Affiliate Pricing Models: Which Commission Structure Grows Your Program Fastest

Your commission structure is one of the most critical decisions you'll make for your affiliate program.

Get it wrong and you either hemorrhage money or repel good partners.

The 7 Models

1. Flat Percentage Commission

<strong>Structure</strong>: 10-30% of each sale

<strong>Pros:</strong> - Simple to understand - Scales automatically - Partners know exactly what they'll earn

<strong>Cons:</strong> - Doesn't account for product differences - Incentivizes quantity over quality - Vulnerable to low-AOV orders

<strong>Best for</strong>: SaaS, subscriptions, uniform pricing

2. Tiered Commission Structure

<strong>Structure</strong>: Increase commission as partners hit milestones - 0-$1k/month in sales: 10% - $1k-$5k: 15% - $5k+: 20%

<strong>Pros:</strong> - Rewards high performers - Creates growth incentives - Encourages reinvestment

<strong>Cons:</strong> - More complex to communicate - Can create perverse incentives at boundaries - Requires tracking and management

<strong>Best for</strong>: Competitive markets with distinct partner tiers

3. Revenue Share Model

<strong>Structure</strong>: Partners get 20-40% of gross revenue they generate

<strong>Pros:</strong> - True partnership alignment - Partners invested in your success - Scales naturally

<strong>Cons:</strong> - High cost at scale - Requires careful partner selection - Complex accounting

<strong>Best for</strong>: High-margin products, strategic partnerships

4. Fixed Fee Per Lead

<strong>Structure</strong>: $5-50 per qualified lead

<strong>Pros:</strong> - Predictable costs - Doesn't require sales tracking - Great for B2B

<strong>Cons:</strong> - Misaligned with actual conversion - Partners might send low-quality leads - Doesn't scale with your success

<strong>Best for</strong>: B2B, customer acquisition focus

5. Hybrid Commission Model

<strong>Structure</strong>: Base commission + performance bonuses - 5% base commission on all sales - +5% bonus if partner hits $5k/month - +10% bonus if partner hits $15k/month

<strong>Pros:</strong> - Combines simplicity with incentives - Flexible and adaptable - Rewards all partners while incentivizing growth

<strong>Cons:</strong> - More complex to manage - Can create multiple "tiers"

<strong>Best for</strong>: Most businesses (this is the sweet spot)

6. Performance-Based Bonuses

<strong>Structure</strong>: Base commission + bonuses for specific outcomes - 10% commission on sales - $1,000 bonus for 10 new retained customers - Extra 5% commission on renewals

<strong>Pros:</strong> - Highly customizable - Can incentivize specific behaviors - Motivates excellence

<strong>Cons:</strong> - Complex to communicate - Requires close tracking - Hard to predict costs

<strong>Best for</strong>: Complex products, specific growth objectives

7. Exclusive Partner Agreements

<strong>Structure</strong>: Premium commission for exclusive partnerships - Dedicated partners: 30-40% commission - Territory exclusivity (geographic, vertical, etc.) - Regular performance reviews

<strong>Pros:</strong> - Highest partner commitment - Dedicated focus on your product - Can be game-changing

<strong>Cons:</strong> - High cost - Limited number of partners - High risk if partner underperforms

<strong>Best for</strong>: High-stakes, strategic partnerships

How to Choose

Start with: Hybrid Commission Model The 5% base + tiered bonuses approach works for most businesses because it: - Is simple to explain - Rewards all partners fairly - Incentivizes growth naturally - Scales with your business

Then adapt based on: - **Your margins**: Can you afford higher commissions? - **Your competition**: What's the market paying? - **Your partners**: Are they motivated by income or partnership? - **Your product**: Is it high-ticket, low-ticket, subscription, etc?

The Framework

1. **Pick one model** and run it for 3-6 months
2. **Measure**: Track partner satisfaction, cost, and revenue
3. **Iterate**: Adjust based on real data, not assumptions
4. **Communicate**: Be transparent about changes

Your commission structure will evolve as your program scales. Start simple, adjust with data.