Moose on the Loose

This blog topic stemmed from a conversation I had with a merchant the other day. This is maybe best illustrated by giving a hypothetical example.

Merchant A, Merchant B & Merchant C sell the same product at the same price & their conversions are equal & their shipping costs are £3 per order. On the program information page on the network it says each offers 10% commission. However on chatting with each merchant you find that merchant A offers 10% on the NET value of sale (less VAT), Merchant B offers 10% on the GROSS value of the sale (inclusive of VAT) and Merchant C offers 10% on the GROSS value of the sale plus the same % commission on shipping costs.

Lets assume 100 orders of £100+vat are sent to each merchant and see the difference in commissions an affiliate would receive.

Merchant A

Commission = Total Net Value of Sales x 10% = £10000 x 10% = £1000

Merchant B

Commission = Total Gross Value of Sales x 10% = £11750 x 10% = £1175 (A £175 improvement in commission on Merchant A)

Merchant C

Commission = (Total Gross Value of Sales + Shipping Costs )x 10% = £12050x 10% = £1205 (A £205 improvement in commission on Merchant A & £30 improvement of Merchant B)

It’s an old adage & prerequisite which is still required on all information pages pertaining to commission. Affiliates need to know the actual commission they are being paid .. a % of what exactly … by doing exactly what it says it does on the tin.

A merchant who offers a % commission of the Gross sale value can use this as a selling point to affiliates, which they should shout from the roof tops, when rates are compared with other programs. No network can turn around exclaiming that the assumption should be made it’s the net sale value, because this is not the case. We simply need clarity which has been requested before, several years ago. Oh the familiarity one exclaims.

You can scale the figures up or down to suit your volume levels.

Pet Gripes This Week:

a) Merchants changing their display url without notification.

b) Merchants altering their deep linking structure, again, without notification.

c) Merchants chaning their trading name, yet again, without notification.

This entry was posted on Wednesday, August 29th, 2007 at 3:54 AM and is filed under Affiliate Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.