There are a number of ways in which you can earn money as an affiliate; it all depends on the affiliate program you have signed up for and what it offers. There are three basic methods of payment: cost per acquisition otherwise known as CPA, profit-sharing where you get a percentage of sales made from your referrals, pay-per-lead and finally, pay-per-click. You'll find that while some programs offer you a variety of payment methods, others will only have one available. That is when you have to decide what will produce the most money for you.
Which payment arrangement yields the most profit depends on the industry as well as the particular affiliate program. Almost always, branding will have a large impact on your overall revenue, regardless of industry. It's the idea of brand names standing for good quality and trustworthiness that makes sales easier and thus, increases your revenue. Here is a more in-depth description of each payment arrangement:
This is by far the most widely used payment arrangement in the affiliate business, where you get a percentage of all sales that are made as a result of your referred traffic to the merchant site. The merchant makes a decision to either pay you on the NET or GROSS revenue generated. The latter is a much better deal for the affiliate, as your percentage is calculated prior to various deductions being made which yields the net revenue.
Cost per Acquisition (CPA)
CPA is the second most popular method of payment. You are paid a set amount for each customer you refer to the merchant site that makes a minimum purchase. Most programs base the CPA rates on the number of customers you refer; the more customers you send, the more each customer is worth.
Pay Per Click (PPC)
This is probably one of the least employed methods of payment in affiliate programs. As the name suggests, you get paid for every click sent to the merchant site. Regardless of whether the person you refer deposits, purchases or fills out a form, you can count on getting paid for every single click using the affiliate code. Knowing the pay per click, the click through rate on your banners as well as the traffic that your site receives, you can make a fairly reliable estimation on what your monthly earnings will be.
Cost Per Lead
CPL is very similar to CPA with the exception being that your referred individuals don't have to make any purchases in order for you to get paid. All that your referred traffic has to do is fill out some kind of form or download and install a piece of software. The pay per lead is less than that per acquisition as a customer is much more valuable than a speculator.