• http://www.researchandcompare.com amurphy59

    Great subject to write on. A few thoughts …

    1. You increase the commission payout from 15% to 25%, is there a reason why?
    2. 15% is an astronomically high commission to pay. If anyone is paying anything remotely close to that they should renegotiate their deal. Simple math on this one would be if you think that 40% of the sales are going to be organic or from other channels, then take the 15% down by 40% to 9%. I think it should be even lower, but start there.
    3. Rather than a flat %, consider a % with a min floor up to some level like $2k then single digit payouts that go down as the revenue goes up.

    As George points out, other marketing channels and your brand influence sales through search. Make sure that you are getting credit for that and use it in your negotiation.

  • http://www.rimmkaufman.com George Michie

    Thanks for your kind words and fine suggestions.

    Rev. share models come in many forms and some of those variations demand different commission rates. Notably: when the media costs are borne by the service provider, the commission needs to cover both the advertising costs and the management fees. That’s the model I outlined in the second piece, which becomes particularly troublesome when brand sales are commissioned.

    Commission rates would be much lower if the advertiser paid for the media.

    I’m hearing some pretty eye-popping figures for affiliate commissions these days, hence the 15% cited.

    I have a toy spreadsheet available to play with at RKGBlog. Feel free to play with the numbers!