But first we have to ask “what is affiliate marketing?”

Well one of the easiest ways to make money online is to sell other peoples products or services in return for a commission. When you do this you become an affiliate for that person or company, this is what is known as affiliate marketing.

The commission rates for the products you promote vary according to what type of product you are selling. For instance if you are selling digital products, by this we mean anything that can downloaded off the internet onto a computer, can be as much as 50% up to 80%. On the other hand if you are selling a physical product that requires packing and shipping then the commissions are much lower around 4% to 10%. This lower rate is due to the fact that the merchant has much higher overheads due to all this extra work.

In view of the big difference in commissions it makes sense to concentrate on digital products when promoting other peoples products, although a mixture of both types of products would seem to be a good mix.

What is residual income?

When you make a sale of a product, whether it be digital or physical that is always cause for a celebration. However, when you've sold it, that's it, and you have to start over and sell to someone else. On the other hand, if you sold something that entailed a monthly subscription you could keep getting commissions for months or even years in the future, just on that one sale. This is what is known as residual income.

A good example of a residual income program is website hosting, when people buy a website they usually keep it hosted for a number of years and this can give you a regular monthly, quarterly or annual income. Other examples are membership sites and even online book clubs.