How Much money Can I Make As An affiliate?
| Category: Affiliate Marketing - Basics | Date: 2003-04-28 |
The ultimate question for anyone looking to increase their online income as an affiliate is going to be, "How much money can I make?"
My first response to that question always is, how much time are you willing to invest in learning how to position, market and sell the programs you represent. If you dont put time in you wont get cash out. But, lets assume that youre willing to educate yourself on the basics of affiliate marketing and youre dedicated to making your site a success.
Youll find that every program is different largely dependent upon the margins that a particular business generates per sale. For example, the margins in a sale of a computer part may only be 5%, so if the part is sold for $100, the merchant makes $5. Out of that $5 if the commission they pay out is 2%, you make just 10 cents.
However, an Electronic Book (almost all margin) may sell for $100, but the commission is 30%, you net $30. Now you have to ask yourself do you want to sell 300 computer parts or do you want to sell one electronic book to get the same commission. My experience has shown me that its just as hard to sell one computer part as it is to sell one book. Do you really want to sell 300 for the same commission? Do you have the time? Does it even make sense to try? Dont underestimate the importance of asking yourself this question. It may determine whether you succeed or fail.
My next question would be, am I receiving a one-time fee or am I generating a recurring revenue stream (Residual income) from the company Im partnering with? Again, whether a company offers recurring revenue usually is decided by how much margin that particular product affords.
Me, I like recurring revenue, nothing burns me more than bringing a new customer to a merchant and knowing that they are receiving a consistent revenue flow and Im not especially when I brought them the business.
This point also includes when a prospect doesnt buy on the first visit (most dont). If a prospect turns into a customer a month from now, I want to be rewarded and you should too. Having been on both sides, I can tell you that impulse buys rarely happen. People like to check the product or service out 99 out of 100 times before they purchase. Anyone whos been on the merchant side of the equation knows this. They are aware that they are sticking it to the affiliate by not paying on sales from prospects that come back later and turn into customers (Not good business sense because you have the power to choose which merchants to do business with and every business has competitors.)
Anybody that plans on being in business has built their revenue model on the Lifetime Value of a Customer (LTV). As a rule of thumb most businesses will earn 10X the amount of the first sale over the lifetime a customer does business with you.
Shouldnt you be compensated for that? After all, the new customers you brought in has cost the merchant nothing to acquire except a commission AFTER the sale was made!
Lets say there is a product you really want to offer but the merchant only pays if the visitor purchases on that initial visit, what should you do? Contact the owner of the company youre an affiliate for and let them know youll go someplace else if they wont allow you to receive commissions on return visits. Make a statement; once a few affiliates bring this problem to the attention of the merchant partner, heyll change.
So, how much will you make as an affiliate? The choices you make in choosing strategic partners to align yourself with and the compensation "package" they offer will determine how high your income goes but you need to map this out in advance and understand the true value you bring to a merchant.
About the Author
Thom Schlip is the CEO of PlugInGo.com, a leading affiliate program provider, specializing in small and medium size businesses.
For more information on PlugInGo.com: See details below.
tschlip@plugingo.com
http://www.plugingo.com
My first response to that question always is, how much time are you willing to invest in learning how to position, market and sell the programs you represent. If you dont put time in you wont get cash out. But, lets assume that youre willing to educate yourself on the basics of affiliate marketing and youre dedicated to making your site a success.
Youll find that every program is different largely dependent upon the margins that a particular business generates per sale. For example, the margins in a sale of a computer part may only be 5%, so if the part is sold for $100, the merchant makes $5. Out of that $5 if the commission they pay out is 2%, you make just 10 cents.
However, an Electronic Book (almost all margin) may sell for $100, but the commission is 30%, you net $30. Now you have to ask yourself do you want to sell 300 computer parts or do you want to sell one electronic book to get the same commission. My experience has shown me that its just as hard to sell one computer part as it is to sell one book. Do you really want to sell 300 for the same commission? Do you have the time? Does it even make sense to try? Dont underestimate the importance of asking yourself this question. It may determine whether you succeed or fail.
My next question would be, am I receiving a one-time fee or am I generating a recurring revenue stream (Residual income) from the company Im partnering with? Again, whether a company offers recurring revenue usually is decided by how much margin that particular product affords.
Me, I like recurring revenue, nothing burns me more than bringing a new customer to a merchant and knowing that they are receiving a consistent revenue flow and Im not especially when I brought them the business.
This point also includes when a prospect doesnt buy on the first visit (most dont). If a prospect turns into a customer a month from now, I want to be rewarded and you should too. Having been on both sides, I can tell you that impulse buys rarely happen. People like to check the product or service out 99 out of 100 times before they purchase. Anyone whos been on the merchant side of the equation knows this. They are aware that they are sticking it to the affiliate by not paying on sales from prospects that come back later and turn into customers (Not good business sense because you have the power to choose which merchants to do business with and every business has competitors.)
Anybody that plans on being in business has built their revenue model on the Lifetime Value of a Customer (LTV). As a rule of thumb most businesses will earn 10X the amount of the first sale over the lifetime a customer does business with you.
Shouldnt you be compensated for that? After all, the new customers you brought in has cost the merchant nothing to acquire except a commission AFTER the sale was made!
Lets say there is a product you really want to offer but the merchant only pays if the visitor purchases on that initial visit, what should you do? Contact the owner of the company youre an affiliate for and let them know youll go someplace else if they wont allow you to receive commissions on return visits. Make a statement; once a few affiliates bring this problem to the attention of the merchant partner, heyll change.
So, how much will you make as an affiliate? The choices you make in choosing strategic partners to align yourself with and the compensation "package" they offer will determine how high your income goes but you need to map this out in advance and understand the true value you bring to a merchant.
About the Author
Thom Schlip is the CEO of PlugInGo.com, a leading affiliate program provider, specializing in small and medium size businesses.
For more information on PlugInGo.com: See details below.
tschlip@plugingo.com
http://www.plugingo.com
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