Affiliate commission structures: how to set a rate you can afford

Search for "how much should I pay affiliates" and you will find tables: one range for physical goods, a higher one for software, a higher one again for courses. They answer a different question from the one you have. A range tells you what other programs pay. It cannot tell you what you can pay, because that depends on your margins, your refunds and how long your customers stay.

This guide works the rate out from your own numbers instead. It covers the four decisions every commission plan makes, with a worked example for an online store and one for a subscription business, and ends with a worksheet you can fill in.

Every figure in the examples is invented to show the arithmetic. Swap in your own.

The four decisions in a commission plan

A commission plan answers four questions, whether or not anybody wrote the answers down:

1. The base. What amount does the percentage apply to? The order total, or the total before tax, shipping and discounts?
2. The shape. A percentage of the sale, or a flat amount per sale?
3. The duration. Paid once, for a set number of months, or for as long as the customer keeps paying?
4. Finality. When does a commission become money the partner is owed, and what does a refund or a chargeback do to it?

The fourth is the one partners argue about, and the easiest to leave until a refund forces the question. This guide takes them in order, but the worksheet at the end asks all four at once.

Start with what a customer is worth

Before you choose a rate, work out two numbers.

What a new customer is worth to you. Use gross profit, not revenue: what is left after the cost of the goods or of serving the customer. A 20% commission on revenue can be 40% of your margin, which is exactly what a rate table cannot tell you. Count only a period you trust. If you have a year of data on repeat purchases or renewals, use a year. If you have three months, use three months.

The most you would pay to win one. This is your ceiling. If you already buy customers through ads, what you pay per new customer there is a useful reference. If you don't, pick a share of the first order's gross profit you could hand over and still be glad of the sale.

The rate is then arithmetic: the ceiling divided by the amount the rate will apply to. The rest of this guide is about the things that pull the real rate below that ceiling.

Worked example: an online store

A store's average order is $80 before tax and shipping, and the goods in it cost $40. Gross profit on a first order is $40. The owner decides partners may have up to half of that: a $20 ceiling.

$20 ÷ $80 = 25%. That is the most the store could pay, not the rate it should. Two things pull it down.

The discount code. Partners often give their audience a code. If the code takes 10% off, the order is $72 and the gross profit is $32. The discount is part of what that sale cost you, so count it alongside the commission:

Refunds and fees. Card fees come off every order whether a partner sent it or not. Refunds only matter if commission is paid on orders that are later refunded, which is what the finality section below is for.

The owner settles on 15%, and 10% when the partner's own discount code was used, because the discount has already spent part of the margin. On a coded order that is $7.20 of commission and $24.80 left.

A lower rate on coded orders is a trade-off rather than a rule. Partners whose audience buys with codes will notice the difference, and some will feel the code is the reason the sale happened at all. If you do it, say so in the terms from the first day, rather than discovering the problem in a partner's first statement.

Worked example: a subscription

A software product costs $49 a month, and serving a customer costs about 20% of that, so each month a customer stays brings $39.20 of gross profit. Suppose customers stay 14 months on average. A customer is then worth about $548.80 of gross profit.

Three ways to pay a partner for that customer:

For the average customer, those plans hand over 32%, 25% and 18% of the gross profit. The flat amount looks cheapest, and it is, for customers who stay. For the customer who leaves after three months it is the most expensive of the three, and for one who cancels after the first month it is $100 against $39.20 of gross profit.

That is the real difference between the shapes. A recurring percentage pays partners in step with the money the customer actually brings in, so a partner who sends customers who stay is paid more than one who sends customers who leave. A flat amount pays for the signup, whatever happens next.

Percentage or flat

A percentage scales with what the customer spends. It suits stores where order values vary, and it rewards a partner who sends bigger orders. Its weak point is a catalog with uneven margins: one rate either overpays on the thin-margin products or underpays on the rest. The fix is a different rate for those collections or products, not a lower rate for everything.

