Picture this: instead of earning a commission for each referred customer, you receive a percentage of your affiliate partner’s income. Sounds appealing? Then Revshare is just what you’re looking for. We’ll explain each aspect of this payout model and how you can get the most out of it.
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What Is RevShare and How Does It Compare to CPA?
Affiliate marketing follows a basic blueprint: you (as the affiliate) direct traffic to the merchant’s website and earn a commission for each action carried out there. Simple, isn’t it? This is exactly how CPA or cost-per-action model works. It involves fixed, one-time payouts for such actions as signups, subscriptions, downloads, etc.
The RevShare, or revenue share model, is based on a percentage of a merchant’s revenue – whatever that may be. What sets RevShare apart from CPA is its recurring nature. Simply put, you receive payments multiple times throughout the agreement. Plus, any upsells made by your referred customer are also calculated into your commission.
Simple Cases: How Does RevShare Work?
Now that you better understand RevShare meaning, let’s put it into practice. As an experienced affiliate, you know that numbers speak for themselves. Look at how the revenue share model works on simple examples, so you can evaluate its impact on your strategy.
Suppose you’ve joined an affiliate program that promotes subscription-based applications. You launch the marketing campaign and attract new users, earning the vendor a total profit of $1000. If your RevShare is 40%, then you get $400.
But wait, there’s even more to come! When the customer you’ve referred renews their subscription, your income will also grow accordingly.
The revenue share model also works by involving new members as sub-affiliates in your program. Whenever they generate income, you earn a percentage.
For instance, the ShareASale program takes this approach by offering a commission rate of 10%. If a sub-affiliate earns a commission of $200 and ShareASale makes a profit of $20, you would receive $2.
Is RevShare Right for You? 5 Aspects to Consider
The RevShare payout model may seem attractive, but it is not a one-size-fits-all solution. In addition to any specific requirements and conditions your merchant sets, you need to consider the big picture of your business goals. Answer the questions below to discover if RevShare could be your winning strategy:
- Are your goals long-term or short-term? The CPA model is more suitable for quick income, while RevShare pays dividends over time.
- How successful are you in generating leads? RevShare is based on performance, so the more you can convert leads into customers, the higher your return.
- What is the average lifetime value of a customer in your niche? High LTV can ensure you receive a stable income flow.
- Do you have sufficient resources to invest in your marketing campaign? Revenue sharing requires additional effort to attract customers.
- Are you ready for income fluctuations? Even if your merchant is generating high profits, there may be periods where it decreases, resulting in lower payouts.
Pros and Cons of Revenue Sharing Plan
If you’re halfway to joining an affiliate program that offers a RevShare plan, let’s help you cross the finish line by outlining the pros and cons.
You will receive long-term passive income, sometimes even on a lifetime basis.
You can re-invest in acquired earnings in your marketing campaigns and improve them.
You might not get significant income immediately.
Your earnings depend on the customer’s purchasing behavior, which is unpredictable.
The RevShare payout model lets you earn long-term passive income that increases as your referred customers continue to purchase from the merchant.
The one caveat is that it requires additional time and resources to make your marketing campaigns thrive. As a result, affiliate marketers opt for one-time payouts to generate quick income.
However, there is another solution: hybrid deals. They allow you to send traffic to multiple offers and adjust your strategy accordingly. At Bizzoffers, we offer high-commission hybrid deals to help our affiliates get the most out of their traffic.