You might’ve read these sentences on the internet — including on our blog — during your research around affiliate marketing programs:
- ‘Affiliate marketing is a low-risk, cost-effective way for brands to boost awareness, increase brand trust, and acquire new customers.‘
- ‘Setting up an affiliate marketing program costs very little.’
Though they are perfectly accurate statements, some people misinterpret the terms “cost-effective” or “low set-up costs” as “low cost.”
If you are one of those people or someone curious to know the actual costs of starting and running an affiliate program, this article is for you.
How Much Does It Cost To Run An Affiliate Program?
Below, we’ve divided all the affiliate marketing costs into categories and given approximate numbers so you can budget for your first affiliate program better.
Cost-1: Affiliate management platform charges
The first thing you’ll need to start an affiliate program is an affiliate program management platform.
An affiliate management platform enables you to create and manage affiliate program(s):
- It automates creating affiliate links (and/or coupon codes) for the affiliates.
- It tracks those affiliate links to identify referral sales and map them to the right affiliates.
- Moreover, it reports important affiliate program KPIs like affiliate revenue, top affiliates, etc., to help you keep track of your affiliate program progress.
- The reports also enable you to find opportunities to plan further affiliate program growth.
You have two options when it comes to choosing an “affiliate management platform.” And the costs of running your affiliate program vary vastly depending on which you choose.
1. Affiliate network
An affiliate network acts as an intermediary between affiliates and merchants (i.e., you).
- Merchants can create and publish their affiliate programs on the affiliate network.
- Affiliate marketers can join the affiliate network (after passing their vetting process) and join good, suitable affiliate programs.
The main benefit of affiliate networks for you would be access to the pool of affiliate marketers/influencers. Remember, though: You can’t reach out to them; it’s just that they may discover your program on the affiliate network’s directory and join you as a partner.
Cost: The cost varies from network to network. For example, Rakuten Linkshare is one of the oldest and biggest affiliate networks. They quote the network charges on request, but Pagely mentions its typical cost is $2500 one-time fee + $500-$3500 monthly charges. Some affiliate networks have comparatively less fixed charges, but they charge a commission on each affiliate sale.
2. Affiliate app/SaaS
An affiliate app enables you to create your own affiliate program. It gives you complete control over your affiliate program and saves you from relying on third-party networks.
Cost: A typical affiliate app/SaaS costs way less than affiliate networks. For example, we are an affiliate app for Shopify stores, and our pricing is pretty transparent.
The average merchant pays less than $40/month + performance-based % to create their own affiliate program with Social Snowball.
Cost-2: Affiliate commissions
Affiliate commissions are often the biggest “business cost” for successful affiliate programs.
But unlike most of the other costs associated with running an affiliate program, you pay commission based on performance. So, if affiliates bring zero sales, you pay $0 as affiliate commissions; otherwise…
Cost: The typical affiliate commission rate is between 10%-25%.
Let’s take Gel Blaster, one of Social Snowball-using brands, for example. They pay 10% commissions for each successful sale the affiliate makes:
Let’s assume their affiliates bring 100 new orders, and the AOV is $60. In that case, their affiliate revenue is $6000. And given their 10% commission rate, they’ll pay $600 in affiliate commissions.
Cost-3: Affiliate manager salary
If not initially, after a certain point in your affiliate program growth journey, you’ll need an affiliate manager.
An affiliate manager’s job involves recruiting affiliates, vetting affiliate applications, negotiating deals with top affiliates, managing relationships with affiliates, helping new affiliates, ensuring affiliates get paid on time and identifying growth opportunities for the affiliate program.
They also coordinate with other teams to ensure the affiliate program works smoothly. For example, they work with copywriters for email copies, graphic designers for banners, etc.
Cost: The CTC of an affiliate manager depends on how you fill the seat — you can outsource the whole job to an affiliate management agency, hire someone hourly, or hire a part-time/full-time employee. For some idea, though, this statistic might help: According to salary.com, the average hourly wage of an affiliate manager is $31.
Cost-4: Marketing materials cost
You need a few marketing materials to motivate your affiliates or potential affiliates to take action.
Some of the commonly-needed marketing materials are:
- Affiliate landing page: You need a quality affiliate landing page to convert maximum potential affiliates into affiliates.
- Email copies: You need professionally-written emails for affiliate outreach, affiliate onboarding, announcements, tips for affiliates, etc.
- Graphics: Providing graphics to affiliates encourages them to use them on their site or social media.
- Case studies: Affiliates’ success stories motivate potential affiliates to join your affiliate program and current affiliates to push harder.
- Ads: If you plan on running ads for your affiliate program, you’ll need creatives for that.
Let’s take Cloudways’ example to further understand the value of marketing materials in affiliate program success.
They give their affiliates banners like this:
And the affiliates use those banners on their website and essentially increase brand awareness, credibility, and sales of Cloudways:
Cost: If you already have a marketing team, they’ll likely create these marketing materials as part of their job. Otherwise, the cost depends on the department and the person doing it—but let’s say around $30-40/hour on average.
Cost-5: Other costs
The above mentioned are the direct costs associated with running affiliate marketing programs.
You may also need to invest in things like email scraper tool, email outreach tool, influencer scraping software, a communication platform, expert consultations, etc., to automate processes and accelerate the affiliate program’s success.
Start Your Affiliate Program For $0
All the costs we mentioned above are more of “investments.” And you have to make most of those investments once the affiliate program starts getting traction.
To start, you need $0—at least with Social Snowball.
We have a free plan that enables you to create your affiliate program. And we automate affiliate acquisition by converting all customers into affiliates. So, essentially, you’ll have an affiliate program and initial affiliates to kick off your affiliate program for free.
You can invest in our premium plan, an affiliate manager, marketing creatives, and other tools once you are serious about the affiliate channel.