What Commission Should You Pay Affiliates? Rates, Types and Examples

You’re about to launch an affiliate program, and there’s one number you have to settle before anything else: how much to pay affiliates. Go too low and affiliates promote someone else. Go too high and every referred sale eats into your margin.

Here’s the short answer: pay the highest rate your margin can carry after your other costs. For most stores that lands between 5% and 15% of the sale on physical products and 20% to 50% on digital products and courses, and subscription products usually pay 15% to 30% on every renewal.

Those ranges tell you what affiliates expect, but your own margin decides what you can actually afford. It’s worth getting right the first time, because cutting a rate later is how you lose affiliates.

In this post, I’ll show you how to pick your own number, when a flat rate beats a percentage, every commission type AffiliateWP supports and where each one is set, which rate wins when several apply, and how to pay 40% on a first order and 20% on repeat orders.

What affiliate programs typically pay

Commission rates follow margins. When a product costs little to deliver, you can give away a larger share of each sale, which is why digital products tend to pay more than physical ones.

Here are the typical ranges for each product type:

Product type	Typical commission
Physical goods (fashion, home, beauty)	5% to 15% per sale
Digital products and online courses	20% to 50% per sale
Subscription services	15% to 30% on each recurring payment
B2B software and services	10% to 30% of the first contract value
High-ticket items	3% to 8% per sale

Large marketplaces sit at the bottom of the range because they sell on volume. Amazon Associates’ standard rates run from 0% to 10% depending on the category.

An independent store usually has to pay more than Amazon to get an affiliate’s attention. That’s because the affiliate’s audience converts less often on a store they don’t know.

How to work out the right rate for your store

Benchmarks tell you what affiliates expect, while your margin tells you what you can pay. So I’d always work from the margin first, then check your answer against the market.

Here’s the order I’d work through it in:

1. Find your gross margin per order. Take your average order value and subtract the cost of the goods, payment fees and fulfilment. On a $100 order that costs $55 to make and deliver, your margin is $45.
2. Decide what you need to keep. If you need $25 from every order to cover overheads and profit, then $20 is the most you can give away. That gives you a 20% ceiling.
3. Account for repeat purchases. If your average customer orders three times, an affiliate who brings them in is worth more than that first order. That can justify a higher first-order rate, or a lower rate on later orders, as you’ll see in the worked example below.
4. Compare with competitors. Look at the public affiliate pages of two or three stores selling to the same audience. If they pay 15% and your ceiling is 12%, you’ll need another reason for affiliates to pick you, such as better conversion, a coupon their audience can use, or faster payouts.
5. Start below the ceiling. Raising a rate is easy, while cutting one makes affiliates leave. Starting a little lower leaves you room to reward top performers with a personal or tiered rate.

Once you have a number, it helps to decide what the commission is calculated on. On the Commissions tab, the Exclude Shipping and Exclude Tax settings take those amounts out of the order total before AffiliateWP works out the commission.

Now that you know how much you can pay, let’s look at the shape that payment takes.

Percentage or flat rate?

A percentage scales with the order. Affiliates earn more when they send bigger baskets, and you never pay more than the share you chose.

It’s the default in AffiliateWP, and it’s the safer choice when your order values vary.

A flat rate pays the same amount whatever the order is worth. It suits a store with one main product or a fixed price, and it’s easy for affiliates to understand (“$20 for every sale”).

If you go flat, AffiliateWP can pay it per product sold or once per order, using the Flat Rate Referral Basis setting. Just keep in mind that choosing per order turns off per-product rates, and the product screen tells you so.

Every commission type, and where to set it in AffiliateWP

Your default rate covers every sale until something more specific replaces it. That’s useful, because it means you only need to set a special rate where you actually want a different one.

The table below shows each way to change the default, the screen where you set it, and the plan it needs.

Commission type	What it does	Where you set it	Plan
Default rate (percentage or flat)	The rate for every referral unless another rate applies	AffiliateWP » Settings » Commissions: Referral Rate Type and Referral Rate	All plans
Per category	One rate for every product in a WooCommerce or Easy Digital Downloads category	The category’s edit screen: Referral Rate	All plans
Per product (and per variation)	A rate for one product	Edit the product, Product data box, AffiliateWP tab: Affiliate Rate Type and Affiliate Rate	All plans
Per affiliate	A personal rate for one affiliate, on everything they sell	AffiliateWP » Affiliates, edit the affiliate: Referral Rate Type and Referral Rate	All plans
Affiliate groups	One rate for every affiliate in a group, such as a VIP group	AffiliateWP » Affiliates » Groups	All plans
Affiliate Product Rates addon	A rate for one affiliate on specific products	Edit the affiliate: Product Rates	All plans
Tiered rates (Tiered Affiliate Rates addon)	Raises an affiliate’s rate once they pass a number of paid referrals or an amount of paid earnings	AffiliateWP » Settings » Tiered Rates	Pro
Lifetime commissions (Lifetime Commissions addon)	Pays the affiliate on a linked customer’s future purchases, with or without their link, at an optional separate rate	AffiliateWP » Settings » Lifetime Commissions	Pro
Recurring commissions (Recurring Referrals addon)	Pays on subscription renewals, such as WooCommerce Subscriptions, at an optional separate rate	AffiliateWP » Settings » Commissions: Recurring Referrals section	Pro
Multi-tier commissions (Multi-Tier Commissions addon)	Pays affiliates on sales made by the affiliates they recruited, five levels deep by default	AffiliateWP » Settings » Commissions: Multi-Tier Commissions section	Pro

As you can see, the first six rows work on every plan. The four that reward ongoing performance (tiers, lifetime, recurring and multi-tier) are the ones that need Pro.

