!
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  • Profile picture of the author backlinkmasters
    Hello!

    Personally I think that affiliates who are looking for new products to promote, could be turned off initially by the 33% commission, as a lot of products offer much higher than that (50%+). But then again, as has been said, the sale price also factors in, as 33% on a $200 product is much better than 80% on a $20 product.

    I think to start off, I would raise the affiliate commission to at least 50% to attract people, then over time you can lower it if you feel the need.

    Good luck!
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    • Profile picture of the author Diana Lane
      Originally Posted by backlinkmasters View Post

      Hello!

      Personally I think that affiliates who are looking for new products to promote, could be turned off initially by the 33% commission, as a lot of products offer much higher than that (50%+). But then again, as has been said, the sale price also factors in, as 33% on a $200 product is much better than 80% on a $20 product.

      Good luck!
      Not necessarily so - if that $20 product is something you would have no trouble selling all day long and the $200 product is something that proves difficult to sell (perhaps even because of the higher price point), then you could well be better off promoting the $20 product. Sell five of the $20 product and you've already made more than you would by selling one of the $200 product, which might be six times harder to do.

      You have to look at the product and how easily - or otherwise - your efforts would translate into sales first before you look at the figures.
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  • Profile picture of the author skyro
    If it's getting good conversion yea I feel it would be enough.
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    • Profile picture of the author allegandro
      Originally Posted by Ardral View Post

      Normally, I would say 33% is too low for a one-off payment WSO but since you suggest this is a recurring charge then it's probably alright.
      I would normally think 25%-30% for a recurring product is pretty reasonable to be honest. So long as it's a good product (ie, low refund/cancellation) then it would definitely be worth promoting as an affiliate.
      I'd say go with 33% so long as you're still making good profit yourself.
      Thank you for the input, we decided to offer of different websites different offers and then see how it is going.



      Originally Posted by Corey Taylor View Post

      At least 50%. If you don't treat your affiliates with respect then start doing it now

      Plus, if you prefer to choose 33% to keep more money for you, it's even better to have at least 50% in the first place. Why?

      If you sell something for $100 for example, with 33%, SOME of the affiliates will choose to promote you.
      So it's better to have 100 with 50% revenue rather than 10 sales with 67% revenue for yourself.

      Keep your affiliates happy and you'll be happy too!
      Because I ask you guys for advice, means I treat you with respect. Your feedback is very important for me and the rest of the team.

      Originally Posted by backlinkmasters View Post

      Hello!

      Personally I think that affiliates who are looking for new products to promote, could be turned off initially by the 33% commission, as a lot of products offer much higher than that (50%+). But then again, as has been said, the sale price also factors in, as 33% on a $200 product is much better than 80% on a $20 product.

      I think to start off, I would raise the affiliate commission to at least 50% to attract people, then over time you can lower it if you feel the need.

      Good luck!
      True, but I think a product of 20$ covert more easy as a product that cost 200$.

      Originally Posted by Diana Lane View Post

      Not necessarily so - if that $20 product is something you would have no trouble selling all day long and the $200 product is something that proves difficult to sell (perhaps even because of the higher price point), then you could well be better off promoting the $20 product. Sell five of the $20 product and you've already made more than you would by selling one of the $200 product, which might be six times harder to do.

      You have to look at the product and how easily - or otherwise - your efforts would translate into sales first before you look at the figures.
      Yes, our price is a bit higher, so it will be for some people to expensive.

      Originally Posted by skyro View Post

      If it's getting good conversion yea I feel it would be enough.
      That is our aim, to have a very high conversion and a low return.
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      Meow!

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  • Profile picture of the author Nick Jonathan
    In my opinion, you have two options here.

    Option A: You offer them a higher percentage (±40%) without an incentive.
    Option B: You offer them 33% off sales and you give them an incentive.

    What kind of an incentive can you offer? Well, it's entirely up to you.
    You are trying to sell some kind of software. I guess that the software has some kind of subscription (time or money balance).

    (i) What you could do is to offer an additional amount of time to use your software for every sale they bring. This way, they keep 33% and you don't have to give them more money.

    (ii) After every sale, you could provide your affiliates with a coupon that they could use to reduce the cost of the product (if they're interested in buying it).

    Lastly, I agree with what Alexa Smith said. If you give your affiliates a higher cut from the sales, you are most likely going to earn more money than you would with offering a 33% cut, in long-term period.
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