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  1. #1
    Join Date
    October 22nd, 2010
    Lightbulb Zero Minimum Payout Level?

    Wondering if anyone with experience running their own affiliate program can tell me the success that have had (or not had) with setting the minimum payout level to zero.

    It's always annoyed me that some affiliate programs set an unreasonable minimum payout level (like $100) when it's near impossible to sell their product in the first place.

    It seems like a cash grab for company who's cashflow just hurts.

    I've just launched a new affiliate program for my client, and we're going to experiment with a ZERO minimum payout level to see if it's preferred.

    Any thoughts?


  2. #2
    notary sojac Herb ԿԬ's Avatar
    Join Date
    January 18th, 2005
    Central/Western NY State
    I assume you are going to offer payment via something like Paypal; a check for a dime commission would break you, eventually.
    Last edited by Herb ԿԬ; October 22nd, 2010 at 09:16 PM.

  3. #3
    Join Date
    January 18th, 2005
    What's the ACTUAL minimum payout? You don't pay zero, so the absolute minimum payout would theoretically be $0.01 -- and in most affiliate programs, there's no way for affiliates to earn only $0.01

    If your minimum transaction is $1 and you pay publishers a 1% advertising fee, then your minimum payout is $0.01. Depending on your payment method (check, direct deposit, PayPal, other), you'll pay intermediaries much more than a penny to pay an affiliate a penny.

    More realistically, if your minimum transaction value is $20 and you pay publishers a 25% advertising fee, then your minimum payout is $5, period.

    Of course, if you use an affiliate network as your payment intermediary, then your affiliates will likely be able to combine revenues from multiple merchants to achieve the network's minimum payout amount.

    If you don't use an affiliate network, then you've got other credibility issues to address, but even so, I expect you'd see the same affiliate performance whether your minimum payout is $5, $10, or $20.

    A critical exception: if your minimum or most-frequent transaction amount results in an advertising payment of $X, then your minimum payout must absolutely NOT be $X plus $0.01 or $X plus $1. I've seen this in web-hosting affiliate programs, where the typical affiliate-credit from a transaction is $14.95, and the "minimum payout" is set to $15. This just "smells bad" and might draw a lower level of affiliate participation than a $29.90 minimum-payout. (Lesson: if you're designing your program to pay only affiliates who generate multiple transactions and/or renewals, say so.)

    It's important to remember that once you initiate payments, you're going to encounter a wide range of "support" problems: lost checks, PayPal transfers that the affiliate claims didn't get credited, direct deposits to the wrong account, and so on. A reasonable minimum-payment threshold can signficantly reduce these support costs.
    Last edited by markwelch; October 22nd, 2010 at 09:35 PM.

  4. #4
    OPM and Moderator Chuck Hamrick's Avatar
    Join Date
    April 5th, 2005
    Park City Utah
    It has always been a matter of labor. It took two of us and the president to process checks. Me to generate the reports, the bookkeeper to write the checks and the president to sign them. Cost me a half a day a month and the same for the bookkeeper. We had a minimum of $25 and I would check back several years in case an affiliate had a partial that brought it up to the minimum. If you are only doing a handful of checks or transfers then it might make sense to promote your program.

  5. #5
    CPA Network Rep
    Join Date
    August 12th, 2010
    Tacoma, WA
    I agree with the above posts. I think having no minimum payout can cause a lot of problems and can get very expensive. If you decide to go that route, I would just make sure to do it as a short promotion to draw in affiliates, but then make the minimum payout low. I agree with you that $100 minimum payouts are very high and unreasonable, but I think $20 is a good price. Its not so low that it would cost you a lot of time and money, but its also low enough that affiliates can see it as achievable.

  6. #6
    http and a telephoto
    Join Date
    January 18th, 2005
    Something else to remember if you have an international program is that some international affiliates want to set their payouts *higher* to incur less banking fees.
    Deborah Carney

  7. #7
    Moderator MichaelColey's Avatar
    Join Date
    January 18th, 2005
    Mansfield, TX
    Another option to consider might be to run an annual "zero minimum payout" to clear out all small balances once a year. (Of course you'll want to take into consideration those who don't want a small payment.)
    Michael Coley
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

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