Affiliate marketing sounds easy but you do need to exercise some caution. You want to avoid the affiliate marketing pitfalls that can ruin your business and worse, have you crawling on your hands and knees back to that boss that now knows how you truly feel.

People tend to get excited when they start a new venture. Unfortunately this excitement and eagerness can cause them to miss key things in their agreement. Whenever you sign up for an affiliate marketing program, you will be expected to sign an agreement.

The terms and conditions of the agreement for both sides should be outlined. Well you have finally done it. You have packed in the rubbish job and told your boss exactly what you think. You have taken the plunge and made the decision to begin your own affiliate marketing business.

However, if they want to hide something this is where they will put it. It will either be in the small print, so get your magnifying glass out, or they will baffle you with legal language. Either way, you need to read and understand your agreement thoroughly to avoid disappointment and lost earnings.

If you are signing up for a commission based affiliate marketing program then you need to understand how the term revenue is defined. This is one of the biggest pitfalls of the contracts. They may advertise 5-10% commissions but it all fall on how they define revenue.

Most affiliate marketing programs will calculate commission on the gross value of the sale. In other words, the amount of money the site will get at the completion of the sale. You may think that this sounds great.

However, you need to read this part of the agreement very carefully. The amount of the sale almost always excludes credit card or debit card payment surcharges. They also are likely to exclude payment and delivery charges as well as any gift wrapping or other surcharges. What sounded like a nice commission is soon shrinking before your eyes. Ask these questions specifically before you sign an agreement.

Some affiliate programs are even stricter in their definition of revenue. Your commission may be based on the profit margin of the sold product. For example, if you help sell a book for 20 dollars but the company only makes 10 dollars profit, you will receive a percentage of 10 dollars not 20. This can make a substantial difference in your earnings.

Again, make sure you understand these things and ask specifically what your commission will be based upon. Read your agreement and look out for odd sounding clauses. These could come back to haunt you later.

Something else to beware of when you work on commission is returns. Many affiliate marketing companies only pay commission out on completed sales and then only if the customer keeps the item. If they return the items your commission could be cancelled.

To really rub salt in the wounds, you could be billed for the outstanding commission if you do not have sufficient commission credit built up. Make sure you understand this before signing on. You cannot expect a company to pay you a commission on an item that is returned but make sure you understand their return policy. Find out your rights in this situation.

Affiliate marketing can be a great way to earn money. If you have good sales and marketing skills then it can give you the opportunity to out them to good use. You will be able to work for yourself and not someone who undervalues and does not appreciate them.

One needs to consider affiliate marketing carefully. Make sure you understand your agreement and exactly what you will be paid for. You do not want to have to go crawling back to your boss begging for your old job back!