A flat amount is easy for a partner to understand and easy for you to budget. It suits a single-price product, a trial that turns into a payment, or a lead you can value (a booked demo, a qualified signup). Its weak point is that it pays the same for a small order as a large one, and pays in full on a first payment that may be refunded or followed by a cancellation. If you pay a flat amount on a subscription, pay it on a payment the customer is unlikely to reverse, or hold it longer.

Tiered rates, where a partner's rate rises as they sell more, are worth adding once you know what a good partner produces. Promote on sustained performance, held over more than one period, rather than on a single strong month: a raise is usually permanent, and a spike is often noise.

One-time or recurring

For anything sold by subscription, the duration matters more than the rate.

• Once. Simple, and fair for one-off purchases. For a subscription it means a partner earns nothing from the renewals their customer keeps paying.
• For a set number of months. Twelve or 24 months is easy to explain. It rewards customers who stay and puts a ceiling on what any one customer can cost.
• For as long as the customer pays. The most attractive offer to a partner, and the one to think hardest about. In five years you may still be paying partners who stopped promoting you four years earlier. That can be the right call, especially for partners who keep customers using the product, but make it deliberately.

Two smaller questions belong in the same decision:

• Plan changes. When a customer upgrades or downgrades, does the percentage follow the new price? Say which, because a partner who sees an upgrade paid at the old price will ask.
• Annual plans. A percentage of an annual payment arrives once a year. A plan limited to 12 months pays once on an annual customer and twelve times on a monthly one. Check that the totals come out the way you intend.

When a commission becomes final

This is where trust is won or lost, because it decides what happens to money a partner has already seen on their dashboard.

Hold commissions longer than your refund window. If you offer a 30-day money-back guarantee, a commission approved on day 10 may be on a sale refunded on day 25. Approve commission automatically after a holding period that covers the window and a few days for the refund to arrive. Tell partners the number: "approved 35 days after the order" is a sentence a partner can plan around.

Decide what a refund does after payout. A holding period cannot cover everything. Customers can dispute a card payment long after your refund window has closed: Stripe's documentation says card networks typically allow disputes within 120 days of the payment, and longer in some situations. A hold that long would leave partners waiting four months to be paid. So decide what happens to a refund that arrives after a commission was paid:

• Before payout, reverse the refund's share of the commission. A full refund on a $299 sale at 20% takes back the whole $59.80. A refund of half the order takes back $29.90.
• After payout, record the same reversal and net it against the partner's next earnings. If a partner was paid $59.80 in May and the order is refunded in June, June's payout is $59.80 lower. If June's earnings are only $40.00, the remaining $19.80 carries into July.
• Write down what happens if the balance never recovers. A partner who stops promoting you may never earn enough to clear a clawback. You can write the remainder off or ask for it back. Asking is rarely worth the relationship for a small amount, but whichever you choose, it belongs in the terms.

Treat a chargeback like a refund, when it opens. On Stripe, the disputed amount and a dispute fee come out of your balance when the dispute starts. The amount comes back only if you win, which can take two to three months, and for businesses outside Mexico the fee for receiving the dispute does not come back at all. Waiting for the outcome means paying commission on money you no longer have. If you later win the dispute, decide case by case whether to put the commission back, and tell the partner either way. If refunds or disputes cluster around one partner, affiliate fraud prevention covers what to check.

Never change a commission silently. A reversal should be a new line beside the original, with the reason, not an edit to the original amount. A partner who sees $59.80 one week and $0.00 the next, with no line explaining it, will assume the worst. A partner who sees "Refund: −$59.80" next to the sale it belongs to usually does not.

Bonuses, special rates and recruiters

First-sale bonuses pay a fixed amount on a partner's first sale, on top of the commission, to get them over the first step. See getting new partners to their first sale for when they are worth it.

