How to calculate an affiliate commission
The calculation is simple, but it depends on four details that change the result.
Short answer: the affiliate commission is, in general, a percentage applied to the sale value defined by the program. To calculate it, find the percentage, which value serves as the base (with or without shipping and taxes) and whether there are discounts or returns that reduce the payment.
What you need to know first
- The percentage of the program's commission or of the product's category.
- The calculation base: final price, price without shipping, price without taxes.
- The cancellation rules: returned sales usually have the commission canceled.
- The payment deadline and the minimum amount to be paid.
Steps
- Find the percentage in the program's terms. It may vary by category.
- Confirm the base. Read whether the commission applies to the total value or to the net.
- Calculate the gross amount. Multiply the base by the percentage.
- Consider returns. If part of the sales is canceled, discount an average rate.
- Check taxes. Affiliate earnings may be taxable; consult an accountant for your case.
- Track the deadline. Note when each commission is released.
An example
A $200 product has a 6% commission on the value without shipping. The gross commission is 200 × 0.06 = $12. If 10% of sales are usually canceled, the expected value per sale is, on average, $10.80. The numbers are illustrative and do not reflect any specific program.
Common mistakes
- Treating the commission as guaranteed: cancellations and returns exist.
- Ignoring the calculation base.
- Forgetting deadlines and the minimum withdrawal amount.
- Not separating revenue from profit: tools and ads also cost money.
If you promote the same product on different channels, such as a blog and a social network, record the origin of each sale whenever the program allows it. That way you find out where the commission really comes from, instead of guessing, and can focus effort where the return is higher.
Next step
Build a spreadsheet with percentage, base, cancellation rate and deadline for each program you take part in. That way you compare programs by the same criteria.
Related tool: Business Break-Even Calculator
