Setting affiliate commission rates is one of the most important decisions you'll make when launching your program. Set them too low, and quality affiliates will ignore you. Set them too high, and you'll erode your margins. Get it just right, and you'll build a sustainable growth engine.
This guide walks you through the math and strategy behind setting commission rates that work for both you and your affiliates.
Understanding SaaS Affiliate Economics
Before diving into specific numbers, you need to understand the economics at play.
The Core Calculation
Your affiliate commission rate needs to satisfy two constraints:
- Be attractive enough to motivate quality affiliates to promote your product
- Be low enough to maintain healthy unit economics
The sweet spot exists where these overlap. Finding it requires knowing your numbers.
Key Metrics You Need
Before setting rates, calculate:
- Customer Lifetime Value (LTV) — Total revenue from an average customer
- Current Customer Acquisition Cost (CAC) — What you spend to acquire customers through other channels
- Gross margin — Your revenue minus direct costs (hosting, support, etc.)
- Target payback period — How quickly you need to recoup acquisition costs
If you don't know these numbers, pause and figure them out. Setting commission rates without them is guesswork.
Industry Benchmarks
Let's look at what successful SaaS affiliate programs typically pay:
Recurring Commission Rates
| Rate | Common For |
|---|---|
| 10-15% | High-volume, lower-ticket products |
| 20-25% | Standard for most SaaS products |
| 30-40% | Competitive niches, premium positioning |
| 50%+ | Aggressive growth phase, info products |
One-Time Commission Rates
| Rate | Common For |
|---|---|
| $25-50 flat | Low-ticket subscriptions |
| First month | Simple structure, easy to understand |
| 50-100% of first payment | High-margin products |
| $200-500 flat | Enterprise or high-ticket sales |
Most successful SaaS programs land in the 20-30% recurring range. This is high enough to attract serious affiliates while leaving room for profitability.
For the pros and cons of each approach, see our guide on recurring vs. one-time commissions.
The Commission Rate Formula
Here's a practical framework for calculating your rate:
Step 1: Determine Your Maximum Affiliate CAC
Start with what you can afford to pay:
Maximum Affiliate CAC = LTV × Target Margin After Acquisition
Example:
- Average customer pays $50/month
- Average lifetime: 24 months
- LTV: $1,200
- Target margin after acquisition: 70%
- Maximum Affiliate CAC: $1,200 × 0.30 = $360
This means you can spend up to $360 to acquire a customer through affiliates and still maintain 70% margin.
Step 2: Calculate Equivalent Commission Rate
Now work backwards to find the commission rate:
For recurring commissions:
Commission Rate = Maximum Affiliate CAC ÷ LTV
In our example: $360 ÷ $1,200 = 30%
For one-time commissions:
You might offer a flat fee equal to your maximum CAC ($360) or express it as a percentage of the first year's payments.
Step 3: Reality Check Against Competition
Research what competitors pay. If your calculated rate is significantly below market, you have options:
- Accept slower affiliate growth
- Improve unit economics to afford higher rates
- Compete on other factors (better product, better support, better conversion)
If your rate is above market, you have a competitive advantage—use it in recruitment.
Factors That Affect Your Ideal Rate
Product Price Point
Lower-ticket products ($10-50/month) often need higher percentage rates because the absolute dollar amount is small. A 20% commission on a $20/month product is only $4/month—not very motivating.
Higher-ticket products ($100+/month) can get away with lower percentages because the absolute payouts are substantial. 15% of a $500/month enterprise plan is $75/month per customer.
Market Competition
Crowded markets with many affiliate programs require competitive rates. If ten competitors offer 25% and you offer 15%, affiliates will promote them instead.
Niche markets with few affiliate programs can sometimes pay less, but this also means fewer affiliates know your category exists.
Affiliate Type
Content creators and influencers often expect higher rates because they're lending their reputation and audience trust.
Coupon and deal sites may accept lower rates because they drive volume with less effort per sale.
B2B partners and consultants might accept lower rates if you offer other benefits (co-marketing, referral fees, integration partnerships).
Customer Quality
If affiliate-referred customers have higher LTV than average (better retention, more upgrades), you can justify paying more. Track this data and adjust accordingly.
Conversely, if affiliate customers churn faster, you may need to lower rates or be more selective about affiliate quality.
Commission Structures Beyond Basic Rates
Tiered Commissions
Reward top performers with escalating rates:
| Monthly Revenue | Commission Rate |
|---|---|
| $0 - $1,000 | 20% |
| $1,001 - $5,000 | 25% |
| $5,001+ | 30% |
This motivates affiliates to increase their efforts and rewards those who perform. Learn more in our tiered commission structures guide.
Performance Bonuses
Add one-time bonuses for milestones:
- $100 bonus for first 5 referred customers
- $500 bonus for reaching 50 customers
- $1,000 bonus for $10,000 in monthly recurring revenue
Bonuses create short-term motivation and help activate new affiliates.
