If you have a product or service and want to use affiliate marketing to help bring in sales then you need to come up with an attractive enough commission to attract affiliates. What you do will be different depending on the type of product or service that you have.
Affiliate Commmissions for Physical Products
Physical Products typically have a lower margin due to manufacturing costs and overall demand in the marketplace. This means it can be hard to offer a mind blowing commission. I usually see commission structures ranging from 8% to 25%. The reason that you won’t see too many successful companies offering below an 8% commission is because as an affiliate of Amazon.com it’s very easy to get a 7.5% commission with just a small amount of traffic. Therefore, if you’re offering your products on Amazon.com you’ll need to have a commission structure higher than 8%. My suggestion is to get to as close to 25% as you can to attract the better affiliates.
Affiliate Commissions for Digital Goods
If you have digital goods that you are trying to sell through affiliate marketing, then you should look at offering commissions of 50% or higher. By doing this you will get access to some of the top digital goods affiliates in the marketplace and drive sales much quicker. Once you establish that your products convert to a high percentage of sales then you can lower the commission.
Affiliate Commissions for Services
Setting affiliate commissions for services is the toughest in my mind. It really depends on the service and how much labor is involved. If it’s an automated service using technology, such as software as a service, then you should be higher up in the commission range, like 35% or more. If you have a labor intensive service, then you can lower that down to 10%. As an affiliate I will RARELY work for a commission less than 10% unless it’s a store like Amazon.com.
Good luck with setting your affiliate commissions!