Base rate is a standard commission that you are ready to pay to affiliates for a sale, lead, or click.
A competitive base rate is an essential part of the affiliate program. It will attract the best-performing affiliates and motivate them to do even better. It will also be an additional reason to choose your program over one of your competitors.
In order to determine the optimal base rate, you should follow these steps:
- Calculate your profit margin: Profit margin is a percentage of how much your business makes on every sale.
- Subtract your business costs: Business cost consists of running an office, storage, delivery, paychecks for employees and you.
- Subtract bonuses for affiliates: From the first two steps, you will understand the maximum rate. The maximum rate consists of the base rate and bonuses. Bonuses are an essential part of the affiliate program as well since it motivates affiliates to work better. Subtract bonuses from the maximum rate to understand the base rate.
- Compare it to competitor’s rates: If you notice that your base rate is way lower than those of competitors, you will either have to either increase the base rate overall or cut bonuses a bit.
