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- How to Determine the Commission (%) to Offer Your TikTok Shop Affiliates (Bonus Content!)
How to Determine the Commission (%) to Offer Your TikTok Shop Affiliates (Bonus Content!)
Use the Scenario Worksheet I Built Out!
Jonathan Snow
April 18, 2024
How to Determine the Commission (%) to Offer Your TikTok Shop Affiliates
FAQ: What commission level should I set for my TikTok Shop affiliates?
Answer: The HIGHEST amount you are able to pay based on margins. The more attractive the commission offer, the more affiliates you'll activate and retain.
Run your own scenario using the worksheet I built out:
THE MATH IS SIMPLE👇
If you have 80% margin on $100 product, after seller fees, you'd have the following contribution margin (variable profit) in these commission scenarios:
10% commission: $64
20% commission: $54
30% commission: $44
40% commission: $34
50% commission: $24
Commission Scenario (described above)
Once again, the higher commission you offer, the higher the:
- # of affs that'll post
- # of affs that'll post again
- # of aff impressions
- $$ affs will generate organically for your Shop
- # of reviews you will generate on your products
- # of "winner" creatives to scale w/ paid media
- the halo effects on retail, Amazon & DTC channels
You need to play with the numbers & see what each bump in commission does to the number of affiliate orders each month, but would you rather have:
100 orders paying out 10% commission = $6,400 Contribution Margin
or
150 orders paying out 20% commission = $8,100 Contribution Margin
*Obviously the 150 orders at double the commish!
Lets run a less obvious scenario...
Would you rather have:
200 orders paying out 10% commission = $12,800 Contribution Margin
or
500 orders paying out 50% commission = $12,000 Contribution Margin
Honestly, I'd rather have 500 orders with $800 less in profit than 200 orders with $800 more in profit.
At least in the relatively early days in a Shop.
Simply put:
If you're generating 2.5x more orders,
you're likely generating 2.5x more "free" impressions,
w/ 2.5x more halo effects on your other channels.
Aka 2.5x more brand awareness at nearly the same PROFIT. This only helps strengthen your brand and improve marketing efficiency ratio in the later innings.
Affiliate marketing via social commerce is such a beautiful thing since you have a fixed % acquisition cost that you set & KNOW will be profitable to you.
Run some mini experiments at diff commish levels and track what it does to your new affiliate & existing affiliate activation numbers.
Now you're ready to go build your Affiliate Army 🚀
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