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What is the difference between recurring and one-time commissions?
The difference between recurring and one-time commissions lies in how often the affiliate or salesperson earns a commission for each sale or action.
1. One-Time Commission
A one-time commission is a single payment made to an affiliate or salesperson for each successful sale or action they generate. Once the commission is paid out, the affiliate does not earn additional commissions from that same customer, regardless of future purchases.
Example:
- If an affiliate earns a one-time commission of $50 for every sale of a product, they will receive $50 for each sale, but once the sale is made, no further payments are earned from that customer.
Common Use:
- Used for products or services that are purchased once, such as physical products, one-time software licenses, or single-purchase services.
Pros:
- Simple to understand and track.
- Provides immediate earnings for affiliates after each sale.
Cons:
- Limited long-term income potential since the affiliate only earns from initial sales, not repeat business.
2. Recurring Commission
A recurring commission is an ongoing payment made to an affiliate or salesperson for each repeat purchase or subscription a customer makes. Typically used in subscription-based services or membership programs, where affiliates earn commissions as long as the customer continues to pay for the service.
Example:
- If an affiliate earns a recurring commission of 20% on a subscription service that costs $100 per month, they will earn $20 every month as long as the customer continues their subscription.
Common Use:
- Common in SaaS (Software as a Service), membership sites, subscription boxes, or any service with a recurring billing cycle.
Pros:
- Long-Term Passive Income: The affiliate continues earning as long as the customer stays subscribed, offering a stable, recurring income stream.
- Incentivizes Quality Referrals: Affiliates may be motivated to refer customers who are likely to stay with the service long-term.
Cons:
- Customer Retention Dependent: The affiliate’s earnings are contingent on the customer continuing to use the service or product, so churn (cancellations) can impact recurring income.
- Payment Delays: Recurring commissions are often paid monthly or quarterly, which can delay earnings compared to one-time commissions.
Summary:
- One-Time Commission: Earned once per sale, no further commissions for repeat purchases (e.g., physical products, one-time software licenses).
- Recurring Commission: Earned continuously as long as the customer continues their subscription or recurring payment (e.g., SaaS, membership sites).
Recurring commissions often provide more long-term earning potential, while one-time commissions can offer faster payouts with less dependency on customer retention.
