About

Profitability in affiliate marketing is rarely linear. While novice marketers calculate earnings based on a single flat rate, professional program managers and super-affiliates operate in a world of tiered performance structures, recurring revenue models (SaaS), and complex expense ratios.

This tool is designed to model these real-world scenarios. It moves beyond simple arithmetic to handle Marginal vs. Retroactive tier logic (where hitting a sales threshold might retroactively boost commission for all previous sales) and calculates Customer Lifetime Value (LTV) for subscription products. It also accounts for CAC (Customer Acquisition Cost) and tax obligations to reveal the true Net Profit rather than just Gross Revenue.

Formulas

The core logic separates Linear earnings from Tiered earnings. For recurring models, we calculate the estimated Lifetime Value.

1. Recurring LTV (SaaS)

For subscription products, total revenue is a function of the monthly price and the churn rate.

LTV = P × C_%churn

Where P is product price, C_% is commission rate, and churn is the monthly cancellation rate.

2. Marginal Tiered Calculation

When commissions increase based on volume thresholds (e.g., Sales 1-10 @ 5%, 11+ @ 10%):

E_total = n∑i=1 (S_i × R_i)

Where S_i is the volume of sales falling into Tier i, and R_i is the rate for that tier.

3. Net Profit

Accounting for marketing costs and tax.

Profit_net = ( E_total − Cost_ads ) × ( 1 − Tax_rate )

Reference Data

Niche / Program Type	Typical Structure	Avg. Commission	Cookie Duration	Notes
SaaS / Software	Recurring (LTV)	20% - 30%	30 - 90 Days	High LTV, low volume. Often includes tiered bonuses for hitting MRR milestones.
Amazon Associates	Flat / Category-based	1% - 10%	24 Hours	Volume-dependent. Rates vary wildly by category (e.g., Luxury Beauty vs. Electronics).
Digital Courses	Flat High-Ticket	30% - 50%	60 Days	High margin, often involves high CPA (Cost Per Acquisition) for ads.
Web Hosting	CPA (Cost Per Action)	$65 - $125 Flat	60 - 90 Days	Aggressive tiers. Example: 1-5 sales = $65, 6-10 sales = $75, 21+ sales = $125.
Finance (Credit Cards)	CPA (Lead Gen)	$50 - $200 Flat	30 Days	Strict compliance rules. Often pays on approval, not just application.
Fashion / Retail	Flat %	5% - 15%	7 - 30 Days	High volume, lower AOV (Average Order Value). Heavy reliance on influencer codes.
Travel / Booking	% of Fee	25% of their fee	Session - 30 Days	Commissions are often a percentage of the platform's cut, not the total booking value.

Frequently Asked Questions

In a Marginal tier system, the higher commission rate applies only to the sales *above* the threshold. For example, if Tier 1 ends at 10 sales, your 11th sale gets the higher rate, but the first 10 remain at the lower rate. In a Retroactive system, once you hit 11 sales, the higher rate applies to *all* 11 sales, significantly boosting revenue.

Churn represents the percentage of subscribers who cancel each month. A lower churn means higher Lifetime Value (LTV). If you don't know the exact churn, 5-7% is a conservative industry standard for B2C SaaS, while B2B enterprise churn can be as low as 1-2%.

Yes. You can enter your marketing costs (Ad Spend or Fixed Costs) in the "Expenses & Taxes" section. This allows you to see your Net Profit, which is the only metric that truly matters for scalability.

Recurring commissions compound over time. Even a lower percentage (e.g., 20% recurring vs. 50% one-time) can yield 3x-4x more revenue if the customer stays for 12+ months. This is why SaaS affiliate programs are highly coveted.