When one partner asks for more, give that partner their own rate rather than raising the plan for everybody. Before you agree, work out what the new rate costs at their current sales: 5 points more on $4,000 a month of sales is $200 a month, and $2,400 a year. A number that size is easy to agree to and easy to forget you agreed to.

Recruiter commissions (sometimes called two-tier) pay a partner a share of what the partners they recruit go on to earn. Pay it on top of the recruit's commission, never out of it: a recruit who learns their rate was cut to pay somebody else will not stay. Keep it to two levels. Beyond that, a program starts paying for recruiting rather than for selling.

Currencies

If you sell in more than one currency, decide whether commission is paid in the currency of the sale or converted, and if converted, at which rate and on which day. Then set payout minimums per currency. A $50 minimum is a sensible figure in dollars and a meaningless one in yen.

Write it so a partner can predict their payment

A good commission plan passes one test: a partner reading your terms can work out what they will earn on a given order before it happens. For the store above, that is three sentences:

You earn 15% of the order value before tax and shipping, or 10% when your discount code is used. Commission is approved 35 days after the order unless it is refunded, and refunds after payout are taken from your next payout. We pay on the 15th of each month once your approved balance is over $50.

Then show the arithmetic on every line the partner sees: "15% of USD 80.00 = USD 12.00" answers the question before it is asked. How to pay affiliates covers the payout side of the same terms: the schedule, the minimum and tax forms.

Commission plan worksheet

Copy this, fill it in, and put the answers in your program terms.

What a customer is worth

• Average order value, or monthly price, before tax and shipping:
• Gross margin (after cost of goods or of serving the customer):
• Repeat purchases or months retained in a period you trust:
• Gross profit per new customer over that period:
• The most you would pay to win one new customer (your ceiling):

The plan

• Base: order value before tax, shipping, and discounts? Yes or no for each.
• Shape: percentage, flat amount, or rates per product or collection.
• Rate when the partner's discount code was used, if different.
• Duration: once, a set number of months, or as long as the customer pays.
• Plan changes and annual plans: what the commission follows.

Finality

• Holding period in days (longer than your refund window):
• Refund before payout: reverse the refund's share.
• Refund or chargeback after payout: net against the next payout.
• A balance that never recovers: written off, or something else.
• Won disputes: reinstated automatically, or decided case by case.

Payment

• Payout day and cut-off:
• Minimum payout, per currency:
• Currency of payment and any conversion rule:

Check

• Commission plus discount on a typical coded order stays under your ceiling.
• A partner can predict their commission on an order from the terms alone.

How Refficks handles commission plans

Refficks is a new partner program platform, and its commission rules follow the decisions above.

• A plan pays a percentage (optionally a lower one when a discount code was used) or a flat amount, once or on every renewal, for a set number of months or for as long as the customer pays, with conditions and a priority. On Shopify and BigCommerce a plan can be limited to particular products, variants or SKUs (and collections, on Shopify). Any partner can be given their own rate without changing the plan everyone else is on.
• Every ledger entry stores the arithmetic that produced it, written out: "20% of USD 299.00", or "10% of USD 299.00 (the discounted rate, because a discount code was used)".
• A refund writes a reversal beside the original entry, taking back the refund's share. The original is never edited. A refund after payout comes off what the partner earns next.
• A person approves commission, one entry at a time or in bulk, unless a plan is set to approve its own after a holding period you choose. Some commissions always wait for a person, with a sentence saying why: one under review, a suspended partner's, or one from a sale only a shopper's browser reported.
• A recruiter can earn a share of a recruit's commission, paid on top of the recruit's own, for a set number of months, on a recruit's first sales, or for as long as both stay. Two tiers at most.
• Money is kept per currency and never added across currencies.

If you want to try a plan against your own numbers, you can start free. No card needed.

Sources

• Stripe Docs, "How disputes work": the 120-day window, when the disputed amount is debited, and how long a dispute takes to decide. https://docs.stripe.com/disputes/how-disputes-work (read October 15, 2026)