Need help with my affiliate program.

[Bargain-Technology]

Hello,

I currently help run a niche DVD and music store, and after some success and requests from customers we have decided to run an affiliate program.

We currently have the system in place to begin, which allows affiliates to:
-Sign up to the program for free
-Track visits
-Impressions
-Conversions
-Commission owed
-Access to ready made banners
-Two months of cookies

However we are currently unsure what percentage of sales we should give to affiliates. We want to keep our affiliates happy and stay profitable.

What percentage do you think we should give to our affiliates?

Many Thanks,

Charles Kraus

[Linda Buquet]

Hi Charles,

Welcome to 5 Star. Thanks for starting off with a good question!

However it's really impractical to ask how much commission you should offer because affiliates are going to ask for the highest amount possible which may not be affordable or give you a good ROI.

Commissions very WILDLY by market. Some rough averages would be 2-3% for electronics, 8-12% for retail products like shoes and luggage, 50-75% for software and info products. The variance is largely do to average margins of those products.

The ABSOLUTE best way to come up with commission is to do competitive research in your exact market. Check other DVD and music stores to see what they are paying. Their commissions will cover a range. Find the median. Then structure your commission on the high end or if you can afford to even offer a little more.

The fastest, easiest way to research this in about 5 minutes is to join and log into CJ.com, the largest affiliate network. You'll be able to view many retailers in your space at one time and see all their commission rates.

Hope this helps and best of luck!

[John Jupp]

If it is niche DVD's then the average is 5% to 10%. I cover a variety of niche stuff like DVD's including a martial arts movies site which lists a datafeed paying 10% for DVD's (less for electronics) and also a link to a US merchant offering martial arts dvd's at a basic 5% with higher tiers.

[JAmieF]

Agree with Linda here do competitive research and find out what your competitors are doing. Commissions always depends on your costs so make sure it does not eat into your profit.

One thing to keep in mind when setting your commissions is your conversion rates. Affiliates will promote a product or merchant that has a higher conversion rate rather than a higher commission rate.

[Bargain-Technology]

Thanks guys, really sound and helpful advice.