One off commission vs subscription model

[Amy]

Hi there,

I've set up a successful affiliate programme but we need to change our model for 2023 and i'd love some advice. 

Currently the affiliate receives a 15% one off commission (between £12 and £15). We are moving to a subscription model so this one off purchase will stop and the cost of purchase will reduce.  

My question is, how do we reward affiliates appropriately for them to continue driving sales?  What's the best commission model for subscription?

Appreciate any thoughts

Thanks 

[Guest]

@Amy,

So if I understand right right now you have an affiliate program that pay a 15% first-time/one off commissions which is between 12 and 15 pounds. You intend to move to a subscription model so there will be smaller recurring charges and commissions instead of a one time one.

There are a couple of possibilities:

You can continue with a higher one time commissions like trading brokers or gambling sites that pay for instance $250 or $300 one time per player acquired even if they spend only $50 first time. But as you may know this model is risky as may increase the fraud rate so I'm not to keen to recommend it.

What I do recommend is to change your affiliate program into a recurring one that will pay every time a recurring payment is registered. This way your affiliates will make money on the long run and will be part of your success. Here you may decide if you will pay recurring commissions only for a year for instance or for lifetime. You need to make your own calculations to see what you afford to pay but also stay competitive and profitable.

Let me know if you have more questions,

[etechsupport]

A one-off commission model is a business model in which a company receives a payment or commission for a single transaction or service. This is in contrast to a subscription model, in which a company receives regular payments over a period of time in exchange for ongoing access to a service or product.

Some examples of businesses that use a one-off commission model include real estate agents, who typically receive a commission for helping a client buy or sell a property, and insurance agents, who receive a commission for selling insurance policies.

On the other hand, a subscription model is often used by businesses that offer ongoing access to a service or product. Some examples of businesses that use a subscription model include streaming services like Netflix and Hulu, which charge a monthly fee for access to their content, and software-as-a-service (SaaS) companies, which charge a monthly or annual fee for access to their software.

There are pros and cons to both business models. The one-off commission model may be more suitable for businesses that offer a one-time service or product, while the subscription model may be more suitable for businesses that offer ongoing access to a service or product.

[forinnder]

It's great to hear that your affiliate program has been successful so far! Moving to a subscription model definitely changes things up, and it's important to adjust your commission model accordingly.

One option could be to offer affiliates a percentage of the subscription fee for the lifetime of the customer they refer. This would provide a continuous revenue stream for the affiliate, while also incentivizing them to refer high-quality customers who will remain subscribed for longer periods of time.

Another option could be to offer a higher commission rate for the initial subscription purchase, and then a smaller commission for each subsequent renewal. This would reward affiliates for driving initial sales, while also providing some incentive for them to continue promoting your subscription service.