Will You Make Enough Money?
Is the product profitable? Yes / No
What percentage commission does it pay?
I look for something that pays 50% or more. After all, I am doing half of the work by driving traffic to the offer.
This doesn't have to be a hard and fast rule for every single product, but looking for a high commission on average can help you earn more faster.
Will you earn enough from every sale? Yes / No
Personally, I look for $100 commission or more. Here’s why.
I want products that more than cover my advertising costs.
When you promote a product that offers a low commission, you need to make so many more sales to recoup your time and money investment.
The higher your commission, the fewer sales you need to make to reach pure profits. Here is how to calculate your profits.
- Write down the cost of your time. (Your time has value!)
- Write down the cost of your advertising.
- Write down the number of sales needed to cover items 1 & 2.
- Calculate your total commissions.
Now factor in refunds (if you don’t know the refund rate use 10% as a safe starting point) and deduct that amount from your projected total commissions.
Now you have some basic numbers. Does making that number of sales seem realistic to you?
If you are not sure ask someone with experience that you trust. If you have a coach or mentor, ask him or her.
While there is no formula that will guarantee a profit, knowing these basic numbers will help you make wise choices in almost every case.
Are you earning recurring commissions? Yes / No
This is important.
Every sale you make with this type of product means automatic passive income for the foreseeable future.
Rather than looking at the basic commission percentage, it's important to take any recurring payments into account.
Who doesn't want to get paid every month?
Let's say you're selling a $100 product. If you aim for the larger, one-time commission of 75%, that means every sale is $75. But 3 months later, you've still only earned $75 from that one customer.
If you take a smaller recurring commission of 40%, you will earn less with the first payment, but far more over time. Three months later, you will have earned $120 from that one customer alone! And in a year it’s even more!
Here is that example on paper.
- 1 sale of a $100 product at 75% = $75 once. Ever. It’s over.
- 1 sale of a $100 recurring product at 40% over a year = $480
While you might be tempted to think “But that’s as much work as making 12 sales a year to different people” please think again.
It has been proven many times that people keep what they buy for months, if not years, when they are on an auto-pay arrangement.
While you will have fall off (people canceling throughout the year) the fact remains that you make this sale once and profit many times.
And that is the power of the Internet!
It's not necessary that every product you promote provide recurring commissions, but it can be an incredibly profitable opportunity when it comes along to keep making money, month after month, from the same sale!
Be sure to ask the product owner to provide you with a "churn" rate.
This is how long, on average, a person keeps their membership with a recurring payment program.
The product creator should be able to give you an idea of how many installments the average customer continues paying, so you can estimate the value of each sale over that period of time.