I don't know about a well defined "standard". Affiliate commissions vary a lot. If we were to talk about budget hosting, the commission is often enough $40-$100+. Over at CJ.com, hosts typically offer $70-110 or so per sale.
I've always found it interesting that budget hosts, selling $5-$10 shared hosting accounts pay so much for a sale, and high end hosts, with clearly higher profit margins and a higher customer retention rate, typically pay a lot less.
Anyway, for some reason, it seems to me like one time commissions are more prevalent than recurring ones. It's probably has to do with affiliates not being willing to place a bet on the host being able to keep customers, or even be around say... 2 years from now.
Then there's the "money now" vs "money in the future" choice. Typically "money now" is more valuable.
Most commissions also seem to be fixed, rather than in percents.
The value of a commission is driven by a couple of main factors:
1. The market. There is an affiliate market out there, with superaffiliates being able to really put a hosting brand on the map, bring in hundreds of customers per month etc. If you want to get their attention, you need to pay top dollar.
2. The typical customer acquisition costs. If by most means it costs you $100 to gain a new customer, it makes sense to pay an affiliate $100 as well.
3. What the host can afford. Budget limitations are always a reality.
4. What the host can "afford". Lots of hosting businesses (especially higher end) rely mostly on word of mouth to drive new sales. As such, they're probably used to low and very low advertising expenditures. If they decide to add an affiliate program to their marketing efforts, they will be reluctant to pay high commissions. I suppose there might even be a fear of ending up on "top hosts" sites. I don't think that's likely to happen though, as the focus on most of them is on high commission and cheap hosting. A $20 shared hosting account, or a $10 shared hosting account that offers only 500MB, doesn't stand a chance there.
Dan, thank you very much for your very informed - and informative - quality post! I was wondering if you or someone else might be able to post some links to hosting affiliates or the 'superaffiliates' you mentioned...
The trend for affiliate commission in Commission Junction by hosts such as HostGator, BlueHost, HostMonster, JustHost, IXWebHosting, LunarPages, and the like is around $100 per sale.
It would be a good idea to open a CJ account and offer some $150 commission. This will guarantee that your company will literally PAINT the web hosting review sites on the internet as they are utilizing CJ.
This mean your company will skyrocket and be displayed as the "New #1 Web Host" around the world.
Given enough time, you will get some 50,000 clients, then you can lower your commission to $75/sale since your brand is already painted the internet anyways.
Initial cost would be $7K opening cost and $500/Mo for your new CJ account.
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I agree with jrianto. If you put it at $150, or even $125, you will definitely get some solid exposure. However, if your conversion rates are awesome, you could be just as successful offering $50-$75 commission if you can prove to your affiliates you are converting much lower than the competition.
Some hosts even try to cover their costs right off the bat by forcing the client to signup on a 6 month - 12 month term. This way they can cover their affiliate fee and still make some money without worrying about the client canceling before the time is up.
If im not mistaken, CJ also gives you something like 2 months to ensure the sale. If the customer 'cancels', you can get back the commission you paid to your affiliate. I have seen hosts completely screw people over by saying that most of their referrals were fraudulent. Needless to say, these guys dont have affiliates for long.
Some great feedback in this thread by some of the more experienced 'war dogs' of the hosting industry!
Where do I go on cj.com to sign up for what was mentioned above? Having a bit of a time navigating through their sales copy and various plans to find what was mentioned. And, is it really $7K to sign up and $500 a month thereafter?? That goes way above a keyword marketing campaign such as what I've seen on keywordspy...