Commission Structures

Setting up effective affiliate rewards

Overview

Commission structures determine how your affiliates are rewarded for their referrals. Setting up the right commission structure is essential for creating an attractive affiliate program while maintaining profitability.

Refgrow offers flexible commission options that allow you to create a structure that works for your business model.

Commission Types

Percentage-Based Commissions

With percentage-based commissions, affiliates earn a fixed percentage of each sale they generate. This is the most common commission type and works well for most businesses.

Example

If you set a 20% commission rate and an affiliate refers a customer who makes a $100 purchase, the affiliate earns $20.

Purchase Amount: $100
Commission Rate: 20%
Affiliate Earnings: $20

Fixed-Amount Commissions

With fixed-amount commissions, affiliates earn a predetermined amount for each sale, regardless of the purchase amount. This works well for subscription-based products or services with consistent pricing.

Example

If you set a $15 fixed commission and an affiliate refers a customer who purchases any plan, the affiliate earns $15.

Purchase: Any plan
Fixed Commission: $15
Affiliate Earnings: $15

Commission Duration

One-Time Commissions

With one-time commissions, affiliates earn only on the initial purchase. This is the simplest commission structure and works well for products with a one-time purchase model.

Lifetime Commissions

With lifetime commissions, affiliates earn on all purchases made by customers they refer, for as long as those customers remain active. This is great for subscription-based businesses and encourages affiliates to refer high-quality, long-term customers.

Example

If an affiliate refers a customer who subscribes to a $50/month plan with a 20% commission rate, the affiliate earns $10 every month as long as the customer maintains their subscription.

Monthly Subscription: $50
Commission Rate: 20%
Monthly Affiliate Earnings: $10 (ongoing)

Fixed-Period Commissions

With fixed-period commissions, affiliates earn on purchases made by their referrals for a specific duration (e.g., 3 months, 6 months, or 1 year).

Example

If you set a 6-month commission period with a 15% rate, and an affiliate refers a customer who subscribes to a $50/month plan, the affiliate earns $7.50 per month for 6 months.

Monthly Subscription: $50
Commission Rate: 15%
Monthly Affiliate Earnings: $7.50
Duration: 6 months
Total Earnings: $45

Setting Up Commissions

Basic Commission Setup

To set up your basic commission structure:

  1. Log in to your Refgrow dashboard
  2. Select the program you want to configure
  3. Go to the "Settings" tab
  4. Navigate to the "Commissions" section
  5. Choose your commission type (percentage or fixed)
  6. Enter the commission value
  7. Select the commission duration (one-time, lifetime, or fixed period)
  8. If choosing a fixed period, specify the duration in months
  9. Save your changes

Advanced Commission Settings

For more complex commission structures, Refgrow offers several advanced options:

Minimum Payout Threshold

Set a minimum amount that affiliates must earn before they can request payment. This helps reduce processing costs for small payouts. 

Example: $50 minimum payout threshold
An affiliate must earn at least $50 before they can receive a payment.

Payout Frequency

Determine how often affiliate payments are processed. Common options include:

  • Weekly
  • Bi-weekly
  • Monthly
  • Quarterly

The payout frequency you choose should balance affiliate satisfaction with administrative convenience.

Commission Calculation

Refgrow automatically calculates commissions based on your configured settings. Here's how it works:

For Percentage-Based Commissions

Commission Amount = Purchase Amount × Commission Rate

Example:
Purchase Amount: $100
Commission Rate: 20%
Commission Amount: $100 × 0.20 = $20

For Fixed-Amount Commissions

Commission Amount = Fixed Commission Value

Example:
Fixed Commission: $15
Commission Amount: $15

For Subscription Products

For subscription products, commissions are calculated for each billing cycle based on your commission structure: 

For Percentage-Based:
Monthly Commission = Monthly Subscription Fee × Commission Rate

For Fixed-Amount:
Monthly Commission = Fixed Commission Value

The duration for which these commissions are paid depends on your commission duration setting (one-time, fixed period, or lifetime).

Best Practices

Determining the Right Commission Rate

When setting your commission rate, consider these factors:

  • Profit Margins: Ensure your commission rates allow you to maintain healthy profit margins
  • Industry Standards: Research what competitors offer to ensure your rates are competitive
  • Customer Lifetime Value: Consider the long-term value of each customer, not just their initial purchase
  • Acquisition Costs: Compare affiliate commissions to your other customer acquisition costs

Recommended Commission Structures

For SaaS Products
  • Percentage-based: 20-40% of the first month, or 15-30% recurring
  • Commission duration: Lifetime or 3-12 months
  • Payout frequency: Monthly
For Digital Products
  • Percentage-based: 30-50% of purchase price
  • Commission duration: One-time
  • Payout frequency: Monthly or bi-weekly
For E-commerce
  • Percentage-based: 5-15% of purchase amount
  • Commission duration: One-time or lifetime
  • Payout frequency: Monthly
For Membership Sites
  • Percentage-based: 20-40% of membership fee
  • Commission duration: 6-12 months or lifetime
  • Payout frequency: Monthly

Next Steps

Affiliates Payouts