Affiliate Website Mathematics
Affiliate websites are websites that promote other people’s products and get paid a commission on the sale of those products. The biggest example is Amazon affiliate sites where people review products and then customers click on anchor links in their articles and make purchases on Amazon.
Here is what it takes to calculate earnings.
Average Order Value
A customer types in a keyword or phrase in Google that is related to a product: Best Cordless Drills
You’ve done an excellent job doing SEO and driving traffic to your website, so your article on it pops up first. You get 1,000 impressions per month.
Google Click Through Rate
The percentage of those 1,000 people who click through onto your website onto Google gives you your click through rate.
Affiliate Page Click Through Rate
The people go to your affiliate site page, and they have an opportunity to click on your call to action. It might be a button called “Check the Best Price on Amazon,” or it might be a button, “Go Here to Find the Best Price on a Cordless Drill.”
The percentage of people who click that link determine your affiliate click through rate.
Once they get to Amazon, a certain percentage of people are going to convert into buyers. That percentage is your conversion rate.
Average Order Size
How much do those who have clicked through and converted spent on average? People will have different order sizes because they’re buying different kinds of products. That order size is influenced by what your affiliate page is attempting to sell but it is not wholly dependent on that product.
Somebody buys a drill, but then they buy a drill bit. Another person buys two drills. Another person buys two drills, drill bits, and a TV.
This will all be calculated to give you an average order size.
The last part of the equation is your commission rates which vary wildly depending on what and who you’re working with.
Amazon commission rates vary from 0% to 8%.
If you’re selling digital products like video courses or software, rates can be as high as 75%.
It All Starts with Google
If you multiply those factors together, you end up with earnings. That earnings started at the initial keyword search in Google.
To calculate your earnings, you would need to know all potential keywords that are driving traffic to your sites.
That might sound complicated if it’s the first time that you’ve heard this. There is a lot of opportunity in this equation, though.
You can increase the Google impression rate.
You can increase the click through rates on your own affiliate page.
You can influence the retailer conversion rate.
Commissions can be can be negotiated, in many cases.
There’s opportunity for improvements across that equation.
With this knowledge, you can begin to get creative about how you do that.