An affiliate programme pays people to sell for you only when a real sale happens. It sounds low-risk, but many brands set commissions to match competitors without calculating their own costs. The result is that sales grow but profits vanish. This article walks you through calculating the right number for your business.
Start with the “money left per order”
Before setting a commission, work out how much money is left from one order after deducting all costs. For example, a product sells for ฿1,000, product cost is ฿400 and platform fees plus shipping total ฿150, leaving ฿450. If you want to keep at least ฿250 profit, the commission you can pay is no more than ฿200, or 20% of the selling price.
A simple formula
- 1Money left per order = selling price − product cost − fees and shipping
- 2Maximum commission = money left per order − minimum profit you want
- 3Compare it with your cost to acquire a customer through ads (CPA). If the commission is lower, affiliates are better value than running ads.
Use tiered commissions
Instead of paying everyone the same, try increasing the percentage as sales grow. This keeps top sellers motivated without the brand paying a high rate to people who haven't made sales yet.
1–20 orders/month
21–50 orders/month
51+ orders
Rules to spell out clearly from the start
Make it clear that cancelled or returned orders don't earn commission, how many days after a link click a sale counts, when payouts happen and what's prohibited, such as bidding on the brand name in ads or using unauthorised discount codes. Clear rules reduce problems and stop affiliates from taking credit for sales from channels the brand already runs itself.
Summary
A good commission isn't the highest number. It's the number that makes people want to sell while the brand still profits on every order. Calculate it from real costs, start with a safe figure, then use tiers to reward top performers.