What commission rate do you recommend I set for affiliates?
Although commission rates should vary from merchant to merchant, there are a few common factors to consider when determining your rate.
- Do some research on the commission rates set by your competitors. To make your affiliate program more appealing, try to set your rate slightly higher than the rate of competitors.
- Make sure you have a perfect understanding of the profit margins for your products (Price point minus cost of goods). Set your rate so that you still profit an amount you are content with, while keeping in mind that your CPA (Cost Per Customer Acquisition) for affiliate sales is $0. Since you don't have to spend money to acquire affiliate sales, you can sacrifice an amount similar to what a traditional sale's CPA would be to pay out your affiliates.
With all of this in mind, the standard commission rates most merchants set is between 5% and 20%.