How to set Affiliate's payouts with a wide difference in products' gross margin %?

[Logon]

Looking for input on how to form our payout structure with products whose gross margin percentages vary wildly.

Paying out a percentage of the gross margin would be simplest, but I could see many affiliates balking at joining such a program with a new company.

We're dealing with digital services/products such as:
$400, ~65% margin.
$250, ~60% margin.
$300, ~10% margin.
$75, ~10% margin.

Rough sketch of the total program, any thoughts welcome. Most factors still flexible:
Affiliate %: ?
Cookie Life: 90 Days
Payouts: Weekly, one month lock period
Minimum Payout: $50
Payouts By: Paypal(Payoneer could be set up on a per-affiliate basis)
Network: None, leaning towards ShareASale at a later date
Conversion Rate: Unknown
Marketing Material: Provided
Notes: Affiliate/customer support, no phone sales, some sort of bonus program, statistics tracking.

Thanks!

 

[Linda Buquet]

Re: How to set Affiliate's payouts with a wide difference in products' gross margin %

Conversion Rate: Unknown

Hi logon, it's late and I'm tired but just wanted to bring up one point.

It's a really big mistake on several levels to even think about launching affiliate program before you've done extensive conversion testing. Preferably with PPC.

Commission should be based on % of total sale - not margins too. I mean you need to base commissions on what you can afford to pay based on margins, but margins should never be part of the convo with affiliates.

 

[Logon]

Re: How to set Affiliate's payouts with a wide difference in products' gross margin %

Hi Linda,

Thank you for your reply. We won't be recruiting affiliates until we have solid conversion numbers, but a great point.

Just looking ahead and gathering data since I'm new to the space.

If affiliates will only deal w total % of sales than we might have to drop lower-margin products. Shame there isn't a workaround for that.

Now get some sleep!

Thanks,
Logon

P.S. Thoughts on the rest of the program? Any key components missing or numbers unrealistic?

 

[Linda Buquet]

Re: How to set Affiliate's payouts with a wide difference in products' gross margin %

If affiliates will only deal w total % of sales than we might have to drop lower-margin products. Shame there isn't a workaround for that.

Well that isn't to say you can't have multiple payout if there is an easy way to segment. Red widgets pay 30% and Green widgets pay 50%. If you can easily separate into 2 different buckets.

 

[Logon]

Re: How to set Affiliate's payouts with a wide difference in products' gross margin %

I should be able to separate the products. Only carrying a couple proprietary digital products and then reselling a few in the same niche.

Queston: How much weight is placed on marketing materials such as RSS product feeds, video ads, and various other widgets?

Thanks for your time.

 

[Linda Buquet]

Re: How to set Affiliate's payouts with a wide difference in products' gross margin %

Sorry not sure. I have a new company and am not active in the affiliate space any more.