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Determining the right compensation structure for your affiliate program is an important part of your affiliate program because it determines how profitable your program will be. There are several things that you must consider when deciding on the suitable compensation structure of your affiliate program. Before you launch your affiliate program, it is very important that you make sure that the program has an optimal payment structure. The most dangerous mistake a merchant can do is to reduce the commissions later on if the payment structure for your program proves to be unprofitable! Many internet marketers fail to increase their profits and achieve a good return on investments with their affiliate programs simply because the compensation structure is not well planned. A poorly designed compensation structure brings many problems to the merchant later on – so it is very important to get it right the first time! The most important factor that you must consider while determining your affiliate program’s payment structure is the standard commission in the niche that you are in. As you know, marketing on the internet is very competitive, and affiliates join those programs where they are rewarded more for their sales. If your business has high potential for profits, it is a good idea for you to set your commissions higher than what your key competitors in your niche offer. Offering higher commissions will help you to recruit many affiliates quickly and build a large base of dedicated affiliates. Outlined below are some of the factors that you will need to consider while determining the payment structure of your affiliate program. The nature of your business and the products or services that you sell will influence the payment structure for your affiliate program. Analyze the profit margins of your products. Look at the goal of your affiliate program – is it to advertise a product, bring in many customers who will remain your customers for a long time, or is it for one-time products sales. Assuming that you are selling a product, the most common payment structure is pay per sale. Conversely, advertising sales based sites normally use a pay per click payment structure. Subscription based sites usually charge a flat pay per lead fee. The importance and value of your customers to your business can also influence the fees you pay your affiliates. If you have a wide range of prices for your products and services, you will need to find out a way of remunerating your affiliates accordingly. Your affiliate program payments must be structured in such a way that you can reward your high performing affiliates with some bonuses and incentives so that your affiliates will be motivated to increase their sales every month so that they can earn more commissions and bonuses. While deciding on what to pay your affiliates, remember that the most important thing is that you must make profits. You must therefore factor in the cost of managing your affiliate program when deciding what commission to pay your affiliates. Costs include software purchases, marketing materials and tools, any affiliate network fees and other related costs. No payment structure of an affiliate program is the same. Your payment structure for your affiliate program must be unique to your business and products. As a result, affiliate commissions range from 5% to 75% across many niches and product types. Pay per click, pay per lead or pay per sale are some of the most commonly used payment structures for affiliate programs. Decide what’s best for your business so that you can maximize your profitability. Samantha Milner is an well known internet marketing expert especially in the make money online field. Learn how to make money online for beginners today!
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