This is a question you might come across if you begin selling a product of your own. For this post I'd like to focus on affiliate payments for electronic products so think e-books, e-courses, etc., anything electronic that is pretty much passive.  Typically when you write an e-book and get it up for sale, you don't put much more time into it, except of course to promote it or possibly revise it on occasion.

But you do want affiliates because more affiliates mean more sales.

There doesn't seem to be a lot out there about being a good affiliate.  I thought for the longest time I was a terrible affiliate because no one ever clicked on my sidebar advertisements.  But in the past year I've learned the reason why I was such a “bad” affiliate is because you really need to be acting like a salesperson and well, I wasn't actually making any effort to sell.  You have to get your product (or the product you are selling for someone else) in front of people in the first place, or they don't even know it's available.  For some people, you have to tell them about your product many times before they finally take the leap and buy – I've heard 7 times. Passively putting up an ad on your sidebar doesn't do much at all and hardly worth cluttering up your blog.

Going Rate?

So how much should you pay your affiliates?  I'm hearing more and more the going rate is 50%. I've heard some affiliates insist they won't bother to be an affiliate for a product unless they earn 50%.  This smacks of entitlement, who do people think they are demanding half?

Mixed Feelings

From the product owner perspective, I have mixed feelings.  On one hand, it's my product, I produced it.  I put sweat and tears into making it (yes, even if it's just an electronic product there is a lot of work that has to go into it, not to mention $$$ if you want to create a good product that people will actually buy).  From that perspective, I'm not so excited about paying 50%.

Think of real life. Do Amazon affiliates earn 50%?  Absolutely not. Not even when the product is electronic.  At this time, the highest commission you can earn is 8.5% and that's after you've had over 3130 products shipped/downloaded in a month.

I just don't think paying most of your earnings to your affiliate is a sound business model. As the owner of the product, I have to pay the PayPal fees, I have to pay for the shopping cart.  Should my affiliate profit more than me?  Is that fair?

Karma

Some people look at it from a metaphysical perspective.  It's good karma to pay my affiliates 50%.  I'm sharing the wealth.  I'm not afraid to share the wealth.

I can see this point as well.  I want to be generous and I would love to freely pay my affiliates 50%.  Am I being stingy by not wanting to pay 50%?

Am I actually holding myself back financially?  Will more money flow in for me, if I freely allow it to flow out?

Some people feel any money they make from affiliates is “found money”.  They acknowledge – and I agree – it is a sale they would not have made without the help of the affiliate. I can definitely see that point, but why stop at 50%?  Why not 60% or 75%?  Where do you draw the line when giving away most of your profit to someone else?

Super Affiliates

The next thing I'd like to toss out is how do you reward your “super affiliates” when you're already paying everyone 50%? Do you pay super affiliates 60, 75 or maybe 80%?

I have read a couple of books on being an affiliate and one of the things discussed is how to approach your affiliate manager for a higher percentage.  Super affiliates usually understand that they can leverage a higher percentage because they know the product will sell well in their niche and therefore they can demand a higher commission.

Instead of paying every single affiliate 50% right from the start, how about implementing an incentive program?

Rewards as an Incentive

How about paying 25% to every affiliate from the get go.  Let affiliates know they have the opportunity to earn more money on your affiliate toolkit page.

If they sell at least 10 books a month pay them an extra 10% (35%). If they sell at least 25 books, pay them an extra 15% (40%).  With this incentive in place, your affiliates may take some risk and promote (push) your product.

Another idea is to offer a bonus.  Reward your affiliates a $25 bonus for every $100 they earn as an affiliate.  Say for example your product sells for $20. Your affiliate earns 25% so needs to sell at least 20 books to earn $100 in affiliate income.  It's actually not that hard at all to sell 20 books in a month if you are selling the correct product in your niche.

These are just examples – I haven't actually crunched the numbers but this seems like a better business model to me.  I think it will tend to light a fire under people and provides a reason for your affiliates to promote more.  You aren't just giving them money for slapping up an ad on their blog and hoping they make a sell every now and then.

Do you sell an electronic product?  What do pay your affiliates?

This post was included at:

Carnival of MoneyPros at Save and Conquer
Yakezie Carnival at The Value Geek