The more I work online, the more it becomes apparent to me that some people just don't 'get it'. What don't they get? Well in my experience, many things but the 'thing' that someone didn't 'get' this week was the benefit of marketing an affiliate product which has a recurring income element to it.....

One of my membership websites, SimplyWholesale, has an affiliate program which allows anyone to link to the site and earn 50% of any sales generated by their visitors. Nothing special here - millions of websites offer a similar deal. In addition, because one of the payment options offered by SimplyWholesale is a monthly subscription, my affiliates can also earn 50% of future monthly subscription payments made by a member who they introduce to the site. Again, nothing special here - many membership websites have the same arrangement.

So what's the story?

Well, last week I received an email from an affiliate 'complaining' that he wasn't earning enough money from his customers who were only signing up for the monthly subscription option. (A monthly membership is ?4.99 so his earnings would have been ?2.50 on each one). Now, this individual had been referring, on average, one new member to the site per day and the vast majority were opting for the monthly membership. The odd one here and there was paying for a yearly membership which generated a higher commission but the majority, as I say, were paying monthly.

So everyday for the past couple of weeks, this guy has earned ?2.50 from having a single banner on his website. Assuming this continues for the next two weeks, he will have earned at least ?77.50 for the month. Actually it will be more than this due to the annual subscriptions but let's keep things simple :-)

Ok, ?77.50 isn't a life-changing sum of money but let's move things forward a month or two (and this is the bit that the guy clearly hadn't thought of when he emailed me with his 'complaint').....

Month two, assuming the level of sales continues, he will earn another ?77.50 BUT he will also see an income from the second monthly subscription payments made by the members he referred to the site in month one. It is fair to assume that some members may cancel their subscriptions but to date we have a pretty low cancellation rate. Let's work on the worse case scenario and say that 20% of his members cancel in month two - he will still earn over ?60 from the renewals. Add that to the ?77.50 from the new members and month two earnings are getting on for ?140. Things are starting to look a little more interesting....

This isn't just theory - let me back it up with some 'real-life' figures based on one of my actual affiliates....

This particular individual has one link to the SimplyWholesale site from one of his own sites and in the first month of being an affiliate, he earned ?60.

Month two, daily sales continued and with renewal subscriptions, my affiliate earned ?230.

Month three (the current month), this particular affiliate is on target to make over ?400 in commission.

Each week this affiliate refers roughly the same number of new members to the site but look at how quickly the commission payments are growing each month.

The point of this article isn't to try and persuade you all to sign up as affiliates for SimplyWholesale (although that would be great!) but to get you to think about the potential of small payments either for your own products or as an affiliate.

I have built several businesses around very low pricing structures and it works very well. I am also an affiliate for one or two low price products and some of these schemes have been sending me cheques for years even though I stopped promoting the actual product ages ago (the commissions are earned from customers who I referred years ago who are still using the site or service in question).

With online business costs so low, it doesn't always have to be about the hundred dollar products and in fact, the 'less than a tenner' products can also be extremely lucrative....

Copyright (c) 2006 Richard Grady