How to Choose a Commission Rate
The rate decides whether anyone promotes your product at all. Set it from your margin rather than from a competitor's number.
Start from your gross margin
A commission rate is only sustainable if it fits inside the margin you make on the product. Work out what is actually left after the cost of goods, payment processing, packaging and shipping. Whatever remains is the pool the commission comes out of, and a rate set without that number is a guess.
A useful rule of thumb is that a commission which consumes more than half your gross margin is hard to sustain, because that margin is also funding everything else the business does. A commission that consumes less than a fifth of it is usually too small to attract anyone.
Roughly what different margins can carry
- At a 30% gross margin, a rate somewhere between 6% and 15% is the sustainable band.
- At a 40% gross margin, a rate somewhere between 8% and 20% is the sustainable band.
- At a 60% gross margin, a rate somewhere between 12% and 30% is the sustainable band.
A guide, not a formula. Repeat purchase rate changes it: if a referred customer typically buys again, the first sale can afford to be thinner.
Now check it from the affiliate's side
Because Decolinker's 6% comes out of the rate you set rather than being added to it, the affiliate earns your rate minus 6. That is the number an affiliate sees on the marketplace and the number they compare against every other product competing for their attention.
- Set 15%, and the affiliate sees 9%.
- Set 25%, and the affiliate sees 19%.
- Set 40%, and the affiliate sees 34%.
Always sanity check the second number. A rate that looks generous to you can still be uncompetitive once an affiliate is comparing it against everything else they could promote that week.
Why the floor is 15%
Decolinker does not accept a rate below 15%. The floor exists because it sets the worst offer anywhere on the network, and an affiliate who finds a shelf full of unpromotable products does not come back to check a second time. It also screens out products whose margins cannot fund affiliate marketing at all, which is a kinder outcome than letting a merchant list something no one will ever pick up.
The ceiling is 90%, which exists mostly to catch typing errors rather than because anyone should approach it.
Comparing against other networks properly
This is where most rate comparisons go wrong. On networks that add their fee on top of the commission, a merchant offering 20% is billed 20% plus the network's override. On Decolinker a merchant offering 20% is billed 20%. Comparing the two headline rates against each other compares two different things.
The number to compare is what leaves your bank account per sale, not the rate on the listing. See how the 6% fee works for the worked arithmetic, and the software comparison for how the whole cost structures differ.
Changing the rate later
A rate can be adjusted at any time and takes effect for sales recorded afterwards. Existing recorded commissions keep the rate that applied when the sale happened, so a change never restates what an affiliate has already earned. Trust is the entire currency of the affiliate side, and retroactive rate cuts are how programmes lose their best promoters permanently.
Raising a rate is a reasonable lever when a product is not getting picked up. Cutting one on a product that is working is usually a false economy, because the affiliates driving those sales are the hardest thing on the network to replace.