First-Sale Bonus
Encourage affiliates to make that crucial first referral:
- Standard commission: 20%
- First sale bonus: Extra $50
Many affiliates sign up but never promote. A first-sale bonus gets them over the initial hurdle.
Hybrid Models
Combine approaches for flexibility:
- 20% recurring commission + $50 per new customer
- 15% recurring + $200 first-year bonus
- 10% recurring + access to exclusive beta features
Handling Different Product Tiers
If you have multiple pricing tiers, decide how to handle commissions:
Option 1: Flat Rate Across Tiers
Apply the same percentage to all plans. Simple to understand and communicate.
Pros: Easy to manage, affiliates promote whatever fits their audience Cons: May overpay for low-tier conversions or underpay for enterprise deals
Option 2: Different Rates by Tier
| Plan | Price | Commission |
|---|---|---|
| Starter | $29/mo | 25% |
| Pro | $79/mo | 20% |
| Enterprise | $299/mo | 15% |
Pros: Better margin control, can optimize for specific tiers Cons: More complex, affiliates might only promote high-commission tiers
Option 3: Capped Commissions
Pay percentage up to a maximum monthly amount:
- 25% commission, capped at $100/month per customer
Pros: Protects margins on enterprise deals Cons: Less motivating for affiliates to pursue large accounts
Most SaaS programs start with flat rates for simplicity and add complexity later if needed.
Setting Cookie Duration
Your cookie window affects effective commission rates. A 30-day cookie means affiliates only get credit if customers convert within 30 days of clicking.
| Duration | Best For |
|---|---|
| 30 days | Standard for most products |
| 60-90 days | Longer sales cycles |
| 180+ days | Enterprise, high-consideration purchases |
Longer cookies are more generous to affiliates but increase attribution complexity. See our cookie duration guide for details.
Communicating Your Rates
How you present your rates matters almost as much as the rates themselves.
Lead with the Benefit
Instead of: "We pay 20% recurring commission"
Try: "Earn $20/month for every $100/month customer you refer—for as long as they stay"
The second version helps affiliates visualize actual earnings.
Show Earnings Examples
Include concrete scenarios:
"Our average customer pays $79/month and stays for 2 years. At 25% commission, that's $474 in earnings per customer."
Compare to Competitors
If your rates are competitive, say so:
"Our 30% lifetime commission is among the highest in the project management space."
Address Objections
Preempt common concerns:
- "Commissions are paid on the 15th of each month for the previous month's activity"
- "No minimum payout threshold—get paid from your first referral"
- "Commissions continue for the lifetime of the customer, even if they upgrade"
When to Adjust Rates
Your initial rates aren't set in stone. Consider adjusting when:
Signs Rates Are Too Low
- Low affiliate signup rates
- Affiliates join but don't actively promote
- You're losing affiliates to competitors
- Quality content creators decline to join
Signs Rates Are Too High
- Strong affiliate interest but poor unit economics
- You can't afford to scale the program
- Affiliate CAC exceeds other acquisition channels
- Low-quality affiliates attracted by high payouts
How to Adjust
Raising rates: Apply new rates to all affiliates immediately. Announce it as a benefit.
Lowering rates: Grandfather existing affiliates at their current rate. Apply new rates only to new signups. Communicate transparently about why.
Real-World Examples
Example 1: Early-Stage Productivity SaaS
Situation: New project management tool, $15/user/month, strong product-market fit, limited marketing budget.
Strategy: 40% recurring commission. Aggressive rate to attract early affiliates and gain market share. Sustainable because LTV is high relative to low infrastructure costs.
Example 2: Established Marketing Tool
Situation: 5-year-old email marketing platform, $50-500/month pricing, established affiliate program with 200+ active affiliates.
Strategy: Tiered commissions (20% base, up to 30% for top performers). Mature program that can optimize for profitability while rewarding best affiliates.
Example 3: Enterprise Security Product
Situation: B2B security SaaS, $5,000+/year contracts, long sales cycles, few direct competitors with affiliate programs.
Strategy: 10% recurring commission + $500 per closed deal. Lower percentage acceptable due to high absolute payouts. Bonus compensates for long sales cycles.
Common Mistakes to Avoid
Starting too low and raising later — You can always lower rates, but raising them creates expectations of future increases.
Copying competitors blindly — Their economics are different. Calculate what works for you.
Ignoring lifetime value — A 30% commission on a high-LTV product is smarter than 10% on a high-churn product.
Not tracking affiliate customer quality — You might be overpaying or underpaying based on actual cohort performance.
Making it too complicated — Affiliates want to know "how much will I earn?" Keep it simple enough to explain in one sentence.
Action Steps
- Calculate your numbers — LTV, CAC, gross margin
- Research competitors — What are the market rates?
- Set initial rates — Start in the 20-30% range for recurring, adjust based on your math
- Define clear terms — Cookie duration, payout timing, refund policy
- Launch and measure — Track affiliate CAC and customer quality
- Iterate — Adjust based on real data, not assumptions
The perfect commission rate doesn't exist—but a good-enough rate that you can adjust over time does. Start with the best calculation you can make, then improve based on results.