Affiliate Marketing Payment Programs Explained

by Tony Shays on April 1, 2012

When you are involved in affiliate marketing, you play by the rules set by the company whose product or service you choose to promote. They are in the driver’s seat and call all of the shots, including when, how often and how much you get paid for fulfilling your agreement with them. They also can decide to eliminate the product you loved promoting and add new or additional ones.

You have no more control with the way these companies handle their business than you do with any local brick-and-mortar store that you frequent. The benefit of working with the online companies with affiliate marketing programs is you are in a position to earn money.

Since the companies makes the rules and they all have different needs, there are various arrangements made with affiliates. The good news is that these arrangements are usually in the form of a written agreement where the responsibilities of both parties are clearly presented. An obvious warning here is to not promote a company unless you agree with the written terms.

In your search for companies to promote, you will undoubtedly be exposed to different type affiliate programs. The following is a list of the most popular ways the companies do business, with a general description:

Pay Per Sale (PPS)

With Pay Per Sale, you receive payment from the company when a sale is made by someone who has made a purchase from the company’s website by way of your affiliate link. The Pay Per Sale model is usually in the form of a commission, typically ranging from 5% to 50% of the selling price, or you may be paid an agreed upon flat fee. Pay Per Sale is sometimes also referred to as Cost Per Sale.

Pay Per Click (PPC)

With Pay Per Click, you get paid for each time that someone clicks on your affiliate link to visit the company’s website. Due to the higher frequency, the Pay Per Click model tends to pay a much lower amount per click than a company that uses Pay Per Sale and sold something through your efforts. While the flat fee may only be around 5 cents per click, a lot of clicks can add up. As you can imagine, you need a high traffic website in order to make this type of arrangement worthwhile. Pay Per Click is sometimes also referred to as Cost Per Click.

Pay Per Lead (PPL)

With Pay Per Lead, you get paid when a visitor goes to your site and fills out some type of lead generator from the company, such as a registration form, free information request, application, etc. Again, this type program works best if you manage a high traffic website. Pay Per Lead is sometimes referred to as Cost Per Lead or Cost Per Action.

Two-Tier

With the Two-Tier program, you are getting paid on two separate levels. Say that someone went to your website, clicked on your affiliate link and bought the product from the company. Then the same person decides to join the affiliate program to promote the company upon your referral. In additional to your regular affiliate commissions, you will also receive a smaller commission on the second tier. For example, if a company pays 30% on a first tier, you might receive 10-15% on the second. It may seem hard to keep up with, but the company is able to tell who uses which affiliate codes, and you have access to all of your activity.

Network/Multi-Level Marketing

Take the Two-Tier program and put it on steroids to get the idea of how Network Marketing/Multi-Level Marketing works. In this program, you are now paid on many levels. This encourages you to build a network of people who also want to promote the company. To learn more about multi-level marketing opportunities, click here.

Residual Income

Residual Income is money that you continue to receive long after a sale is made. If someone orders a product through the link on your website and loves it so much that they continue to order it and/or become a subscriber, you will continue to get paid on a period basis for as long as they remain a customer. Residual Income is sometimes referred to as Passive Income.

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This article was written by Tony Shays. Tony is the founder of Home Based Business Success Center. He is an entrepreneur who has owned and operated 12 traditional small businesses and has also found success in several different home based multi-level marketing companies. In addition to running the Success Center, he is also a business coach.

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