There are few ways that you can get paid for being an affiliate marketer (or affiliate for short). Merchants generally use pay by performance compensation model to reward you when the visitors you referred performed some actions at their site. The actions required could be a click, sales or filling out form.
The pay by performance compensation model consists of few types of commission as below but the merchants and affiliates may call the compensation models differently. For example, from the merchants’ perspective, the compensation model is a cost to them so the name starts with “Cost Per __” while to the affiliates, the commission is a payment to them hence the name starts with “Pay Per __”.
Pay Per Sale (PPS) / Cost Per Sale (CPS)
In pay per sale compensation model, you will only be paid when the visitors you referred make a purchase at the merchants’ sites. You will be paid either a fixed dollar amount or a percentage of sales generated by your website, ads, text links or banners.
Pay Per Click (PPC) / Cost Per Click (CPC)
In pay per click compensation model, it is easier to get paid than pay per sale because the visitors at your site just need to click on the link or banner that lead to the merchants’ sites. There is no sale required. One good example is Google Adsense, it will pay you a percentage of the amount the advertisers pay Google per click for their advertisements.
Pay Per Lead (PPL) / Cost Per Lead (CPL)
You can get paid if the visitors perform the required actions required by merchants. For example, asking the visitors to fill up a form, sign up the merchants’ mailing list, register for events and etc. Pay per lead commission can be quite low compared to the above two models so if you want to enjoy good commission, you must be able to send large traffic to merchants’ site.
Pay Per Action (PPA) / Cost Per Action (CPA)
Like the pay per lead model, the main goal of pay per action model is to generate lead for the merchants.
Recurring Compensation Model
This could be an excellent model for those of you who want to make residual income for life. The merchants will continually paying you monthly as long as your referred visitors continual using their services. This is commonly found in subscription and membership type of services, for example merchants who offer web hosting, online training course, email marketing and etc.
Two-Tier Affiliate Program
Some merchants such as the web hosting companies implement two-tier affiliate program in their compensation model. That means you will enjoy commission when any of your referred visitors who also sign up as an affiliate (aka sub-affiliate). So, besides the usual commission you get from the merchants, you will now also enjoy additional commission from your sub-affiliates. Normally, you will enjoy higher percentage of commission from your first-tier of affiliate program and lesser from your second tier.
The compensation models mentioned above have their own pros and cons. Most merchants also require a minimum threshold to be met before they can issue payment. Some pay by using a direct bank transfer or via paypal while some can only issue check. There are normally some administrative or processing fees involved in payment so do check their payment policies properly before you sign up for their affiliate programs. The last thing you want is your commission being reduced by unnecessary fees.