Working with influencers on commission? You're way ahead of the usual pay-per-post tactic.
Now, find the right commission rate.
Too low, and you'll miss great partnerships. Too high, and profits may suffer.
Here's a 5-step method I've found the best to set commissions without hurting profits:
1— First you need to know your net margins. If you've got a healthy net margin like 65%, you're in a good place. Offer 15% to influencers and a 15% discount to customers. You're still left with a 35% profit.
2— Then in a spreadsheet, create a column for adding your costs — COGs, shipping, packaging etc (Total cost).
3— Split what you want to spend on promo into affiliate commission and discount they will offer their customers.A 30% discount for customers and a 5% commission for affiliate influencers? Might not be the best mix.
Go for a split that values both customers and influencers.
I have created a Google Sheet template that you can duplicate, and plug your numbers in. Seriously, it does half the work. You just need to know your costs. Find it here.
4— Calculate the absolute value of the discount and commission you're offering. This is what you're spending on prompt.
5— After inputting all data into the sheet, calculate your revenue = Selling price - Amount spent on promo. Then calculate your Unit Profit = Revenue-Total costIf this is too low, you need to adjust your commissions. If this is high while giving a good commission to your influencers, you're good to go.
Out of curiosity, how do you usually set your commissions? Do you follow a similar strategy or have some secret sauce?
PS: Let me know if you have any issues accessing the template, can share it again.
Now, find the right commission rate.
Too low, and you'll miss great partnerships. Too high, and profits may suffer.
Here's a 5-step method I've found the best to set commissions without hurting profits:
1— First you need to know your net margins. If you've got a healthy net margin like 65%, you're in a good place. Offer 15% to influencers and a 15% discount to customers. You're still left with a 35% profit.
2— Then in a spreadsheet, create a column for adding your costs — COGs, shipping, packaging etc (Total cost).
3— Split what you want to spend on promo into affiliate commission and discount they will offer their customers.A 30% discount for customers and a 5% commission for affiliate influencers? Might not be the best mix.
Go for a split that values both customers and influencers.
I have created a Google Sheet template that you can duplicate, and plug your numbers in. Seriously, it does half the work. You just need to know your costs. Find it here.
4— Calculate the absolute value of the discount and commission you're offering. This is what you're spending on prompt.
5— After inputting all data into the sheet, calculate your revenue = Selling price - Amount spent on promo. Then calculate your Unit Profit = Revenue-Total costIf this is too low, you need to adjust your commissions. If this is high while giving a good commission to your influencers, you're good to go.
Out of curiosity, how do you usually set your commissions? Do you follow a similar strategy or have some secret sauce?
PS: Let me know if you have any issues accessing the template, can share it again.