How much should I give members for each referral they give my hosting company? I see some sites giving $10.
However the numbers don't match up for me.

Say John Q. has a site hosted with me. He, decides he wants to host another site with us. And chooses to buy cheapest plan ($6.95) through his referral id. Now IM giving somebody $10, to spend on a $6.95 account?

Granted, he could wind up hosting the same site for 3 years.
Yet, whose to say, he just won't cancel after the first month.
It seems risky if you ask me. So what is the right amount I should give members for each of there referrals?

Thanks in advance.

Personally, I would log user IPs and prohibit the act of referring oneself. It's immoral, really.

Give users a third of the new accounts value as a referral. This way, you still make a small profit on the new user's first month, and the it encourages the referrer to upsell the new account for you (they want a larger referral credit). Also, it minimizes your loss in the event that people cheat by referring themselves.

Example:
For the legimate referral
Profit from new user: $9
Credit payed to referrer $3
Total profit/month one: $6

For the sneaks and cheaters:
Profit from 'new user': $9
Credit payed to 'referrer':$3
Total profit: $6

In the last scenario, sure you are being screwed out of $3, but at least you are in the black, and not paying out. It eliminates the motive for a scammer to refer themselves for a month and then quite the hosting. They are making no real profit.

Anyone else have any ideas? I'm curious about this as well.

Sem

I think that giving a percentage of account value is the best idea, that way you never lose out and if you are lucky they may try and get people to sighn up for bigger accounts LOL
I think it is best to do it that way because then the amount is proportinate to the account, say they got their friends to sign up for a $100 account i dont think they would be too happy to receive $5 the same as if they had signed up for a $10 account.

You can have a rule that the referral clients have to stay with good membership for at least __ month(s) before the bonus is given to the referrer. This way, you get your money first and minimize chances to get burned :)

Good one Rey i hadn't thought of that, AOL do that if you sign on a friend you get £30 after 60 days continuous membership from the person referring and the person who was referred

Originally posted by rey
You can have a rule that the referral clients have to stay with good membership for at least __ month(s) before the bonus is given to the referrer. This way, you get your money first and minimize chances to get burned :) the other point with that is the person referring you is more likely to actually know what they're talking about...

Saying "I'm with this great hosting company, come join" after 2 weeks sounds awfully hollow ;)

What would people rather have:

Affiliate brings a customer paying $10/month

Should he get $10 one time commission fee,
or should he get paid say $2.00/month for each month that referral stays?

People would rather have $2 a month....
It's a better business move to just make a larger, one off payment though