Revenue share agreements are one of the backbones of high-earning affiliate marketing partnerships, and represent one of the most worthwhile ways for affiliates to invest in their future success and generate ongoing passive earnings over the medium or long term.
Revenue share, sometimes shortened to “revshare,” is a type of commission structure or payment agreement that may be offered to affiliates to promote third-party products and services, which provides a number of advantages over other types of affiliate commission models like cost per click and cost per acquisition.
If you are wondering how revenue share agreements work, their advantages and disadvantages, and how to find the ultimate revenue share affiliate partnership to maximize your earnings, we will provide an easy introduction to affiliate revshare in this article.
How do revenue share programs work?
Revenue share is a type of percentage commission payment structure, which determines the amount of commission you will receive for achieving sales for a third-party partner whose goods or services you promote and sell.
When you achieve a sale for your partner scheme, you are rewarded with a percentage payout of the total value of the sale, rather than earning a one-off flat fee for making a sale, or gaining a prospect or expression of interest.
Additionally, many revenue share programs offer the added advantage of giving you the potential to earn an ongoing passive income from every acquisition you make, as well as providing a payout for the initial purchase. This means that your revenue share program will continue to return dividends of a percentage reward of future sales too, either for a set time period after each acquisition or for the entire lifespan of your partnership.
Is the revenue share model right for you?
If you want to aim towards earning the highest levels of affiliate commissions and have the chance to generate an ongoing passive income that will pay out every time that one of your initial acquisitions makes another purchase or renews a subscription, the revenue share model is usually the best choice.
However, this type of payment agreement requires rather more work in most cases in order to generate interest in your offerings and convert them into sales than other affiliate payment structures. This means that you have to be conscientious about designing and targeting your ads and marketing campaigns to reach out to the type of people who might buy from you and be able to turn their initial interest into a cash result.
This is harder than simply bringing in a lot of traffic or earning low-level commissions based on every click you send through to your partner scheme, whether or not that click converts into a sale – but it is also much more rewarding, and offers better value financially for affiliates in the medium and long-term.
Calculating your revenue per share
Knowing how to calculate your revenue per share is an important element of success as a revshare affiliate because this will help you to assess the value of different affiliate schemes
offering this payment model, and enable you to predict your future earnings based on the level of sales you can achieve.
Different revenue share programs pay different levels of commission, and in some cases, have a sliding commission scale within the same scheme as well.
Some revenue share models will pay a set percentage of the value of the initial sale made to any acquisition, while others will pay a percentage for every sale made to an acquisition you attain, either for a set period of time or for life.
Additionally, the commission percentage paid out over the medium to long-term in revenue share programs may fall along a sliding scale, with the initial purchase or sale paid at one rate, and the level of commission falling for follow-on purchases after a set period of months or weeks.
Revenue share is paid as a percentage of the total sale value generated – and the percentage can vary from scheme to scheme from as low as 5% up to 25% on average, or even as high as 50% for some programs.
In order to calculate your revenue per share, you first need to know the percentage rate you will be working with, and the value of your sale.
For instance, if you are working with a revshare affiliate scheme that pays 25% commission and you achieve a sale of £200, you will receive £50 for this transaction. If your acquisition continues to make follow-on purchases after your initial referral and you are working with a revenue share program that pays commissions for follow-on transactions at the same rate, you will also make 25% of the value of future purchases too.
This, of course, means that potentially, the lifetime earnings you can make from a single successful acquisition can far exceed the payment amounts you would have received by making the same acquisition whilst working under a flat fee or one-off commission model, making revenue share highly lucrative for successful affiliates.
Whilst the effort and work involved in gaining that initial acquisition that results in a purchase is, of course, more challenging than setting the bar lower to earn a simple flat fee commission, over the medium to long-term, it is well worth the effort and investment.
How to find the ultimate revenue share partnership
If you wish to invest in your future and be able to generate ongoing earnings long after you have set up your promotions and put in the ground work, it is important to find the best revenue share partnership to help you to achieve your aims.
So, what makes for the ultimate revenue share program? It comes down to a combination of factors that pertain to both what your affiliate partner offers, and how you use it.
The first step to maximising your earnings using revenue share is to choose the right type of products or services to sell – if you choose something that there is no demand for, which has already reached the point of market saturation, or that you don’t know who to market it to, you won’t get very far.
Once you have determined the right type of products or services to work with, you should next look at affiliate schemes that provide these types of goods under the remit of a revenue share agreement, and then check the details of their percentage pay outs and payment terms.
Choosing a revenue share model that pays a high percentage rate per sale is naturally a good place to start – but remember to check out how the payment system works for follow-on sales and repeat purchases, the duration of the agreement, and if your commission pay outs will lower in percentage value over time.
All of this information can help you to calculate your potential revenue per share over the medium and long term, project your potential earnings, and enable you to design your promotions and allocate your marketing spend to ensure you turn a profit.