One of the first decisions when launching a SaaS affiliate program is whether to pay affiliates recurring commissions for as long as customers stay, or a one-time payout when they convert.
This choice fundamentally shapes affiliate behavior, your program's economics, and the type of partners you attract. Here's how to think through it.
How Each Model Works
Recurring Commissions
Affiliates earn a percentage of the customer's payment every billing cycle—monthly or annually—for as long as the customer remains active.
Example:
- Customer pays $100/month
- 20% recurring commission
- Affiliate earns $20/month for the customer's lifetime
If that customer stays for 3 years, the affiliate earns $720 total.
One-Time Commissions
Affiliates earn a single payout when the customer converts, then nothing more regardless of how long the customer stays.
Example:
- Customer pays $100/month
- $100 one-time commission (equal to first month)
- Affiliate earns $100 total, regardless of customer lifetime
Pros of Recurring Commissions
Attracts Serious Affiliates
Recurring commissions appeal to affiliates who think long-term. These affiliates tend to:
- Build genuine content (tutorials, reviews, comparisons) rather than thin promotional pages
- Focus on audience trust rather than quick wins
- Promote products they actually believe in and use
The promise of ongoing income motivates affiliates to create quality referrals, not just volume.
Aligns Incentives with Retention
When affiliates only earn if customers stay, they're incentivized to:
- Refer customers who are a good fit
- Be honest about product limitations
- Provide accurate expectations during promotion
This alignment means affiliate-referred customers often have comparable or better retention than other channels.
Creates Predictable Affiliate Revenue
Affiliates with recurring income from your program have stable, predictable earnings. This stability makes your program a core part of their income rather than a one-off promotion.
Affiliates with meaningful recurring income will:
- Continue promoting even during slow periods
- Update their content when your product improves
- Stay engaged with your affiliate program for years
Competitive Advantage in Recruitment
If competitors offer one-time payouts and you offer recurring, you have a compelling pitch: "Earn forever, not once."
This is especially powerful when recruiting content creators who are choosing between affiliate programs to feature.
Cons of Recurring Commissions
Higher Total Cost Per Customer
Over a customer's lifetime, you'll pay significantly more with recurring commissions than one-time payouts.
Example comparison:
- Customer LTV: $2,400 (24 months × $100/month)
- One-time commission at 50% of first payment: $50
- Recurring commission at 20%: $480
The recurring model costs nearly 10x more in this scenario.
Complex Accounting
Recurring commissions require tracking:
- Active subscriptions per affiliate
- Upgrades, downgrades, and plan changes
- Refunds and commission clawbacks
- Cancellations and reactivations
This complexity requires good affiliate software. Trying to manage it manually or with spreadsheets quickly becomes unmanageable.
Cash Flow Timing
One-time commissions are a known, immediate cost. Recurring commissions create ongoing obligations that can surprise you as the program scales.
If you pay 20% recurring and have 500 affiliate-referred customers paying an average of $80/month, you're paying $8,000/month in ongoing commissions—forever (or until those customers churn).
Difficult to Reduce Later
If you start with generous recurring commissions and later want to reduce them, you face a dilemma:
- Lower rates for new affiliates only? Creates two-tier system that feels unfair
- Lower rates for everyone? Damages relationships with existing affiliates
- Grandfather existing affiliates? Complex to manage
Pros of One-Time Commissions
Simple to Manage
One-time payouts are straightforward:
- Track the conversion
- Pay the commission
- Done
No ongoing tracking, no complex calculations, no lifetime obligations.
Predictable Costs
You know exactly what each affiliate-referred customer costs at the moment of conversion. This makes budgeting and forecasting easier.
Higher Upfront Payouts Possible
Because you're not committing to ongoing payments, you can offer more generous upfront amounts:
- 100% of first payment
- 50% of first year
- Large flat fees ($200-500)
These big numbers can be attention-grabbing in affiliate recruitment.
Easier to Adjust
Changing one-time commission rates is simpler. New rates apply to future conversions without complex grandfather clauses or ongoing obligation tracking.
Cons of One-Time Commissions
Attracts Short-Term Thinkers
One-time commissions can attract affiliates who:
- Prioritize quick wins over quality referrals
- Use aggressive tactics to drive any conversion, regardless of fit
- Churn through programs quickly
This doesn't mean all one-time programs have quality issues, but the incentive structure attracts different behavior.
