What is an average Affiliate percentage? Anyone?

[ncdesign]

Hi All - new to the world and it appears Tyson does not want to touch this question - I understand why - I simply want to know what a good percentage is to attract good affiliates rather than posting the percentage too low and not attracting anyone -and then again, not setting the percentage too high where I lose money. This is my first time using affiliates and this is also for an ebook that costs $20 - if anyone can shoot me a number I promise not to hold you liable - my guess is 50% but I think this may be too high -

[seattlecpa]

I haven't had any successful experience with providing products to affiliates, but I'll share my thoughts... I have been a writer (books like QuickBooks for Dummies) and also a book publisher. And those experiences in the book business, make me say that the percentage should be something less than fifty percent.



I.e., in a regular bookstore where the retailer actually has to buy the product and then inventory and take care of the product, the retailer's share is fifty percent (or actually sometimes a little less).



A "retailer" who doesn't pay up front, doesn't provide sales people, doesn't process the refunds, etc., would logically seem to deserve much less.



I thought about the fifty percent a retailer hopes to get... about the fact that the percentage could not be zero. I guessed that 25% might be reasonable in my case...

[E-junkie_Guru]

You may wish to browse through current Affiliate product listings to see what share percentage other Merchants are offering, perhaps searching for "ebook" products in particular:

http://www.e-junkie.com/ej/search.php?section=affiliates&q=ebook

[blaine]

For a digital product, 50% should be a minimum that you pay out to somebody, if not more.



If you have back end products to sell to your customers, then offering 75% or even 100% of the front end sale can still be more profitable to you than getting that extra $5 up front.

[nathans]

Look at clickbank. I dont think anyone offers less than 50% to affiliates. For the products i sell i think i will offer 10% but these are different than e-books. I have to pay for them, ship them among other things. So the 10% is closer to 20% of my profit.

[E-junkie_Chef]

If you notice, ClickBank is primairly used for a certain type of type of products.



E-junkie offers 25% to it's resellers .. IMHO, offering 50% might undermine your product's worth.

[blaine]

Given the past 2 responses I just want to clarify my position that I was responding to an all digital product such as an ebook, and not to a physical product or a service which has significantly different profit margins.



Especially if you have back end products then you can't go too far wrong by treating your affiliates as well as possible, even if that is giving them 75-100% of the front end profits (or even taking a loss) because the largest expense for a digital product is generally customer acquisition.



Once you learn what your lifetime customer value is then you can better craft how much you can spend on your affiliates or other advertising methods in order to acquire that customer.

[seattlecpa]

Even if the product is digital, it sure seems like a low-overhead ecommerce retailer should just logically deserve less margin than a high-overhead bricks and mortar retailer. Also, remember that traditional retailers are (or are supposed to be) paying for products up front... So part of their 50% gross profit margin is a return on their investment investment.



I would wonder if the real problem when an affiliate/reseller business doesn't work right stems from the volume... I.e., it's not that one needs higher affiliate percentages... what one really needs is more traffic, more buyers, etc.



BTW, just to add a bit of content, the ebooks that I sell are documents that describe how to setup a limited liability company (http://www.llcsexplained.com), a regular corporation (http://www.fasteasyincorporationkits.com), or an S corporation (http://www.scorporationsexplained.com) in a particular state.

[sunnankar]

SeattleCPAEven if the product is digital, it sure seems like a low-overhead ecommerce retailer should just logically deserve less margin than a high-overhead bricks and mortar retailer. Also, remember that traditional retailers are (or are supposed to be) paying for products up front... So part of their 50% gross profit margin is a return on their investment investment.

What difference does any of that make?



I think Blaine makes a lot more sense. He seems to be applying the Theory of Constraints thinking process to maximize throughput. In this case we are talking about throughput for the seller not the affiliate. What the affiliate makes or loses is irrelevant. NCDesign, try reading The Goal and you will see the wisdom in Blaine's analysis.

[blaine]

Never heard of The Goal - who wrote it? I'll pick up a copy at the library.

[sunnankar]

BlaineNever heard of The Goal - who wrote it? I'll pick up a copy at the library.

Eliyahu Goldratt. I have also included a couple other books that build on the foundation in The Goal. They give additional Thinking Process tools. You will probably want to read them multiple times.



While these are used as graduate level business textbooks the writing style is extremely easy and engaging so you will likely find yourself wanting to finish to see if your 'solution' is correct; so be prepared for some late nights



FYI, I have completed the courses and am a 'Trainer of Jonah's'. Boeing has sent 10,000+ employees at $10,000/each to get introductory training by a 'Jonah'. This is powerful stuff for increasing productivity and profitability.



Here are the Amazon links, in the order I recommend reading them, so you know what they look like:

The Goal - http://tinyurl.com/acqa82

It's Not Luck - http://tinyurl.com/itsnotluck

Critical Chain - http://tinyurl.com/criticalchain

Theory of Constraints - http://tinyurl.com/theoryofconstraints

[seattlecpa]

Theory of Constraints says that you don't optimize a system, you optimize the bottlenecks within a system... and that's how you gain breakthroughs in throughput...



I'm not sure how this applies to discussion here, though.



Would you not, following Goldratt's notion, need to say that the "system" bottleneck is the number of people using some teaser product? If that's what you're saying, I might agree with you.



But what if the bottleneck is some other step in the process?

[seattlecpa]

One related point. Heard a client say the other day that iphone applications sold through the Apple store give 30% to Apple and 70% to developer. That would sort of be like a 30% affiliate fee...

[ap777]

That would be more like a 30% fee to whomever runs the affiliate system.

[seacoaster]

I sell ebooks and I usually give my affiliates 50%. 2/3 of my sales come through those affiliates. 1/3 come from non-affiliate referrals and organic searches at Google, etc.



With greater volume, I might be able to offer my affiliates a higher percentage, but most of them seem happy with 50% commissions.



(Yes, after I pay PayPal their percentage, I actually make less per-copy than my affiliates do. However, happy affiliates mean more sales. I see it as an "everyone wins" situation.)



I tried lower percentages but my sales were dramatically lower. My affiliates are happier and work harder to sell my books when I give them 50%.

[clare]

Just to add another perspective, we've been very successful with a 20% affiliate program. 50% seems excessive -- I strongly disagree that the affiliate should make more than the producer of the product, and this type of expectation/high affiliate percentage sets what is in my opinion a dangerous and unrealistic expectation on the part of resellers.



As I said, 20% seems to work just fine. If you have an affiliate that's doing significantly more in terms of marketing, etc., they will reap the benefits in terms of more sales, so the system works out fairly.



Just a thought, in case it helps.

[E-junkie_Guru]

A reasonable commission percentage may also depend on any overhead/wholesale costs for the merchant's product(s).



E.g., 50% might not be unreasonable for a digital product like an eBook whose purchase price is nearly all-profit, whereas say 20% could be more in line for tangible goods where there is a physical cost to the item itself, maintaining inventory, manually fulfilling/shipping orders, etc.

[kjmaclean]

I wouldn't touch any affiliate program that didn't pay out at least 50% on a digital product.

Why should I promote someone else's product at 20% when I could be promoting my own products at 100%?

If I am going to do all the work of promoting to my list and making a sale, a 50-50 split is the minimum I will accept. Go to Clickbank, the largest affiliate marketing site in the world, and check the percentages. For digital products, 50% is the minimum and many vendors offer 60% and even 70%.

It's different for tangible products, of course.