Question

Topic: Strategy

How Much Commission To Charge As An Affiliate?

Posted by Anonymous on 8/22/2012 at 7:30 AM ET 110 Points
Hi, I am starting a coupon website , with coupons of local retail vendors. Since I will be receiving a fee for this as an affiliate , I want to know what amount should I charge as fees? 5- 10 %? or more? or charge them differently?
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RESPONSES

  • Posted by Gary Bloomer on 8/22/2012 at 5:50 PM Accepted
    Instead of charging an affiliate commission, it's more profitable to charge local vendors a monthly or an annual fee to take part.

    This helps with your cash flow because you're better able to tell how many new vendors you might need to sign up per month in order to help you meet your margins and still make a profit.

    By charging advertisers an annual fee, or by offering them a slightly higher month-to-month payment option, you get paid up front BEFORE the coupon is redeemed, not on the back end as a commission only agent.

    The payment upfront model eliminates the need for commissions, it also tells your advertisers you mean business, it demonstrates that member advertisers benefit from a full year of visibility (on the annual plan), and it gives you the option of providing coupon clippers an additional chance to save if they decide to sign up as premium members (for a fee).
  • Posted on 8/23/2012 at 2:34 AM Author
    Oh thank you very much for giving a different view ! I am pretty much considering doing what you said. Charge them before for a premium service upfront - makes complete sense !
  • Posted by Gary Bloomer on 8/23/2012 at 8:56 AM Member
    You're welcome.

    I know of a site in the same niche that uses the pre-paid model ... and the site is growing. Advertisers pay an annual fee of $497, or, if they prefer a monthly fee of $47 (which possibly has a minimum agreement of three months, but don't quote me on this).

    Individual subscribers (coupon redeemers) who want coupons with a higher discount (at least $6 per month for one coupon) pay $4.95 per month for premium access. All other coupon clippers receive free access.

    Deployed strategically, across a wider area than just local businesses (perhaps regionally) this model has multiple six figure per year potential ... perhaps not at first, but certainly over time. Ideal businesses to target are local eateries, take out food establishments, bakeries, dry cleaners, local hardware stores, print and copy shops, coffee shops, independent book stores, independent health and fitness clubs, beauty salons, hair salons, dentists, yoga studios, chiropractors, emergency plumbers, and seasonal businesses such as landscaping, tree companies, and snow removal.

    I hope this information is of value. Good luck to you.
  • Posted on 8/26/2012 at 3:52 AM Author
    Thanks again!
    But for starters do you think its advisable to charge commission on per coupon basis & then later on change the pricing to the upfront model , because in the beginning if the coupon sales are low , merchants may be dissatisfied with the upfront plan , they might feel they aren't getting sufficient return on investment .
  • Posted by Gary Bloomer on 8/26/2012 at 8:37 AM Member
    Possibly. However, you run the risk of confusing vendors if you switch from a commission model to a paid model. You also need to be prepared to start small and build things up over time.
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