What's the range for an affiliate fee / rev share for a SaaS business?

I'd take a look at the payouts on the existing affiliate networking platforms. 

Jay, In the SaaS model the affiliate should be paid just once. I am not sure what your CAC is but if an affiliate should only make 1 month worth of revenue to you, I believe it would be of value to you and the affiliate.

Hi Jay, Personally I believe there are many variables you need to consider. I've seen a wide spread of SaaS applications offering all sorts of "Partner" (affiliate) compensation scenarios. We really don’t have enough detailed information to offer any “real” advice here, but I’ll do my best.

I know of one application that has a monthly cost of $300. Their profit margin after paying their affiliates is 32%. They have 72,000+ current monthly subscribers, and they payout 30% to their affiliates in monthly recurring commissions. Their main expense is payroll supporting their help desk and their marketing budget. They have enterprise level bandwidth all hosted through Amazon. Needless to say, it’s a profitable business.

Here are some things I think you should consider (the first three are critical):

1. Know your end-users: Conduct a thorough customer analysis, actually talk to people and get their feedback.
2. Know your affiliates: Conduct a thorough affiliate analysis, again actually talk to people and get their feedback. You’d be amazed at how many up-sell situations you can create doing this.
3. Know your competitors: Conduct a thorough competitive analysis. Do live shopping calls! You will be amazed at how much information they will give you if you approach them correctly.
4. What is the end-users 'perceived value' of your application? What will the marketplace pay based on their perception of its value to them? Don’t get hung up on; “I put $1 in and I need to get $2 back out.” You may discover the perceived value is much larger. Is it a $5 per month application? A $50 per month application? A $300 per month application? Is your application disruptive - meaning is it a complete replacement making all others obsolete -vs an add value application? You may have a direct cost of $5 per subscriber-per month to support it, but a perceived value of $50 per month. So, do you sell it for $10 per month?
5. What is your cost to deliver? What is your profit margin before a "Partner" (affiliate) is given their cut?
6. How important is the "Partners" (affiliates) influence on the sale -or better yet, in maintaining ongoing monthly subscribers? Example: Let’s say you developed a mobile training application supporting golfers. Only your application uses the camera function with its facial recognition tech from the phone to ID the approximate distance to the flag / hole. And based on the calculated distance and the direction the flag is blowing, the AI pulls from the database suggested clubs to use, loft, wind direction, suggested torque, etc.; plus your database includes easy access to quick-cheat videos and suggestions on how to make the best approach on the green or at the tee. The app might even offer a help desk where golfers could ask questions a panel of pro golfers you’ve cut a deal with on how to do things better. Entry level pro coaching without the huge fees, what a concept?  Needless to say, all of this could offer tremendous value, especially for new beginning golfers.
7. How much value does promoting your application bring to your "Partner" (affiliate)? Should you pay them -or should they pay you? Think of ways you can up-sell them to a value added "Partner" (affiliate) desktop application, and make them subscribe also. How can your application make them money, bring in more sales? Going back to the golf example: If your application included ‘tee times’ at all the affiliated golf courses, discount green fee QR code coupons, proximity marketing at the club and/or pro shop, built-in mobile shopping cart for the pro shop, a built in marketing platform, etc. Tremendous value, right? Now all you need to do is sell them on why they need to subscribe and promote your application to all of their members. It’s called fishing with a wide net -vs a pole. What manufacturers or fabricators can you build a version of your application for and tie them into the revenue stream as well? Get them to endorse and promote your application to all your would-be "Partners" (affiliates). Look for WIN / WIN scenarios.

Make sense? I hope this helps. Happy building!

Hi Jay. 

Hi Jay,

Having managed multiple SaaS affiliate programs in a variety of verticals (education, finance, administrative, entertainment) the payouts very greatly. The floor for a CPL to be competitive is around $30 with some payouts going as high as $90.

I disagree with Peter in the earlier comments. A competitive payout usually amounts to 2-3 months subscription value. But I do agree that by far the majority of SaaS payout only payout on the the initial CPL and do not offer continuing incentives. The only reason to offer such incentives is if you are hoping to leverage the affiliate channel to move subscribers into a higher echelon of service. It then may be worthwhile to implement some sort of bonus payout based on LTV but it is tricky to implement properly.

Timing of payouts should be no more than 30 days after the initial trial period, if any, of the software. Longer payout times or waiting for quarterly payouts will significantly impact your ability to recruit additional partners.

Finally something no one seems to have mentioned is fraud. I am not talking about credit card fraud, although for really aggressive payouts that may be an issue, but I am talking about affiliate fraud. The more aggressive the payout on a CPL the more incentive for affiliates to cheat by either sending you fraudulent signups or by stealing credit from other affiliates. You should work closely with your internal team and your affiliate network/tracking provider to help mitigate.

Thanks everyone for your inputs - I appreciate you sharing your insights! To provide some extra context, we have an application for coaches and players to use in order to capture and evaluate mental game performance. We are looking to partner with one of the largest golf apps (who does digital scorecards and yardages) using an affiliate model. They would promote our product for an affiliate fee.

Jay - I run a cloud based trip planning service that is a free widget plug in for venues, companies and events.   We can trip-enable any webpage, photo, video, blog or confirmation email with an address or lat/long.  We are different from every other travel product in that we do a proximity search for the venue, versus searching based on city centers and airports.