Payment threshold

What Is a Payment Threshold?

A payment threshold is the amount of revenue that must be generated by an affiliate’s sales before the affiliate receives a commission. This threshold can be different depending on the campaign. For example, you might have a $50 payment threshold for one campaign and a $100 payment threshold for another. This threshold is set by the retailer, not the affiliate. Retailers have every right to set this threshold because they are paying the affiliate for their sales. The retailer wants to make sure the affiliates are being compensated according to the terms of the affiliate marketing agreement. Affiliate marketers usually receive a commission based on a percentage of the sale price. For example, if an affiliate’s percentage is 50% and the sale price is $100, the affiliate would receive $50. If a payment threshold is set at $50, the affiliate wouldn’t receive any commission until the sale total reached $50.

Why Does a Payment Threshold Matter?

Affiliate marketers are likely to become your brand advocates when you provide them with the opportunity to earn a higher commission. This is especially true when you set the payment threshold at a number that is attainable. Affiliates are more likely to work hard to hit the payment threshold if their efforts lead to a substantial monetary reward. If the payment threshold is set too high, affiliates may think twice about promoting your brand. They may feel discouraged or may not even try if they feel that they won’t receive any commission.

How to Determine Your Affiliate Marketing Payment Threshold

First, determine the average sale amount of your product or service. For example, an average sale amount for an eCommerce product could be $50. Next, determine the percentage of the sale amount an affiliate receives as commission. In this example, affiliates receive 50% of the sale amount. Finally, plug the numbers into this formula: average sale amount x percentage = payment threshold. In this example, $50 x 50% = $25. There are affiliate networks that offer pre-made payment threshold recommendations.