“What rate should we pay?” is the first question every founder asks about an affiliate program, and the usual answer — “20 to 30 percent recurring” — is right often enough to be dangerous. It is a market convention, not a number derived from your business. This guide shows how to derive yours.
Start from what a customer is worth
An affiliate commission is an acquisition cost you only pay when a customer actually pays you. So the ceiling on what you can pay is set by what a customer is worth, and by what you are willing to spend to acquire one.
You need three numbers:
- Average revenue per customer per month — what a typical referred customer pays.
- Expected lifetime in months — how long customers stay, roughly one divided by your monthly churn.
- Your target acquisition cost — what you are willing to spend to win a customer, often a fraction of lifetime value so the channel pays back within a year.
Suppose customers pay $60 a month and churn 3% a month. Expected lifetime is about 33 months, and lifetime revenue about $2,000. If you are happy to spend up to 20% of lifetime revenue on acquisition, a referred customer can cost you up to $400.
Turn the budget into terms
A commission has a rate and a window. The total paid per customer is roughly:
rate × monthly revenue × min(window, expected lifetime)
With the numbers above:
- 30% for 12 months pays 0.30 × $60 × 12 = $216 per customer.
- 25% for 24 months pays 0.25 × $60 × 24 = $360.
- 20% for life pays about 0.20 × $60 × 33 = $400, and more for customers who stay longer than average.
All three fit the $400 budget. Which one to choose depends on who your partners are.
Recurring windows favour different partners
Twelve months is the common middle ground. It rewards partners meaningfully for a good customer while keeping your obligation bounded and your accounting simple.
Longer or lifetime windows attract consultants and agencies who build a book of business, and they make your program stand out. The cost is an obligation that grows every month and is hard to reduce later.
One-time commissions on the first payment suit products with annual plans or high first payments, and partners who send volume rather than relationships. A flat amount per customer is also easier for partners to understand.
Pay more for what you want more of
A single rate treats every referral as equal. Rules let you pay for what matters to you:
- More for annual plans, which are paid up front and churn less.
- More for a strategic product or plan you are trying to grow.
- Tiers that raise the rate once a partner refers a certain amount in a month, so your best partners earn more.
- A bonus or boost for a limited period — a launch, a season — paid only on payments in that window.
- A second level, giving a partner a share of the commissions of partners they recruited.
Keep the base offer simple, then add rules. Partners should be able to state your offer in one sentence.
Do not forget the hold
Whatever the rate, hold each commission for at least as long as your refund period before it can be paid. A 30-day hold with a 14-day refund policy means a refunded payment cancels its commission before money leaves your account. Without a hold you will be clawing back commissions from future payouts — possible, but unpleasant for everyone.
Look at what you compete with
Partners compare programs. If others in your category pay 30% recurring for a year and you offer 15% for three months, serious partners will notice. You do not have to match the highest offer — a good product, fast payouts and a portal that respects their time all count — but you should know where you stand.
Start generous, change carefully
It is far easier to raise a rate than to lower one. If unsure, start at a level you are confident you can sustain for two years, and use time-limited boosts to test whether higher rates bring more referrals. When you do change terms, apply new rates to future payments only, give notice, and keep commissions already earned unchanged.
A worked starting point
For a typical B2B SaaS product with monthly plans, a 30-day refund policy and customers who stay two to three years:
- 25–30% of each payment, for 12 months.
- A 30-day hold.
- A higher rate, or a longer window, for annual plans.
- A $50 minimum payout, paid monthly.
Then measure. After three months, compare the acquisition cost of referred customers with your other channels, and adjust from evidence rather than convention.
Doing this in Affiligato
Set the program’s default rate, window and hold when you create it, then add rules for what you want more of: conditions on plan, product, billing interval, country, promo code or partner group, tiers by a partner’s referred revenue this month, a cap per customer, a second level for recruiters, and boosts for a period. Preview any rule against a sample payment before switching it on.
