Affiliate Commission Structure Cheatsheet

The template

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AFFILIATE COMMISSION STRUCTURES — CHEATSHEET

1) FLAT FEE (fixed amount per action)
   What it is: A set amount per qualified action — e.g. $50 per signup,
   $10 per lead, $200 per closed deal.
   Best for: Lead-gen, free trials, high-or-variable-priced products where a
   percentage is awkward, and B2B where the value of a referral is consistent.
   Watch out: Set the amount below your allowable cost-per-acquisition, and
   define "qualified" tightly to avoid paying for junk leads.
   Example: $25 for every paid signup, paid after the trial converts.

2) PERCENTAGE OF SALE (revenue share)
   What it is: A % of the order or revenue — e.g. 20% of each sale.
   Best for: E-commerce and most digital products; scales naturally with order
   value, so partners are motivated to drive bigger carts.
   Watch out: Calculate on NET revenue (after discounts, refunds, taxes,
   shipping) to protect your margin.
   Example: 20% of net order value, paid monthly after the refund window.

3) TIERED (rate rises with performance)
   What it is: The rate or amount increases as a partner hits volume or revenue
   milestones — e.g. 15% up to 10 sales/mo, 20% from 11–25, 25% beyond.
   Best for: Motivating your top partners and rewarding consistency; great when
   a handful of partners drive most of your volume.
   Watch out: Keep the tiers simple and the thresholds reachable, or they
   demotivate instead of motivate. Decide whether tiers reset monthly.
   Example: 15% / 20% / 25% based on monthly sales count.

4) RECURRING (commission on every renewal)
   What it is: The partner earns on the first payment AND ongoing renewals for
   a defined period — e.g. 30% recurring for 12 months, or for the lifetime of
   the customer.
   Best for: Subscription / SaaS businesses; aligns partners with retention,
   not just the first sale, and is highly attractive when recruiting.
   Watch out: Model your payback period — recurring + a long sales cycle can
   strain cash flow. Cap the duration (e.g. 12 months) if lifetime is too rich.
   Example: 30% recurring for 12 months on the subscription price.

5) HYBRID (combine the above)
   What it is: Mix models — e.g. a flat bonus for the first sale plus a smaller
   recurring %, or a percentage with a tiered bump for top performers.
   Best for: Programs that want to reward both acquisition and retention, or to
   layer in launch incentives without permanently raising the base rate.
   Watch out: Complexity. If a partner can't predict their payout in their head,
   the structure is too complicated.

RULES OF THUMB
- Pay on NET revenue, after refunds and the return window — never gross.
- Know your max allowable cost-per-acquisition before you set any rate.
- Recurring and tiered attract the strongest partners but demand cash-flow
  planning.
- Whatever you pick, write it down clearly in your program terms and your
  welcome email — surprises about pay are the fastest way to lose partners.

How to use this template

1. 1Start from your margins: work out the most you can afford to pay per acquisition, then pick a structure that fits under that ceiling.
2. 2Match the model to your business — percentage for e-commerce, recurring for subscriptions, flat fee for lead-gen or high-variance pricing.
3. 3Always calculate on net revenue (after discounts, refunds, and the return window), not gross.
4. 4Use tiered or hybrid rates to reward your top partners without permanently raising your blended commission.
5. 5Document the final structure in your program terms and restate it in your welcome email so partners always know exactly how they're paid.

Frequently asked questions