Now it’s time to choose a compensation model and commission rate. Before deciding these things, however, you should determine what you’ll actually be paying for. For example, you’ll pay a commission every time an affiliate gets a new customer to sign up for your service. This should align with your affiliate marketing goals.
i. Long-term Partnerships
Most SaaS affiliate programs choose to pay members for every subscription sale and renewal since it fosters more long-term partnerships. Recurring commissions are used in these cases, which allows members to receive multiple commissions from customers they’ve referred. Every time they renew a subscription after first purchasing one will earn that member a commission.
It’s best to use commission rates as opposed to fixed fees when dealing with subscriptions because they can vary drastically in terms of cost. It’s also more profitable for affiliates and can attract more members. Commission rates are a percentage of a sale made on your service — it’s essentially sharing your revenue with your affiliates.
ii. Short-term Partnerships
If you’re aiming for short-term partnerships, it’s better to opt for one-time commissions or fixed fees. This limits the amount of payment a member can receive. You can also limit payment by establishing a customer-referral limit for each affiliate. For example, each affiliate will only be paid for their first 50 referrals.
Additionally, you can have a set time period in which affiliates will be paid for referrals or sales earned through their affiliate links. After the period is over, they’re no longer paid commissions. For example, members are paid for every referral they make in the first 12 months.