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Commission is the most visible part of your affiliate programme. It decides which publishers join, how prominently they feature you and whether the programme is profitable for you at all. Yet many webshops pick a number because a competitor uses it, or because the network suggested it at launch.
A better approach is to work backwards from your own numbers. This guide shows how to use margin, average order value, customer lifetime value and network fees to set a commission you can afford – and one that partners find worth promoting.
Start with margin and average order value
Commission is normally a percentage of the order value excluding VAT, so the first question is how much of each order you actually keep. Take your gross margin and subtract the costs that come with every order, such as shipping, payment fees, packaging and expected returns. What is left is the contribution you can split between yourself and your marketing.
Here is a simple example with round numbers. An order of 100 euros excluding VAT at a 40% gross margin leaves 40 euros. If shipping, payment and returns cost 10 euros on average, the contribution is 30 euros. That is the absolute ceiling for everything you pay for the sale – commission, network fee and any bonuses.
Average order value matters too. A 10% commission on a 40-euro basket earns a publisher very little, so low-value shops often need a higher percentage or a fixed amount per sale to get attention.
Include the network fee in your calculation
The commission partners see is not your full cost. Most networks charge a fee on top, and the model varies:
- Partner-ads charges 25% on top of what partners earn. A 10% commission therefore costs you 12.5% of the order value.
- Adtraction charges a percentage of the commission paid to partners, with no fixed onboarding or licensing fees.
- Awin’s Access plan in the UK costs 99 pounds a month plus 3.5% of each transaction, and its Accelerate plan starts at 199 pounds a month plus 2.5%, both on top of partner commission.
Always check current terms with the network, as prices differ by market and change over time. In our example, a 10% commission plus a 25% fee costs 12.50 euros per order and leaves 17.50 euros of the 30-euro contribution.
Think in customer lifetime value, not single orders
If customers come back and buy again, the first order is not the whole story. Look at your own data: how many orders does an average customer place over 12 or 24 months, and what contribution do those repeat orders bring? A new customer who is likely to return is worth more than the first basket suggests.
Continuing the example, if a new customer places on average one more order with the same contribution within two years, their value rises from 30 to 60 euros. That gives you room to pay a higher commission for new customers and still be profitable – as long as the repeat pattern is based on real data, not hope.
New versus returning customers
Many programmes pay a higher rate for new customers than for returning ones. This can make sense, but it needs care. Definitions vary – some advertisers count only people who have never bought, while others treat a customer as new again after 12 months without a purchase. Publishers cannot see who is new, so a big gap between the rates can feel unfair.
- Write a clear definition of a new customer into your programme terms.
- Reward new customers with a bonus on top of a fair base rate, rather than cutting the rate for returning customers.
- Make sure your tracking can actually tell new and returning customers apart before you launch split rates.
Use category-based rates where margins differ
One flat rate across the whole shop is simple, but it rarely matches reality. Electronics may carry a thin margin while accessories or your own brand earn far more. Category-based rates let you pay more where you can afford it and protect the products where you cannot.
- Group products into a few margin bands rather than dozens of rates – partners need to understand them.
- Check that your platform and network can pass the product category with each order.
- Publish the rates clearly in your programme description.
The same logic applies to time-limited boosts. Before Black Friday on 27 November, many advertisers raise commission for a few weeks to win better placements. That can work well, but remember that your margin is often lower during a sale. Calculate the boost on the discounted price, set a clear end date and tell partners in advance when the rate goes back to normal.
Commission checklist
- Calculate the contribution per order after margin and order costs.
- Add the network fee to find your true cost per sale.
- Use your own repeat purchase data to estimate customer lifetime value.
- Decide whether a new customer bonus is worth it, and define new customer clearly.
- Consider category rates where margins differ a lot.
- Compare your offer with competing programmes in the same networks.
- Review the rates every quarter, and give partners notice before you lower them.
The right commission is not the highest one you can find in your category. It is the one that fits your margins, rewards the partners who bring real value and still leaves you a profit on every sale.
Want a second opinion before peak season? Start with a free audit of your affiliate programme.
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