Affiliate commission

[BoxObsessed]

Hi folks,

I don't know if this is the right place to ask these questions. As we could get better insight from potential affiliates directly.

But what is by your opinion fair affiliate commission rate and payout terms?
Also, should it be one time or recurring?

We have different ways, and we are ready always to negotiate fair terms with our affiliates. But for example, we had some kinda unfair requests where one website (I won't name it) asked us for like $200 per sale. Which is like a lot above our selling fee, not to mention true earnings.

 

[bigredseo]

Affiliate commissions are a tricky subject as the amount offered is sometimes it's directly dependent on the Lifetime Value (LTV) of the sale, and other times it's just on the initial sale.

The correct number is something that you will need to talk to your accountant about and also what marketing you're doing and how things will offset.

For example, if you're selling a server for $200/month, and you offer a 100% commision on the initial sale ($200), I personally don't think that's unreasonable. Depending on your churn rate, you could keep that client for 6 months or 5 years - again, this is going to be something you need to evaluate.

Affiliate commissions MUST be treated as your marketing channel. You're paying that individual for marketing your services, and as such, it must be worth their time too.

Every price point is different. I've seen some hosts pay out $35 for a $5/month account (700%), and others pay $0.50 for $5/month recurring (10% lifetime recurring).

As a person selling the product of a business, most will want the initial payout as there's no telling how your support is and if you will lose the client due to actions of your own. As a result, I could have received $35 in one shot, versus $0.50 for 1 month, after which the client cancels due to poor communication with staff.

So determining the rates is something you need to determine the value of, and what that marketing is worth to you.

In real estate and car sales, 0.5%-2% are commonplace, but the ticket item is much higher.

You really need to talk to someone about your Value Proposition, and then what exactly you can afford to hand out.

When I ran hosting, our commissions were 10-20% recurring monthly (Tier Commissions), even on servers at $400/month. Spending $10k in commissions was not a problem as the income far outweighed the expense.

 

[bountysite]

How does affiliate commission generally work in Hosting Industry?
Does it vary for VPS/Dedicated/Shared hosting?

@bigredseo: Do you have experience running affiliate campaigns in the past?

 

[bigredseo]

How does affiliate commission generally work in Hosting Industry?
Does it vary for VPS/Dedicated/Shared hosting?

@bigredseo: Do you have experience running affiliate campaigns in the past?

It definitely varies depending on the host and depending on products.

For us, we ran it as 10% across the board (hosting, domains, SSL, PCI Compliance, servers, VPS, management), and then 15, 20 and 25% for tier levels and power users. So the more you send, the bigger the overall commission becomes.

Again, it completely depends on how you want to run your business model, and how you want to reward.

 

[MattC]

How does affiliate commission generally work in Hosting Industry?
Does it vary for VPS/Dedicated/Shared hosting?

I would have to think that affiliate systems are meant mainly for VPS or dedicated server hosting. The price and profit margin in shared hosting just isn't there to warrant substantial affiliate programs.

10% of a 3.99 shared hosting package is 40 cents.

I suppose if someone is willing to drive in a lot of shared hosting accounts, it might add up over time. But it's going to take several.

10% of a 39.90 VPS is 3.99

Which isn't great, but if you can drive in a lot it can become a substantial amount.

 

[easyhostmedia]

I would have to think that affiliate systems are meant mainly for VPS or dedicated server hosting. The price and profit margin in shared hosting just isn't there to warrant substantial affiliate programs.

10% of a 3.99 shared hosting package is 40 cents.

I suppose if someone is willing to drive in a lot of shared hosting accounts, it might add up over time. But it's going to take several.

10% of a 39.90 VPS is 3.99

Which isn't great, but if you can drive in a lot it can become a substantial amount.

but it also depends on how it is paid out.
before i closed my hosting business down i paid affiliates in the form of credits.

I had 1 client who brought in a load of affiliates that he never paid anything towards his £20 a month hosting for 12 months

 

[bigredseo]

Yes, payouts via credits are very popular.

We operated both on a credits, or payout minimum $75 I think it was.

We also had an extra stipulation that the affiliate must be a customer of ours in order to be part of the affiliate program. The logic of this was that you really can't recommend someone if you haven't used them yourself. They can be a past customer also, but they couldn't just sign up for the affiliate program on it's own.

As for the $0.50 payout that we paid on $5.00/month hosting - it does add up when you have multiple accounts. If you're an affiliate, you really shouldn't have just 1 or 2 accounts anyway as even a $10 affiliate bonus isn't going to do anything to make an impact.

It's all a numbers game.

 

[Artashes]

We also had an extra stipulation that the affiliate must be a customer of ours in order to be part of the affiliate program. The logic of this was that you really can't recommend someone if you haven't used them yourself.

An incredibly intelligent stipulation. Once you experience the great service for yourself, the way you can sell the service/product is another level. Customers can sense message authenticity.

 

[easyhostmedia]

We also had an extra stipulation that the affiliate must be a customer of ours in order to be part of the affiliate program. The logic of this was that you really can't recommend someone if you haven't used them yourself.

A very sensible stipulation.

I remember 1 time i have someone come on live chat

'I have been on your website and would like be be an affiliate, how can i do this'

my reply was

if you have been on my website then you you have seen that to be an affiliate you have to have an active product with us for at least 3 month, so that gives you time to use our product and test our services before you recommend us to anyone else.

only for me to get this reply

' i read that, but i just want to be an affiliate for you'

at this point i just closed the chat and blocked the users IP as it was clearly just someone messing about or someone hoping to make money by recommending fraudsters

 

[UK1Host]

We offer 20% recurring commission. Payout via PayPal, Cryptocurrency and account credit. Minimum payout $50.

Hope this helps.

 

[SerNetHosting]

Personally I would recommend 10-20% once, due to the fact recurring offerings mean you need to account for that within your monthly costs, one time ones mean you do not have to directly pass on extra costs to your customers.

 

[bigredseo]

Personally I would recommend 10-20% once, due to the fact recurring offerings mean you need to account for that within your monthly costs, one time ones mean you do not have to directly pass on extra costs to your customers.

You shouldn't be passing the affiliate payout "cost" on to your client in the first place whether it's one time or multiple.

You should be writing this off as a Marketing Expense and collect your tax credits on COGS. If you're not doing this, you're not taking full advantage of the tax code. (speaking as a US company, not sure about other countries)

 

[Internoc24]

We dont have any active affiliate, but its planed for 2019...good to know, how much other Companies offering.

Do you have different commission for shared hosting, vps and dedicated server?

 

[qtechservers]

A lot of hosting companies offer affiliate program to non-customers also. Some friends of mine who referred customers to their hosting companies actually earned better than those who were just affiliates (non-customers). So I believe unless you have used that particular host or truly know their product, you can't expect others to trust you and signup through a referral link.

 

[zomex]

I think this will come down to your business specifically such as the clients you have, your brand, your pricing point etc.

Web hosting affiliate programs are very saturated so you need to provide something very unique to get the attention of affiliates.