Affiliate Payout Types: Cost per Sale

Writing by Brick Marketing on Monday, 21 of January , 2008 at 7:12 pm

Of the affiliate payout types, cost per sale is probably the most underused. Cost per sale is a great way to cap the earnings of an affiliate for any particular sale. Affiliates might not like the CPS affiliate payout type as much as a percentage of sale, but there are times that it really makes sense. The best reason for using an affiliate payout type that limits the amount an affiliate can earn is if you are selling a high cost item.

With high cost items, the rate of profit can be quite low. Consider a piece of platinum or gold jewelry:

With precious metals the profit margin can be quite low compared to general consumer goods. With general low value consumer goods, the profit margin can be very high, but the amount of profit per item is relatively low. A ballpoint pen might have a markup of several hundred percent on the wholesale value, that amount, however, is for the most part insignificant. It might be as low as one or two dollars. A piece of jewelry, however, might sell for several hundred or even several thousand dollars more than the wholesale value. As the cost of the item is much higher, lower percentages of profit are required to make a sale worthwhile.

If you are selling something that costs a great deal of money, it makes sense to use the CPS affiliate payout type. Low percentages do not look that attractive to most potential affiliates and percentages can make it difficult to such delicate profit margins. Having a flat cost per sale allows the business owner a little bit more flexibility when it comes to pricing their inventory and it is a more attractive option than the cost per lead affiliate payout type because it does allow for repeat business.

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Category: Affiliate Payout Types

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