There are several different types of pricing models in affiliate marketing. The pricing model determines what needs to happen before you get your commission. Choosing a model that is right for you is really important if you want to make it in affiliate marketing.
Here is a list of the most common pricing models:
CPM – Cost per mille
CPM means cost per thousand impressions. In this pricing model, the merchant pays a commission for one thousand views or clicks of an advertisement. CPM rates vary on different affiliate networks, but they are generally too low in our opinion.
The affiliate networks track where the views or clicks come from. Often they have a list of countries with different rates. This means that if you get a lot of traffic from countries lower on the list it will impact your commission.
So is CPM marketing really worth it?
Yes and no. If you have a super high traffic volume on your website you can make a lot of money with this pricing model. But let’s get real… most people struggle to even get a thousand views a month to get 2 dollars! We have tried most of the pricing models and wouldn’t recommend this one to people starting out in affiliate marketing.
CPC – Cost Per Click
In CPC marketing the merchants pay publishers for individual clicks delivered to their site or affiliate program. What you get per click can vary a lot depending on what niche you choose to work with.
Promoting expensive products and services will usually give you higher CPC rates. The reason for this is that merchants who sell expensive products often spend a lot of money on marketing. Let’s use a car insurance company as an example: If they pay you 2 dollars for a click, they might sell insurance worth 1500 dollars a year!
Can you make money with CPC marketing?
The short answer is Yes… You can definitely make money promoting CPC offers as a beginner in affiliate marketing. However, you do need a high traffic volume to make a substantial income.
CPL – Cost Per Lead
CPL marketing is a pricing model where the merchant pays for an explicit action from a consumer. In most cases, the merchants gather information such as names, email addresses, and phone numbers. You get a fixed commission for every person you refer that completes the required action. The merchants can then use the information to make sales, promote their businesses, etc.
Is CPL marketing a good way to make money?
Sure! But keep in mind that most people hate getting spammed by companies all the time. To avoid this, many people sign up with fake email addresses if they even complete the form at all. You can’t combat this and it will most likely affect your CPL marketing commission.
CPD – Cost Per Download
This is a very popular form of marketing which is often used by app and game developers. You get a fixed commission based on the number of downloads via your affiliate link. Since most apps are free today this is very beginner-friendly.
Is CPD marketing worth the effort?
It can be very lucrative to do CPD marketing. But like most of the other pricing models, you do need a high traffic volume to make a lot of money with CPD marketing. Most companies pay you per 1000 downloads which can be hard to achieve without a huge following.
CPI – Cost Per Install
Many companies pay commissions for installs instead of downloads. They do this to ensure that people actually use the apps/software once they download it. If you want to promote games and apps, this is most likely the way your commission will be calculated.
Is it easy to make money with CPI marketing?
If you choose great software to promote it’s pretty easy. Most apps and games are free, which means that you don’t really have to “sell” anything. A great way to do CPI marketing is by promoting games that you play and stream online. These streams can also be turned into Youtube videos for extra exposure and income.
CPC – Cost Per Call
Cost per call is also called pay per call. In this pricing model, the merchants pay commission on a call-in basis. The publishers show ads to potential customers and induce them to call. The commission is determined by the number of calls and/or conversions.
What does it take to do CPC marketing?
First of all, you need to find merchants that actually use this marketing method. We have tried several affiliate marketing networks and have only seen a couple of these offers. If you find an offer you would like to promote, keep in mind that it is really hard to make people call a salesperson.
CPA – Cost Per Action
This is one of the most popular pricing models across many affiliate networks. The reason for this is that its a very cost-efficient model for the merchants. A commission is paid to the publisher per action completed by potential customers. The merchant is almost guaranteed a profit because these leads often turn into sales.
What should I look for in CPA offers?
When you are looking for CPA offers you should look for full form actions and not just email sign-ups. The payout rates are higher on more complex actions. Basically you get more money for the same amount of work.
A quick tip: On most networks, you can see how popular the CPA offers are by checking out the average conversion rates. Offers with high conversion rates are easier to “sell”, so picking them is a no-brainer!
Tenancy Pricing model
In the tenancy pricing model, the merchants pay the publishers a fixed fee each month. No matter how many impressions, clicks or leads you generate the payout doesn’t change. This type of deal is mostly offered to really big players in the industry, so don’t be too sad if your application gets rejected.
Revenue sharing is a pricing model where the merchants share a portion of their conversions with the publishers. This model is often used for products that customers pay for several times (for example Subscriptions, software, etc.)
Are revenue share programs really worth it?
Yes! We highly recommend joining these types of programs, since they have so much earning potential. Instead of selling a single product and getting a single payment, you can sell subscriptions and get paid on a monthly or weekly basis. This way you will earn a recurring income that stacks over time.
We hope that this article gave you a better understanding of the many different pricing models in affiliate marketing. If you have any questions or comments feel free to hit us up at Facebook or Twitter