The three main commission types
Every affiliate commission falls into one of three categories: a fixed amount per action (flat rate), a percentage of the transaction value, or a recurring payment on subscription renewals. Most affiliate programs use one or a combination of these. Understanding the trade-offs helps you design a program that attracts the right affiliates and stays profitable.
Flat rate (Cost Per Action)
A flat-rate commission pays a fixed amount for every qualifying action. For example, 5 euro per sale, regardless of the order value. This model is also called CPA (Cost Per Action) or sometimes CPS (Cost Per Sale) when tied to purchases.
When to use it: Flat rates work well for low-ticket products where the order value does not vary much. If your product costs 29 euro, a 5 euro flat commission is clear and predictable for both sides. It also simplifies budgeting because you know exactly what each acquisition costs.
Downside: Flat rates do not incentivize affiliates to promote higher-value plans or upsells. An affiliate earns the same whether the customer buys your basic plan or your enterprise tier.
Percentage (Revenue Share)
A percentage commission pays a share of the net transaction value. For example, 20 percent of a 99 euro sale means the affiliate earns roughly 20 euro. The commission scales naturally with the order value.
When to use it: Percentage commissions align incentives. Affiliates are motivated to promote your higher-tier plans because they earn more. This model works especially well for products with variable pricing (multiple plans, add-ons, or usage-based billing).
Downside: Less predictable acquisition costs. If your average order value increases, so do your commission payouts. You need to keep an eye on your margins.
Recurring commissions
Recurring commissions pay affiliates on every subscription renewal, not just the first sale. They can be flat (10 euro per month) or percentage (20 percent of each renewal). You can configure a limit (for example, 12 months) or allow lifetime commissions.
When to use it: Recurring commissions are the natural choice for SaaS and subscription businesses. They incentivize affiliates to refer high-quality customers who stick around, because the affiliate earns more when the customer retains. This is the single most effective way to align affiliate incentives with customer lifetime value.
Downside: Higher long-term cost per acquisition if configured as lifetime. Make sure your LTV justifies the total commission payout over the customer's lifetime. A 12-month cap is a common compromise.
Lead commissions (Cost Per Lead)
Lead commissions pay affiliates for actions that do not involve a payment — for example, a free trial signup, a demo request, or an email subscription. The commission is always a flat rate (there is no transaction value to take a percentage of).
When to use it: CPL works well for freemium models where the conversion from free to paid happens inside your product. It lowers the barrier for affiliates (they just need to drive signups) and reduces risk because you are paying for top-of-funnel actions, not revenue.
Downside: Higher fraud risk. Lead commissions are easier to game because the qualifying action does not require a payment. Shorter hold periods (3 days is standard) and quality monitoring help mitigate this.
Hybrid: combining multiple types
Many programs combine commission types for maximum flexibility. Common hybrid structures include:
- Lead + Sale: Pay 3 euro per free trial signup, plus 20 percent of the first purchase. Rewards affiliates for volume and quality.
- Sale + Recurring: Pay 50 euro on the first sale, plus 10 percent on each renewal. Front-loads the incentive while still rewarding retention.
- Lead + Recurring: Pay per signup and then on every renewal once the customer converts. Common in freemium SaaS.
How to choose: a decision framework
Your choice depends on three factors: your product type, your price point, and your margins.
- Low-ticket, uniform pricing: Flat rate. Simple and predictable.
- Variable pricing or multiple tiers: Percentage. Aligns incentives with higher-value sales.
- Subscription product: Recurring (percentage or flat). Rewards retention, attracts long-term affiliates.
- Freemium or free trial: Lead commission, optionally combined with sale or recurring.
- High-ticket B2B: Percentage with a cap, or a generous flat rate. Large commissions attract specialized affiliates.
Industry benchmarks
Commission rates vary widely by industry:
- SaaS: 20 to 40 percent recurring (some go up to 50 percent for year one)
- E-commerce: 5 to 15 percent per sale (fashion and beauty trend higher)
- Finance and insurance: 50 to 200 euro per lead or account opening
- Online education: 20 to 50 percent per sale
- Web hosting: 50 to 200 euro flat per signup, or 20 to 30 percent recurring
These are rough ranges. The right rate for your program depends on your margins, customer lifetime value, and competitive landscape. Start conservatively and increase rates as you learn what works.
Configure any structure with Traaaction
Traaaction supports all three commission modes — Sale, Lead, and Recurring — with both flat and percentage options. You can configure multiple commission types on a single program (for example, a lead commission plus a recurring commission). Hold periods, clawback on refunds, and automated payouts are all built in.
Traaaction uses a subscription pricing model with no per-sale fees, so 100 percent of the commission you configure goes to your affiliates.