Introduction
Affiliate marketing pays affiliates for driving measurable outcomes for merchants. The commission model — how that outcome is defined and paid — determines income potential, traffic strategy, and risk.
Definition
An affiliate commission model is the formula by which a merchant compensates an affiliate for promoting their product. Each model rewards a different action.
Models Comparison
| Model | Payout Trigger | Typical Rate | Best For |
|---|---|---|---|
| CPS (Cost Per Sale) | Customer purchases | 3%–50% of sale | Physical/digital products |
| CPA (Cost Per Action) | Specific action (signup, install) | $1–$200 flat | SaaS trials, app installs |
| CPL (Cost Per Lead) | Qualified lead form | $5–$150 | B2B, mortgages, insurance |
| RevShare | % of recurring revenue | 10%–50% lifetime | Subscriptions, SaaS |
| Hybrid | CPA + RevShare | Mixed | High-LTV products |
| CPC (Cost Per Click) | Click only | $0.05–$2 | Rare; high fraud risk |
Why It Matters
A blog driving 1,000 monthly conversions earns $1,000 at $1 CPA, $50,000 at $50 CPS, or potentially $200,000+ at 30% lifetime RevShare on a $99/mo SaaS. The model — not just the traffic — defines income.
How Each Works
CPS: Affiliate is paid a percentage of the sale price. Cookie window (30–90 days typical) attributes the sale.
CPA: Flat fee per defined action. Merchant pays regardless of whether the action becomes paying customer.
CPL: Affiliate gets a fixed amount for a qualified lead meeting criteria (verified email, demo booked).
RevShare: Affiliate earns a recurring percentage as long as the customer pays. Highest long-term income on SaaS.
Formulas
Affiliate Earnings (CPS)
$$ \text{Earnings} = \text{Clicks} \times \text{Conversion Rate} \times \text{Avg Order Value} \times \text{Commission Rate} $$
Earnings (RevShare, lifetime)
$$ \text{LTV Earnings} = \text{Customers} \times \text{Monthly Fee} \times \text{Months Retained} \times \text{RevShare %} $$
EPC (Earnings Per Click)
$$ \text{EPC} = \frac{\text{Total Earnings}}{\text{Total Clicks}} $$
Worked Example
10,000 monthly clicks to a $99/mo SaaS with 2% conversion, 12-month average retention, 30% RevShare:
- New customers/mo: 10,000 × 2% = 200
- Monthly recurring earnings (steady state, year 2+): 200 × 12 × $99 × 30% = $71,280/mo
- vs. CPS one-time of 30% × $99 = $29.70/customer × 200 = $5,940/mo
RevShare wins by 12x on retained subscriptions.
Disclosure (FTC)
The U.S. Federal Trade Commission (FTC) requires clear and conspicuous disclosure of affiliate relationships. Failing to disclose can result in enforcement action. Disclose near the link, in plain language.
Common Mistakes
- Promoting low-EPC offers regardless of relevance
- Ignoring refund clawback windows (lose commission if customer refunds)
- No tracking — can't optimize what isn't measured
- Missing FTC disclosure (legal risk)
- Picking CPS when RevShare is available for same product
Selection Framework
- High AOV physical product → CPS
- SaaS with subscription → RevShare
- Mortgage/insurance leads → CPL
- Mobile apps → CPA
Related Calculators
Related Articles
Conclusion
Choose the commission model that maximizes lifetime earnings per visitor, not the headline rate. RevShare on retained customers consistently outperforms one-time CPS over a 2–3 year horizon.