Each Pro feature is an AffiliateWP addon included with the Pro plan, not a separate purchase. You install it from AffiliateWP » Addons.

If you’d like the details of each one, see the docs for affiliate groups, Tiered Affiliate Rates and Recurring Referrals.

Which rate wins when more than one applies

With this many places to set a rate, it’s natural to wonder what happens when two of them apply to the same sale. The rule is simple: the most specific rate wins.

When an affiliate refers an ordinary first-time order, AffiliateWP checks the rates you’ve set in this order, from weakest to strongest:

1. The default rate on the Commissions tab.
2. A category rate replaces the default for products in that category.
3. A product rate replaces the category rate.
4. The affiliate’s own rate replaces product, category and default rates.
5. An affiliate group rate replaces all of the above for every affiliate in the group, including their own rate. The Edit Affiliate screen warns you when a group rate is overriding.

Three Pro features change this for particular orders. Lifetime Commissions uses the Lifetime Referral Rate on purchases from a customer who’s already linked to an affiliate.

Recurring Referrals uses the Recurring Rate on subscription renewals, and falls back to the affiliate’s normal rate when you leave it empty.

Tiered Affiliate Rates only applies to affiliates who don’t have a rate of their own. So if you give an affiliate a personal rate, you take them out of the tiers.

The referral rate hierarchy doc covers how the addons combine. Next, let’s put two of these rates together in a real structure.

Worked example: 40% on the first order, 20% on repeat orders

This structure pays well for winning a new customer, then keeps paying the affiliate a smaller share for as long as that customer keeps buying. In AffiliateWP, you build it with Lifetime Commissions (Pro).

Here’s how it works. The first order is paid at your normal rate. Lifetime Commissions then links the customer to the affiliate, and later orders from that customer are paid at the lifetime referral rate, even when the customer comes back without the affiliate’s link.

To set it up, work through these steps:

1. Go to AffiliateWP » Settings » Commissions, set Referral Rate Type to percentage and Referral Rate to 40, and save.
2. Install and activate the Lifetime Commissions addon from AffiliateWP » Addons.
3. Open the Lifetime Commissions settings tab and check Enable For All Affiliates? (or turn lifetime commissions on per affiliate from their edit screen).
4. Check Enable Lifetime Referral Rates and set Lifetime Referral Rate to 20.
5. If you want the link to expire, set Lifetime Length to the number of days it should last. 0 means it never ends.

Now let’s see what that pays. A customer clicks an affiliate’s link and spends $100: the affiliate earns $40.

Two months later, the same customer types your URL in directly and spends $80: the affiliate earns $16 at the lifetime rate. Other affiliates’ links don’t take that customer away, because the lifetime link takes priority.

There are two settings worth checking before you rely on this. First, leave Link Customers To Affiliates On User Registration off. Otherwise a customer who creates an account before their first purchase is already linked, and that first order is paid at 20%.

Second, a product or affiliate rate you set elsewhere still applies to the first order, so keep this structure on products that use the default rate. The Lifetime Commissions doc covers per-affiliate lifetime rates and lengths.

Can you pay commission on new customers only?

Not with a setting, and that’s worth being upfront about. AffiliateWP has no option to pay only when the referred customer has never ordered before, and none of its addons add one.

That means a referred order from a returning customer earns the normal commission. If paying for existing customers is your concern, a developer can add the check with a custom code snippet, or you can lower the cost of repeat orders with the lifetime referral rate described above.

Frequently asked questions

Here are answers to the questions store owners ask most often about commission rates.

Which AffiliateWP plan do I need for tiered or lifetime commissions?

Pro. Tiered Affiliate Rates, Lifetime Commissions, Recurring Referrals and Multi-Tier Commissions are addons included with the Pro plan and the Growth Bundle. Percentage and flat rates, per-product, per-category, per-affiliate and group rates work on every plan. The pricing page lists what each plan includes.

What is a good commission rate for a new affiliate program?

One you can afford to keep. Work out your margin per order, subtract what you need to keep, and start a little below that ceiling. The typical ranges above (5% to 15% for physical goods, 20% to 50% for digital products) then tell you what affiliates in your category are used to seeing.

Can different affiliates have different rates?

Yes. You can set a personal rate on the affiliate’s edit screen, or put several affiliates in a group with its own rate at AffiliateWP » Affiliates » Groups. A group rate overrides the affiliate’s personal rate while they stay in the group, so use one or the other for the same person.

Why didn’t an affiliate move up to the next tiered rate?

Usually it’s one of two reasons. Tiers count paid referrals and paid earnings, so unpaid referrals don’t move an affiliate up until you pay them. And tiers only apply to affiliates without a personal rate, so an affiliate with their own rate on the Edit Affiliate screen stays on that rate.

Are commissions calculated before or after shipping and tax?

That’s your choice. AffiliateWP includes shipping and tax in the order amount unless you turn on Exclude Shipping and Exclude Tax on the Commissions tab. Excluding both keeps the commission tied to the price of the products you sold.

Next, put your rates to work on WooCommerce

Now that you’ve picked your numbers, the natural next move is getting them live in your store. The guide to set up an affiliate program for WooCommerce walks you through it from install to your first test referral.

If repeat customers are central to your plan, the lifetime commissions guide goes deeper. And if you run a subscription store, you can follow the guide to recurring commissions on subscription products.