All You Need To Know About Latest Average Affiliate Commission Rate
In the world of affiliate marketing, there seems to be a lot of talk about how much affiliates make and the average affiliate commission rate.
But what many people don't realize is that making money as an affiliate is not a simple task, and it takes a lot more than just putting up a blog or website and throwing some affiliate links on it.
It can require a significant amount of time, effort, and even money to run your own online business.
But one thing that does not require any additional expenditure is knowledge.
Affiliate marketing is one of the most popular online money-making methods for people seeking an additional income stream.
It can be very lucrative, but like anything else that seems too good to be true (and might be), some terms and conditions need to be considered before you can begin seeing any real success.
Source: Online Course Platform Teachable
What Is An Affiliate Commission?
There is a lot of information online about affiliate marketing, some reliable and some unreliable, so it can be challenging at first to separate facts from fictions.
The most common questions include
- how much affiliates and affiliate partners make per sale
- what commissions they receive on products or services they recommend or sell, and
- what sort of payout schedule do they follow
In this article, we will discuss the different commission rates that companies offer their affiliates, what an average affiliate compensation is, and how to test if your current program pays well.
Below is an example from the inkthemes.com affiliate program:
What Is A Good Affiliate Commission?
Affiliates' actual commission rates for selling products and services vary greatly.
The payout terms are established between affiliate marketers and their sponsor companies, ranging from anywhere below 1% up to 75%.
So, how much do affiliates make on average?
That means, a good average commission rate for affiliate marketers is between 5% and 30%.
However, it's important to note that these numbers aggregate all the various payouts, payments, and commissions.
Therefore, they mean very little in actual income because it will vary greatly depending on how much time you invest in your online business.
How To Tell If An Affiliate Program Pays Well And The Average Affiliate Commission Rate Is Good?
When evaluating whether or not an established online company offers quality products and services, there are always certain factors one should look at.
If they have been around for a while and continue to grow, this could be a good sign; however, many new businesses make their debut in the industry by opening up with affiliate marketers (who also jump on board early) only to fail shortly after gaining traction.
So although new businesses might offer attractive commission rates, they may not be reliable sources of income.
The most important thing to look at is an affiliate company's average commission rate.
You can get a feel for this right off the bat by checking out their website and reading through their payment policy's terms and conditions section.
A good rule of thumb is that you should not have to go further than one page into their website before being able to find any information about how much affiliates are paid throughout each stage of the sales process (i.e., when traffic turns into subscribers, then customers).
Although there will always be unique or extraordinary circumstances that direct marketers employ to attract more prominent name brands with payouts.
It's safe to say that an average commission rate of above 10% is fair compensation for any affiliate.
What Affects Average Affiliate Commission Rate?
There are quite a few factors that play into average affiliate commission rates.
10 Affiliate Commision Rate Factors
1. Market Competition
Some industries or products hold more excellent value than others and attract higher-paying marketers (which also attracts consumers).
2. Industry Type
Affiliate companies can be established in any industry, which is why some pay better commissions than others depending on how much profit margin they stand to gain for providing their product or service to their affiliates.
3. Commission Percentage Vs. Total Sale Amount
This factor will play into how affiliates are paid during different sales process stages, i.e., when they have traffic, leads, customers, etc.
4. Unique Affiliate Programs
Depending on what an affiliate company offers to their marketers (usually established by how much commission is paid out), marketers can sometimes receive additional incentives to reach certain milestones set in place by the company.
5. Marketing Tools Provided By The Affiliate Program
The more value an affiliate program provides to its affiliates, the more significant potential return on investment it will generate through its marketing strategies and outreach efforts.
6. Affiliate Manager Support
If someone manages your campaign or processes your payments, you should expect top-notch customer service because it's part of their job description to ensure you're satisfied with all aspects of your partnership with them.
If not, find another affiliate company to work with.
Affiliate companies that have been around for a while and continue to grow can earn your trust by demonstrating their ability to generate consistent income for their affiliates.
Which would mean they know how to get the most out of every marketing strategy (even if you use them as a source of inspiration).
In addition, these companies tend to pay higher commission rates because there is less risk associated with working together.
8. Unique Products Or Services
A company needs to prove that its product or service is something new and entirely exclusive to stand apart from the competition and demand higher commission rates.
Otherwise, it's bound to remain at an average rate until it becomes significantly better than anything else.
A company that can produce a well-organized website and advertising campaign will undoubtedly have higher affiliate commissions.
As a result, they will be more effective at getting their product or service before consumers are ready to buy from them.
10. Your popularity
If you're well-known for some reason (not necessarily on social media, though), major affiliate companies will want to work with you (and give you higher commissions).
They can piggyback off of your existing fan base to generate more sales.
Average Affiliate Commission Rate -Which is Better?
Low Commission Rate On Expensive Products Or High Commission Rate On Cheap Products?
The honest answer is that it depends on how much value the company's product or service holds.
For example, if you're promoting a $10 product with very little value to consumers, it would be in your best interest to get a 60-70% commission rate and to increase your profit margin.
Here is an overview of average affiliate commission rates (from well-known affiliate programs):
On the other hand, if you promote a product or service that costs significantly more and holds even more value for consumers (i.e., digital cameras instead of cheap plastic toys), then you'd want a commission rate of 40-50%.
Source: Email Automation GetResponse
How to Calculate Your Average Affiliate Commission Rate As A Marketer
3 Step Approach On How To Calculate Average Affiliate Commission Rate
Determine the median average affiliate commission rate
This may be as easy for some affiliate companies as looking on their website and knowing the industry standard for similar companies.
For others, it will require more digging to find out what other people are earning and then determine an average.
Calculate your monthly affiliate commission rate
Calculate your monthly commission rate by using this equation (where "P" is the median average commissions as calculated in step 1):
Commission Rate = (Median Rate/100) * (Monthly Income/Units Sold)
Calculate your annual affiliate commission rate
Calculate your annual commission rate by multiplying the number 12 monthly.
For example, it could look like this if you sold 10 units in 1 month at a median average of $50/unit and made $500 in that same month:
Monthly Commission Rate = ($50/100) * ($500/$10) = $25/month
Annual Commission Rate = ($25/month)*12 = $300/year.
This will be your designated commission rate for the following year if you maintain this level of performance.
You can now expect to make around $300 per month on average with this particular affiliate company.
There are many different ways to calculate your average commission rate as an affiliate.
The most common one is the median average commission, but it is also possible to develop your own method or use a combination of methods.
In most cases, the better the company's product or service is, the more value it holds for consumers, the higher the average commission rate.
Some affiliate companies pay a set percentage for each sale you bring in, while others pay a certain sum for every lead or customer who signs up with their service.
In most cases, it's a combination of both types of commissions that add up to an average commission rate.
Conclusion On Average Affiliate Commission Rate
If the commissions are too low for the value of the product, then you may want to consider promoting something else.
It's also worth considering whether you should join one affiliate program over another purely based on the commission rate.
As you can see, many factors go into determining what your average affiliate commission rate will be.
However, you will need to do your own calculations for this.
Companies that pay out a higher commission rate tend to be better in customer service and product quality.