Affiliate Marketing – Calculating Commissions at Clickbank
You want to add Affiliate Marketing as a stream of income for your home based business. You need to focus on your business and not be distracted by unfamiliar details. It is important that you need to be comfortable with the details of Clickbank, the most popular source of digital products for Affiliate Marketing. I am going to assume that you have registered with Clickbank and now have a nickname and a password. You are starting a home based business. It is important that you understand how your commission income from Clickbank is calculated. Go to the FAQ at the Clickbank webpage. Go to the clickbank marketplace and click on the FAQ link in the navigation bar. Click on question 11.
The formula uses the following terms:
– retail price – go to the marketplace page. In the Search the Clickbank Marketplace box, type the name of the product you are interested in selling in the keyword area. Look at the search results until you find your product. Hit the View Pitch Page link to view the sales page for the product. Scroll down the sales page until you find the buy now button. Hit the buy now button. Now at the order page, locate the price of the product and then exit the page.
– commission rate – this is also found by search for your product at Clickbank. When you find your product listing you will see a% / sale item which is the commission paid per sale.
You must now calculate the net sales amount. That is the sales amount after Clickbank takes it's share: 7.5% of the retail price plus $ 1.00. Subtract Clickbank's share from the retail price, now you have Net Sales Amount.
To calculate your commission, multiple the commission as a decimal fraction times the Net Sales Amount, ie 65% becomes 0.65.
Here is an example.
Hypothetical product XYZ retails for $ 50. It pays a commission of 60%.
Net Sales Amount = (50 X 0.925) – 1.00 = 45.25
Commission Paid = 45.25 X .6 = 27.15.
Here is an example from Clickbank – Keyword Elite
Retail Sales Price is $ 174. Commission is 58%.
Net Sales Amount = (176 X 0.925) – 1.00 = 161.80
Commission Paid = 161.80 X 0.58 = 93.84.
Now you know how your responsibilities will be calculated. This value assumes that none of your customers ask for a refund. On the marketplace page for a specific product you will see an item reported as $ / sale. This value is the average amount per sale that Clickbank estimates you will receive after adjustment for refunds.
Again using Keyword Elite as the example product, the $ / sale reported on March 16 2008 is $ 92.34. This is very close to the commission before refund allowance calculated earlier at $ 93.84. The importance and significance of the difference between these two values is the subject for another discussion. The fact the difference is small, less than 5%, suggested that the marketplace is satisfied with the product and claims very few refunds from Clickbank. Remember, the Clickbank guarantee is unconditional. No questions are asked. Refunds take up to 5 business days. The commission income is deducted from the affiliate account when the customer claims a refund. Clickbank products carry a 60 day 100% satisfaction guarantee.