Affiliate marketing is performance-based marketing where a brand pays a third party (the affiliate) a commission for driving a desired action — typically a sale, lead or signup — through a unique tracking link.
This article explains the main commission models, typical rates by category, and how to estimate affiliate earnings.
The Core Formula
Commission Earned = Clicks × Conversion Rate × Average Order Value × Commission Rate
Variable Definitions
- Clicks — visits sent through your tracking link.
- Conversion Rate — percentage of clicks that result in the rewarded action.
- Average Order Value (AOV) — the average sale size for that brand.
- Commission Rate — the % paid to the affiliate.
Worked Example
A blog sends 5,000 clicks/month to a software affiliate program with a 4% conversion rate, $200 AOV and 25% commission.
- Sales = 5,000 × 4% = 200
- Revenue driven = 200 × $200 = $40,000
- Commission = $40,000 × 25% = $10,000/month
Use the Affiliate Commission Calculator to model your own funnel.
The Five Common Commission Models
1. Pay Per Sale (PPS)
Most common. Affiliate earns a percentage of each sale generated. Used by Amazon Associates, ShareASale, most SaaS.
- Typical rates: 1%–10% (physical), 20%–50% (digital/SaaS).
- Risk balance: affiliate carries traffic risk; brand carries no spend risk.
2. Pay Per Lead (PPL)
Affiliate earns a flat fee per qualified lead (form submission, free trial, demo).
- Typical rates: $1–$200, depending on lead quality and vertical.
- Used heavily in insurance, finance and B2B.
3. Pay Per Click (PPC)
Affiliate earns per click, regardless of outcome.
- Typical rates: $0.01–$1.00.
- Rare today; mostly large publishers.
4. Recurring (SaaS)
Affiliate earns a % of every recurring payment for the customer's lifetime (or a fixed window like 12 months).
- Typical rates: 20%–40%.
- Most lucrative model long-term; common in SaaS (e.g., ConvertKit, Webflow).
5. Tiered or Hybrid
A flat fee plus a recurring share, or higher rates after volume thresholds. Common in mid-market affiliate programs.
Typical Commission Rates by Category
| Category | Typical commission |
|---|---|
| Physical retail (Amazon, big box) | 1% – 8% |
| Fashion / beauty | 5% – 15% |
| Software / SaaS (one-time) | 20% – 40% |
| Software / SaaS (recurring) | 20% – 30% |
| Web hosting | 30% – 75% one-time, or recurring |
| Online courses / digital products | 30% – 50% |
| Financial products / credit cards | $50 – $500 per signup |
| Insurance leads | $5 – $200 per lead |
Rates vary widely; always read the program terms.
Cookie Windows Matter
When a user clicks your link, a cookie is set on their device. The cookie window is how long after the click you still get credit if they purchase.
| Cookie window | Notes |
|---|---|
| 24 hours | Amazon Associates standard |
| 30 days | Most affiliate networks |
| 60–90 days | Generous SaaS programs |
| Lifetime | Best-in-class — sticks until cookie is deleted |
A long window can multiply earnings 2–3× without changing anything about your traffic.
How to Estimate Affiliate Earnings
Multiply the funnel:
- Monthly clicks from your content.
- × Conversion rate (1%–5% is typical).
- × AOV.
- × Commission rate.
A high-intent niche (credit cards, web hosting, B2B SaaS) can hit $1+ per click. A general-interest blog earns $0.01–$0.05 per click.
Disclosure Requirements
Affiliate links must be disclosed under most consumer-protection regimes:
- United States: the FTC Endorsement Guides require "clear and conspicuous" disclosure on any post containing affiliate links.
- United Kingdom: the CMA and ASA require similar transparency.
- EU: the Unfair Commercial Practices Directive applies.
- Canada: the Competition Bureau requires disclosure of material connections.
A short line such as "This post contains affiliate links. We may earn a commission at no extra cost to you" is usually sufficient — placed near the top of the page.
Common Mistakes
- Skipping disclosure. It is the easiest way to lose trust and risk regulator action.
- Promoting products you have not used. Conversion rates and credibility both collapse.
- Ignoring EPC (earnings per click). It is the single best metric for comparing programs.
- Stacking too many programs. Most affiliate income follows a power law — 1–3 programs usually drive 80%+ of revenue.
- Forgetting to track returns and chargebacks. Many programs claw back commissions on refunded sales.
Frequently Asked Questions
Is affiliate income taxable? Yes — treated as self-employment / business income. Set aside ~25–30% for tax depending on your country.
Do I need a website? No. Affiliate income can come from YouTube descriptions, email newsletters, podcasts or social bios. A website typically yields the highest conversion rates because of intent and SEO.
What's the difference between affiliate and referral? Largely terminology. Referral programs are usually for existing customers; affiliate programs are open to third parties.
Is affiliate marketing still profitable? Yes — it is one of the most resilient income models for creators and publishers, because brands prefer paying for results.
Related Calculators
Conclusion
Affiliate commissions are simple math: clicks × conversion × order value × commission rate. The leverage is in choosing the right niche, building trust, picking programs with long cookie windows, and disclosing properly. Done well, it is one of the highest-margin income models on the internet.
Educational only — disclosure and tax requirements vary by country; consult local guidance.