Affiliate Commission Rates: How to Set Them

Start from your margin and LTV, not a number

The right commission is whatever you can pay and still profit, set as high as that allows so affiliates choose you. Work it out from:

Gross margin — the commission comes out of it, so a 60%-margin product can pay far more than a 15%-margin one.
Customer lifetime value — if a customer is worth $400 over time, you can pay generously for the first sale even at a thin first-order margin.
Your CPA on other channels — if paid ads cost you $50 to acquire a customer, an affiliate commission below that is a bargain.

Framed against LTV and your blended acquisition cost, a "high" commission is often cheaper than the ads you're already buying.

Percentage, flat CPA, or hybrid

Percentage of sale — scales with order value, simple for affiliates to understand. Best for ecommerce with variable cart sizes.
Flat CPA — a fixed amount per sale or lead. Predictable cost, good for lead-gen and single-price products.
Hybrid — a smaller flat fee plus a percentage, or a bonus on top of a base rate. Useful for aligning affiliates on both volume and value.

Typical rates by industry

Physical products — 5–15% (margin-dependent; electronics low, apparel and beauty higher).
Digital products / courses — 20–50% (near-zero marginal cost).
SaaS — 20–30%, frequently recurring for the customer's lifetime.
Lead gen — a flat CPA from a few dollars to hundreds, scaled to lead value.

Recurring vs one-time

For subscription products, recurring commissions (paying a percentage every month the customer stays) are the strongest recruiting magnet in SaaS — they let affiliates build compounding income, so the best partners prioritize recurring programs. One-time commissions are simpler and cheaper but less attractive. If your retention is strong, recurring almost always wins more and better affiliates.

Tiers and bonuses without overpaying

Flat rates leave money on the table at both ends. Reward performance instead: volume tiers (a higher rate once an affiliate passes a monthly threshold), new-customer bonuses, and time-boxed promotions on priority products. This concentrates spend on the partners actually driving growth rather than paying everyone the same. Spell every structure out in your terms so there are no disputes — and watch the cookie window, since a longer window raises your effective cost per sale.

Frequently asked questions

What commission rate should I offer affiliates?

Set it from your gross margin and customer lifetime value, not a fixed number. Physical products commonly run 5 to 15%, digital products and courses 20 to 50%, and SaaS 20 to 30% (often recurring). The rate needs to beat competing offers affiliates could promote while staying profitable for you after the sale — and measured against your cost to acquire a customer on paid ads, a generous commission is often cheaper.

Should affiliate commissions be a percentage or a flat fee?

Use a percentage when order values vary and you want commissions to scale with cart size — typical for ecommerce. Use a flat CPA when you want predictable cost or sell a single-price product or lead. A hybrid (small flat fee plus a percentage, or a bonus over a base rate) can align affiliates on both volume and order value. Pick what matches your economics and is simple for affiliates to understand.

Should I offer recurring commissions?

For subscription products, recurring commissions are the strongest recruiting advantage in SaaS — paying affiliates a percentage every month the customer stays lets them build compounding income, so top partners favor recurring programs. It only works if your retention is solid; if customers churn quickly, a higher one-time commission may recruit better. For strong-retention SaaS, recurring usually wins more and better affiliates.

How can I afford a competitive commission?

Measure it against lifetime value and your blended acquisition cost, not first-order margin alone. If a customer is worth $400 over time and paid ads cost you $50 to acquire one, an affiliate commission in that range is profitable even if the first order's margin is thin. Use tiers and new-customer bonuses to concentrate spend on the affiliates actually driving growth rather than paying a flat rate to everyone.

How to set commission rates.