The first time that you get on a plane, every sound and movement is new.
When the plane makes any noise or shudders slightly from turbulence, all first-time fliers are thinking, “Is this normal?”
Anyone who has flown multiple times is aware that this is normal.
A real frequent flier probably knows what each sound is and the reasons why turbulence occurs.
However, with no past experience with which to compare it, how are the newcomers supposed to know what’s normal?
In affiliate marketing, many of us are still a bit like those first-time fliers, even if we’ve been involved in affiliate marketing for some time.
A lot of us are wondering, “Are my commission rates normal?”
There are thousands of affiliate programs in the world, and it seems that each one has a different commission rate. With so many different opinions and options, how can you be sure that you’re getting an average affiliate commission rate?
Today, we’re going to discuss what makes companies choose different commission rates for their affiliates. We’ll also see what an average affiliate commission is, and how to test if the affiliate programs you’re involved with are really worth your time.
The Ultimate Breakdown of Average Affiliate Commission Rates
What’s an Average Affiliate Commission Rate?
Let’s talk about what “normal” really means in the affiliate world.
As we’ll discuss in a minute, there are plenty of affiliate programs out there, each offering different affiliate commission rates based on a number of factors. Personally, I’ve seen commission rates that range from 1% to 200%.
So, what’s average?
Taking into account a variety of factors, an average affiliate commission rate should be somewhere between 5% to 30%.
Here’s a rundown of the factors that will change the average affiliate commission rates you’re coming across online.
What Affects Average Affiliate Commission Rates?
Interestingly enough, the commission rates that you see will be greatly affected by the vertical that you’re promoting in.
For example, many types of digital products such as music, movies and e-books have relatively low commissions. Electronics have also been struggling to hit decent numbers lately, giving low commissions on things like PCs, tablets and smartphones.
On the other hand, there are industries that are getting better commissions.
For example, finance products (such as Forex trading platforms) are seeing better commissions every year. For example, many trading platforms offer 20% to 30% revenue sharing commissions for each trader that you refer. Others, such as 24option, offer a one-time cash amount per trader, often giving you hundreds of dollars per referral.
The health industry has also been looking up, getting better commissions on everything from vitamins, supplements and natural health products to weight loss programs and specialty diet programs for those with celiac, diabetes, etc.
The health industry sees a wide range of different commission rates, anywhere from 7% to 50%. For example, the Vitamin Shoppe offers a solid 9% commission on natural health products, while programs like SellHealth and Market Health offer up to 50% on a range of different medications and products.
Another industry that has seen better commissions recently is the “making money” vertical. Along the same lines of Forex trading platforms, products or programs that help people earn money at home are also giving out average (or better than average!) affiliate commission rates. Products such as website hosting, WordPress themes and plugins, marketing products and other related items are all offering great commission rates.
Within these broad industries, there are also companies that function within a very narrow niche. If your affiliate marketing strategy hits a very specific type of customer, you may be able to find niche-specific affiliate programs that offer above-average affiliate commission rates.
The Price of the Product
When determining the affiliate commission rates, companies will often take into account the price of the product.
In general, lower-priced products will have higher commission rates, while products with higher prices will have lower commission rates.
That’s often why we see products on ClickBank that offer commission rates of 50-70%.
On the other hand, luxury-niche items such as private jets, luxury jewelry and the like will often have commission rates of less than 10%.
Of course, this is a generalization, and there are some programs that have made themselves exceptions to the rule. For example, I’ve seen many affiliate programs that offer low commission rates on products that are worth very little. I’ve also seen a few programs with items priced into the hundreds or thousands of dollars that offer commission rates of 20-30%.
We’ll talk more below about how you can use this factor to test the validity of any affiliate program.
The Value the Company Sees in Affiliate Marketing
The last factor that affects affiliate commission rates is the value of the company itself—and the value it places on affiliate marketing.
