hi Why affiliates get $100 per sale when the cost is just like $5 per month or $60 per year. Do they miss tracking? Sam
They pay that much because they know the lifetime value of the customer is worth that much. If they have someone who runs a site for 2 years (and it costs $60/month), they make money... and it's incremental from there on out! True, they lose money if the website only hosts with them for a year, but that's a risk they like to take (and know they can win).
yup they are looking at lifetime value of their customers. people typically will stay with hosts quite a while (assuming they get decent service)
I own a web hosting review site and yes I do have affiliates on my site and yes they do provide a good source of income; however, I also offer alternative options for smaller web hosting companies that maybe cannot afford to pay high commission rates. To answer the original question; it is true that web hosting companies often pay out higher commission than a yearly income... However, as noted above the long term revenue makes it beneficial.. In the web hosting business it is essential to have lots of sites hosted on your servers.
whatever the present value of future billings. ie if your average consumer stays 4 months and your making $30/mo. off of him, you have approx $120 in revenue per consumer, depending what your marginal cost per consumer is, you may be able to afford to pay $80 per signup, and if you have a good conversion ratio, you can get a lot of traffic from affiliates that way, depending how efficient your business is
Most customers if happy with the hosting would have no reason to change plans. As already suggested the consider the lifetime value of the customer when doing affiliate payouts.
yeah its all about lifetime value. i love it as i get to use my affiliate link and therefore my first years tests with the host are free.
It's also estimated that through Banner advertising, Google Adwords and/or other PPC programs it costs on average $120+ (no exact) to obtain a new client. You also have to constantly manage the advertising campains which takes time and resources. So paying a webmaster the same amount to do your own campainging and advertising is a win win for both parties involved. Yeah, it's a tough situation for smaller hosts.. A lot haven't got any capital let alone $100's to throw around when you have to wait at least a year to get it back..
These points are all correct. We are paying $125 for a $4.95/mo package (based on an annual purchase) and that is based on the lifetime value of the customer. We are paying up to $350 for the $29.95/mo package. Out of 100 customers so many will drop after a year but many will increase their service as they grow their business. How many affiliates here have just one site on one hosting account. http://www.affiliatecrew.com/emails/Register/Hosting_Newsletter.htm During peak season you can see EPC's over $300. Unfortunately, the top hosting sites are highly leveraged and its a very competitive space.