No Retention Alignment
Affiliates have no stake in whether customers stay. Once the commission is paid, the affiliate has no financial reason to care about customer success.
This can result in:
- Referrals that don't match your ideal customer profile
- Exaggerated promises in affiliate content
- Higher churn from affiliate-referred customers
Affiliate Churn
Without ongoing income, affiliates may promote your product once, collect commissions, and move on. Your program becomes a transaction rather than a relationship.
Retaining affiliate mindshare requires ongoing recruitment and reactivation efforts.
Hybrid Approaches
You don't have to choose purely one or the other. Hybrid models capture benefits of both:
Recurring + Signup Bonus
- 20% recurring commission
- Plus $50 bonus per new customer
The bonus provides immediate gratification while recurring commissions maintain long-term alignment.
Time-Limited Recurring
- 25% commission for the first 12 months
- Then commissions end
Captures much of the retention alignment without infinite obligations. Common duration limits: 12 months, 24 months, or first year only.
Declining Commission
- 30% commission in months 1-6
- 20% commission in months 7-12
- 10% commission after year 1
Rewards affiliates most heavily upfront while maintaining some ongoing alignment.
Upfront + Recurring
- 50% of first payment as immediate bonus
- Plus 10% recurring commission ongoing
Gives affiliates a meaningful upfront payout while still aligning with retention.
How to Decide for Your SaaS
Consider these factors:
Your Average Customer Lifetime
Long customer lifetimes (24+ months): Recurring commissions become very expensive but also very attractive to affiliates. Consider time-limited recurring or lower percentages.
Shorter lifetimes (6-12 months): Recurring commissions cost less total. The model works well without major cost concerns.
Your Price Point
Low-ticket ($10-50/month): One-time commissions may be too small to motivate affiliates. Recurring (or time-limited recurring) creates more meaningful payouts.
High-ticket ($200+/month): One-time commissions can be substantial enough to attract affiliates. You have more flexibility.
Your Retention Rate
Strong retention: Recurring commissions cost more but attract quality affiliates aligned with your strengths.
Weak retention: Fix retention first. If you must launch, one-time commissions limit your exposure until retention improves.
Your Competition
Research competitor programs:
- What model do they use?
- What rates do they offer?
- How can you differentiate?
If everyone offers one-time, recurring is a differentiator. If everyone offers recurring, match the model and compete on rates or other factors.
Your Cash Flow
Strong cash flow / well-funded: You can handle the ongoing obligation of recurring commissions.
Tight cash flow / bootstrapped: One-time commissions give you predictable costs you can budget for.
What Top SaaS Companies Choose
Most successful SaaS affiliate programs use recurring commissions, typically:
- 20-30% recurring
- Lifetime or 12-24 month duration
- Sometimes with additional first-sale bonuses
The SaaS model naturally fits recurring affiliate commissions because:
- Customers already pay monthly/annually
- Tracking ongoing payments is built into your billing system
- Retention is already a core metric you're optimizing
- Quality affiliates strongly prefer recurring income
However, some notable programs use one-time models successfully, especially:
- Very high-ticket products where one-time payouts are substantial
- Products with very long sales cycles
- Enterprise software with sales-assisted closes
Making the Transition
Moving from One-Time to Recurring
If you currently offer one-time commissions and want to switch:
- Announce the change as an upgrade (which it is)
- Apply to new affiliates immediately
- Offer existing affiliates the choice to switch
- Phase out one-time option over 3-6 months
Moving from Recurring to One-Time
This is harder because affiliates will lose expected income:
- Grandfather existing affiliates on recurring
- Offer new affiliates only one-time
- Consider generous one-time rates to compensate
- Communicate transparently about the change
Recommendation
For most SaaS businesses, recurring commissions are the better choice, with some considerations:
- Start with time-limited recurring (12-24 months) if you're concerned about lifetime obligations
- Use 20-25% as a starting point, adjust based on your unit economics
- Add a first-sale bonus if you want to boost affiliate activation
- Track cohort performance to ensure affiliate-referred customers have healthy retention
One-time commissions make sense for:
- High-ticket products ($500+/month)
- Products with unpredictable retention
- Programs where you need maximum cost control
- Markets where competitors all use one-time models
For more on setting specific rates, see our guide on how to set affiliate commission rates.