Affiliate marketing pays either by issuing a commission, or through a recurring fee, agreed upon in the beginning of the undertaking. The payment scale and method of pay vary depending on the agreement. A relationship is formed between a merchant and an affiliate, where the affiliate is paid based on how much traffic they can bring to the merchant's web site. If an affiliate produces a lead or new sales for the company, they are compensated by the merchant for their efforts.
The majority of merchants offer a one-time commission for all future leads or sales that the affiliate brings to the company. This commission can be as high as 75% or as low as 5%. Some affiliate programs grant a small, fixed fee for each click that the affiliate brings to the merchant's web site. The later program is beneficial because it does not require a purchase to be made on the site in order for payment to be received.
An alternate payment system that some affiliate programs choose to use is a residual income program. This allows a person to be paid based on the amount of work they do, which occasionally leads to a higher income. It also promises the opportunity for multiple payments, an attractive option for many. The drawback is that this income is not guaranteed in the way that a commission is often, a high paying one-time commission far exceeds the initial payment from a recurring income program.
For example, let's suppose that two merchants are beginning an affiliate program. One offers a $100 commission, and the other is offering $20 per sale. It is tempting to sign up for the single, higher commission, but the second option has long -term viability. Even if the affiliate only makes $20 a month, in six months they will have exceeded that original, one-time commission of $100. The marketing efforts are not in any way lessened by choosing the first option, either. The amount of work involved in either endeavor is equal. However, with the second option, a person can secure a future income by building a loyal clientele, which can provide years of future income.