Built for recurring revenue. Model what an affiliate actually earns over a customer lifetime, what that customer costs you to acquire, and how long it takes to pay back.
$493.75
per customer referred, over the full commission window
$1,086.25
gross margin per referred customer after commission
Referred customers per month
25
Channel MRR at month 12
$19.1K
Average customer lifetime
25.0 months
Net kept over 12 months
$73.5K
After commission, margin, and software
Every month adds a new cohort while earlier ones keep paying, so a recurring program compounds rather than resetting.
At 25% you pay $493.75 to acquire a customer worth $1,975.00, keeping $1,086.25 in gross margin. That is a 3.2x return on commission spend, and the affiliate earns enough per referral to keep promoting you rather than a competitor.
The same program at different rates, using your price, churn, and commission window. Rates above your gross margin are flagged because they lose money on every referral.
| Rate | Affiliate earns | You keep | LTV to cost |
|---|---|---|---|
| 10% | $197.50 | $1,382.50 | 8.0x |
| 15% | $296.25 | $1,283.75 | 5.3x |
| 20% | $395.00 | $1,185.00 | 4.0x |
| 25%Yours | $493.75 | $1,086.25 | 3.2x |
| 30% | $592.50 | $987.50 | 2.7x |
| 40% | $790.00 | $790.00 | 2.0x |
| 50% | $987.50 | $592.50 | 1.6x |
Most affiliate calculators were built for ecommerce, where a sale happens once and the commission is settled immediately. Point one at a subscription and it will tell you that a 79 dollar per month plan with a 25 percent commission costs you 19.75 dollars per customer. That figure is only correct if every customer cancels after a single month.
In reality the customer keeps paying, and depending on how you structure the program the affiliate may keep earning. At 4 percent monthly churn that same customer stays about 25 months and pays close to 1,975 dollars. A lifetime recurring commission on that customer is not 19.75 dollars, it is roughly 494. The number a one time calculator gives you is off by a factor of twenty five.
This matters in both directions. Underestimating commission cost means budgeting for a program you cannot afford. Underestimating affiliate earnings means advertising a rate that looks unattractive next to competitors who quote lifetime value, and wondering why good partners do not sign up. This calculator models the commission window and churn explicitly so both numbers are the ones you will actually see.
The rate gets all the attention, but the window you pay it over changes the economics far more. Here is how the three common structures behave.
The affiliate earns a share of every payment for as long as the customer stays. Costs scale with the value the customer actually delivers, so the channel can never become unprofitable on a per customer basis provided the rate sits below your gross margin.
Best when: You want serious partners who will invest in content and keep promoting you for years.
Watch out for: Commission becomes a permanent line in your cost base, so model it against margin rather than revenue.
The affiliate earns on a fixed window, commonly twelve months, then payments stop while the customer continues. This caps your exposure while still paying enough to be worth an affiliate's effort.
Best when: You need predictable acquisition costs and want commission to stop once a customer has paid back.
Watch out for: Partners may prioritise competitors offering lifetime terms, so the rate usually has to be higher to compensate.
A single commission on the initial charge. Simple to administer and cheap, but it pays an affiliate roughly the same for a customer who stays three years as for one who cancels immediately.
Best when: High ticket annual plans where the first payment is already substantial.
Watch out for: On low priced monthly plans the payout is often too small to attract anyone serious, and it rewards volume over quality.
Rates track gross margin more than anything else. Software can afford generous commissions because the marginal cost of another customer is close to zero, while anything with physical goods or heavy support cannot.
High margin and recurring revenue support generous rates, especially on lifetime structures.
Near zero marginal cost and no ongoing support means most of the price can be shared.
Competitive marketplaces push rates up, since affiliates choose between similar products.
Thinner margins and real delivery costs keep rates low, usually paid on the platform fee only.
The only hard rule is that your rate must sit below your gross margin, otherwise every referral loses money. Within that, SaaS programs typically land between 20 and 30 percent, and digital products go higher because their margins allow it. Use the rate comparison table above, which recalculates against your own price, churn, and commission window rather than a generic average.
Lifetime attracts better partners because it turns referrals into an income stream worth investing in, and it is safe as long as your rate stays under your gross margin. Time limited caps your exposure and makes acquisition cost predictable, but you usually have to offer a higher rate to stay competitive. Twelve months is the most common compromise.
Churn determines how many payments a customer makes, which sets both their lifetime value and, on recurring structures, the total commission you pay. At 2 percent monthly churn the average customer pays for 50 months. At 8 percent they pay for around 12. Same price and same rate, but the commission per customer differs by a factor of four.
Marketers usually target at least 3x against total acquisition cost. Affiliate commission is generally more efficient than paid advertising because you only pay on a completed sale, so ratios of 3x to 5x are common and healthy. Below 2x the channel is fragile, since a small rise in churn or refunds can wipe out the margin.
Most programs pay on net revenue, meaning after refunds, chargebacks, discounts, and sometimes payment processing fees. State this clearly in your terms, because paying on gross while your terms imply net is one of the most common sources of affiliate disputes. Whichever you choose, apply it consistently and show the calculation in the partner dashboard.
Thirty to ninety days covers most SaaS buying cycles, with 60 days being the common default. Longer windows attribute more sales to affiliates, which raises cost but also makes the program more attractive to partners creating content that converts slowly. For products with long evaluation periods, a shorter window will quietly undercount the channel's real contribution.
Yes, and the simplest way is to fold them into your gross margin figure rather than treating them separately. If Stripe takes roughly 3 percent and your infrastructure and support cost 17 percent, enter 80 percent as gross margin. The calculator then measures commission against what you actually keep.
Affiliate commission is paid only after a sale completes, so there is no spend on traffic that never converts. The effective cost per acquisition shown above is directly comparable to a paid CAC, with the difference that affiliate cost scales with results while ad spend is committed upfront. Referred customers also tend to churn less, because they arrive through a recommendation rather than an interruption.
Arkvon handles recurring commission tracking, per partner rates, and payouts on top of Stripe. Your affiliates see exactly what they earn as customers keep paying, which is what keeps good partners promoting you.
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