How do you negotiate a fair commission rate with a merchant?

Most merchants don’t pay out as much as they as they could in Commissions, so it’s important to deliver some revenue and then ask for a raise immediately. If they tell you they won’t give it to you and you feel like you deserve it. You can tell them you’ll send the traffic to a competitor. They will change their tune really quickly.

Negotiate fair commission rates by proving revenue generation. Align with brand goals and show results from past partnerships. Benchmark affiliates and highlight dedication. Threaten redirecting traffic if needed for leverage.

Tell them you’re going to send the traffic to their competitor if they don’t honor your request for an increased commission. Works every time.

In some verticals, there might be restrictions. For example, an insurance company would be most interested in the total number of sales generated, but can only legally pay on a lead. Find out what their ROAS goals are — understand that success is a two way street.

The merchant needs you - and if you bring value to others, show how much of it you can bring to the merchant. This has to be an equal business negotiation for both sides.

To negotiate a fair commission rate with a merchant, start by researching industry benchmarks for similar products or services. Highlight your value proposition, such as the size and engagement of your audience, past performance, or your niche expertise. Approach discussions with clear data to demonstrate your potential contribution to the merchant’s sales growth. Be transparent about your expectations while remaining flexible to their budget constraints. Suggest performance-based tiers or incentives to align interests. Focus on creating a win-win arrangement, emphasizing long-term collaboration. Regularly revisit and adjust the commission based on performance metrics to maintain fairness and mutual satisfaction.

Regarding my experience with affiliate marketing, most of their tracking links do not work. Do your research before you join and make sure all information as an affiliate is placed for you to understand in your back office. Instead try referral marketing if you have a blog or website. Build a relationship with the business and ask if you can add their products or services to your blog or website and you get paid up-front. If the answer is no, build a one-page opt-in with your link so you can track the traffic that came from your affiliate link to their products or services. Sorry to say, many businesses affiliate programs are not honest. Just another way to get more people to help them sell their products or services.

Doing your research is important, but kick off with a conversation. Where they can, brands are open to discussing how to offer better rates of commission by product. Margins tend to play a huge role for many brands and so if you can understand which products have greater margins and therefore unlock a higher commission, work with this to offer a more tailored approach to your advertising for the client.

Open up a dialogue with the merchant when you can. This allows both parties to understand how each other work and what you would each define as quality. If the merchant is looking for higher AOV traffic, perhaps think of tactics to help drive these results and demonstrate this to them. With this you then have a case study to back up your proposition for higher commissions. By understanding the merchant, you can better serve them and demand better rates.

Negotiating with a brand or the Account Manager managing the program depends on several factors: your distribution mechanisms and your activity level. A brand will be willing to pay more for a blog that generates content than for a coupon code website. Another factor is the potential volume you can deliver. In this case, the Account Manager will have a clearer idea, as they can analyze your performance on other similar programs. What more can the publisher bring if the brand increases the commission? If you're already promoting the brand, it's important to be responsive and attentive to the brand's requests to strengthen your relationship and satisfaction.

As a brand, Identify what ‘good’ looks like and benchmark your individual affiliates against it. If you have an average new to book % of 40% for example and individual affiliates are tracking higher than this, then this is a good indicator that they’re reaching customers you’re not. These metrics should be considered alongside others as individually they may not be comprehensive enough to make conclusions. Average basket value may be another, types of product sold, geographic location of their audiences and margin on goods they’re pushing. Create a matrix of these metrics and benchmark your top affiliates using a score of 1-5. This will help you make more informed and confident choices about where to spend your valuable commissions.

The commissions of a program are defined in advance by the merchant and may depend on your typology (generally, a coupon site is less remunerated than a vertical blog). Commissions generally follow industry averages and are linked to the margin rate. If you are not a big publisher, it will be difficult to negotiate a premium commission with the brand, so you will need to start by proving yourself on standard terms. It is also important to offer additional options that will guarantee more traffic and sales to the brand for a win-win deal.

And also it is always great to have some numbers which you can show to the brand. And I am not talking about the traffic or domain rating, but show real results what did you achieve with other brands. It always shows great dedication and proves that you are not just talking.

Communication is key. If you have an affiliate program manager that actually cares and knows what they are doing, all you have to do is talk to them. Tell them how much you need and what you will do (performance - with past history/details to back it up) to make it worth it to the advertiser, and you should get a positive response. Most will be willing to test anything out for a month or two, and if it doesn't work out as expected, be open-mined to changing things up and trying again.

Where the same product is being sold across numerous resellers, such as branded clothing/toys/footwear etc, you can fairly compare the rates and ensure you are making the best commission for your efforts. Network tools such as the Webgains "Product Discovery" tool allows you to not only see the best % commission for a specific product, but also which sites see the best EPC and Conversion rates so that the publishers can not only earn the best commission for selling a specific product, but also give themselves the greatest chance to sell more if the site they work with converts better than others.

Most merchants, don’t pay out as much commission as they could to affiliates. They start the commission rate on the lower side, so you have to ask them to raise it for you. Once you’ve made a sale or two, you can go to them and ask for a higher commission rate. If they won’t give it to you you can simply say I’ll send the traffic to one of your competitors. Trust me that will work.

It would make sense to almost look at this as if you were asking for a raise from your boss. What would they want to hear/see from you to help them see you are worth more? Facts and figures are a great place to start - whether this is current results being driven for that merchant, or perhaps others in their competitor landscape. If you have this lined up along with a reasonable argument as to why you are worth more moving forward, there's no reason why this conversation cannot be a straightforward one!

Apart from how much money an affiliate brings in for a merchant, there are other things they take into account before giving a commission raise. These could be: What extra exposure can you bring to the table? How compliant are you with the T&C of the program? How long have you been part of the program? Use these answers in your pitch to increase your chances.

Don't just ask for a commission increase because you want it. Explain what you bring to the table. Give the affiliate manager a reason for offering you a higher commission. If you deliver more sales and revenue, it's beneficial for all parties. Make it clear that you can deliver more and how you will do it and not just ask for more money.

Be realistic. It costs money to acquire new customers. Understand your own limitations and customer value limits. Then negotiate fairly to build long term Partnerships!

Consider the value proposition and importance this partner brings to your program alongside all the others you’re working with. Remember the 4 P’s or marketing, product, price, place , position and negotiate for the situation that affords you the best of these.