Commission

What Is a Commission?

A commission is a reward someone earns for helping generate a business result.

In affiliate, referral, or partner programs, a commission is usually paid when a partner helps drive a sale, lead, signup, booking, subscription, or another valuable action. It is the “thank you” behind performance-based marketing: when someone helps your business grow, they receive a share of the value they helped create.

For example, if an affiliate promotes your product and their referral becomes a paying customer, the affiliate may earn a commission for that sale.

How Affiliate Commissions Work

1. Affiliate Joins Your Program

The affiliate signs up, receives a unique affiliate link or coupon code, and starts promoting your product on their blog, social media, email, or network.

2. Customer Clicks and Converts

A customer clicks the affiliate's link, and the system tracks the referral. When the customer completes an action—makes a purchase, signs up for a trial, fills out a form—the system records it.

3. You Pay the Commission

At the end of the payout period (weekly, biweekly, or monthly), you pay the affiliate the agreed-upon commission for each conversion they drove.

Examples:

• SaaS product: An affiliate refers 50 signups at $99/month. You pay them $10 per signup (10% commission) = $500.
• E-commerce: An affiliate drives $2,000 in sales. You pay them 8% = $160.
• Service: An affiliate refers a client worth $5,000. You pay them $500 flat (10% fixed payout).

Common Types of Commission

There is no single way to structure a commission. Affiliate commissions can be structured in different ways, such as:

• Percentage Commission  
• Flat-Rate Commission  
• Recurring Commission  
• Tiered Commission  
• Hybrid Models

They can also be tied to different payout models, including:

• Pay-per-sale
• Pay-per-lead
• Pay-per-click.

To compare these payout model options in more detail, read our guide to the 3 best affiliate payout models for growth.

In other words, the commission structure determines how much an affiliate earns, while the payout model determines what action qualifies for a commission.

The right model depends on your business, margins, sales cycle, and partner strategy.