As I mentioned above, I’ve seen affiliate programs that offer low commission rates on low-priced items. In the end, affiliates are getting paid very little for the work that they’re doing, and it’s not worthwhile.
Companies who do this are just looking for cheap advertising and refuse to acknowledge the true value of affiliate marketing. This is often related to whether or not the company itself is valuable.
On the other hand, there are companies that truly do value their affiliate marketers. To make sure their affiliates are happy, they provide higher commission rates. This is mutually beneficial, and both the company and the affiliates end up happier.
High Commission Rates on Cheap Items or Low Commission Rates on Expensive Items: Which Is Better?
We mentioned above that higher-priced items usually see lower commission rates, while cheaper products offer high commission rates. In the end, which will work better for you?
With high-ticket items, those smaller commissions may actually be earning you a higher amount in dollars.
On the other hand, cheaper products with higher commission rates may look good on paper, but the actual cash you receive might not be as good as you thought.
For example, if you’re promoting a product that’s worth $1,000 with a 5% commission rate, you’re actually getting $50 per sale. However, if the product you’re promoting is worth $10 and you have a 70% commission rate, in reality, you’re only getting $7 per sale.
That being said, you’ll also need to factor in how many items you’ll actually sell during the month. Lower-priced items are generally easier to sell, so it’s possible that you’ll make up the difference in sale quantity.
Following our example above, let’s say you can only refer 10 sales of the expensive product per month, but you refer 100 sales of the cheaper product. In that month, the expensive product will earn you $500, while the cheaper product will earn you $700.
In the end, you’ll need to factor in all of these variables when deciding on an affiliate program. So, how can you use this information to test whether or not an affiliate program is worth your time?
How to Tell If an Affiliate Commission Rate Is Worth Your Time
Step #1: Do the Math
As we just saw above, higher commission rates don’t necessarily translate into higher revenue.
That’s why it’s so important to actually do the math!
To test any affiliate program, take into account the price of the product that you’re promoting, figure out exactly how much revenue you’ll see in dollars for each sale that you refer.
You’ll also want to pay attention to programs with recurring commissions when making your calculations, as these could have you earning multiple (even indefinite) commissions on just one sale.
Step #2: Consider Your Audience
In our example above, we saw that even if an item gets you a lower revenue per sale, it may be worthwhile if you’ll be referring a greater number of sales.
I’ll use myself as an example here: My husband and I run a budget travel blog. Even though there are some fantastic luxury travel affiliate programs that would earn us a better dollar amount per sale, I don’t promote those on our website.
Because we’ve chosen to focus on budget travel, and our readership is only interested in budget-friendly products and services. If I promoted luxury products on our site, we’d be referring very few (if any) sales.
However, by promoting lower-priced items on our site, we’re actually getting better revenue. How so? Because we’re referring a greater number of sales than we could with luxury items.
My point? Pay very close attention to your audience, and what they are most likely to buy. If your target audience can’t afford high-priced items then you’re better off promoting lower-priced items, even if they earn you less revenue in dollars per sale. The higher amount of referred sales will earn you a better revenue at the end of the month.
Step #3: Compare and Decide
Once you’ve followed the above steps for one affiliate program, do so for a few! Compare how much you could actually earn per month with each program.
Calculate: commission earned per sale x number of expected sales per month.
Then, choose the program where you’ll see better payouts!
So far, we’ve seen some of the different factors that affect affiliate commission rates. We’ve also discovered that somewhere between 5% and 30% is considered an average affiliate commission rate.
However, you don’t want to choose an affiliate program solely based on the percentage.
We’ve discussed three steps to vetting affiliate programs, calculating the commissions in dollars that you’ll receive per sale times the number of sales you’ll likely refer each month (depending on what type of products your audience is most likely to buy).
Comparing different affiliate programs using this calculation will not only help you find average affiliate commission rates—it will also help you make sure you’re getting the best commission rates possible for your affiliate marketing website!
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