How to estimate your affiliate marketing earnings

By | January 26, 2015

If you’re new to affiliate marketing as a whole, or new to a specific niche, you’re probably wondering how much money you could potentially make! You’ve come to the right place; in this article I’ll go in detail on how you can make the best estimation of your potential affiliate marketing earnings. To make your actual calculation, you can use our affiliate marketing estimation calculator.

The formula

The formula for your estimated affiliate earnings is:

Affiliate earnings =
(Page views x CTR% x Conversion rate%) x (100% – Cancellation%)) x (Sales price x Commission%)

 

Or simplified:

Affiliate earnings = Payable conversions  x  Sales price  x  commission%

What does it all mean?

Pageviews and impressions

If someone is viewing one of your webpages, this is counted as a pageview. A single person viewing 3 pages on your website results in 3 pageviews. You can find the amount of pageviews you’re getting using google analytics. A pageview isn’t necessarily also an impression. An impression is a pageview in which the page shows your affiliate link. Every pageview is an oppurtunity for your visitor to eventually turn into a sale.

CTR; click-through rate

The click-through rate, is a rate or percentage of pageviews that result in a click on your affiliate link. So the CTR% = (pageviews / clicks on your affiliate links)*100%.

Conversion rate

A conversion is an order that is placed (a sale) as a result of a person clicking on your affiliate link. Therefore, your Conversion Rate (%) = (clicks on your affiliate links / sales)*100%. If you’re joining an affiliate network, the historical conversion rate is often displayed for each advertiser.

Cancellation or return rate

Sadly, not all sales will be valid for a commission. If the customer returns the product, uses their money-back guarantee, or cancels the order before it’s shipped, you (and the affiliate advertiser) won’t get paid. The cancellation rate = ( cancelled orders / conversions) * 100. Some affiliate networks, like Zanox, will show this data for every advertiser on their platform.

Sales price

This is the most obvious one; how much the product you’re marketing is costs. For your calculations, use the average price of the product you’re selling.

Commision rate

The percentage of the sales price that’s rewarded to you, if the product or service is bought through your affiliate link. In most cases, this number is fixed. In others, this number goes up if you’re making a higher volume of sales.

EPC

EPC means the Earnings Per Click. This is calculated by dividing your affiliate earnings by the amount of clicks you’re getting on your affiliate links. The EPC value makes it easy to compare different affiliate programs, or even compare using an affiliate program to running Adsense instead. Affiliate networks might show the average EPC for specific programs they’re listing.

Example Affiliate Earnings calculation

Affiliate-earnings-samle-calculation

Example affiliate earnings calculation.

To make a good estimation, always go by known data for all of your variables. If you don’t have any data on a specific niche, you’ll have to do some Google searches to get a better idea.

Here’s an example of a calculation:

Let’s say your affiliate website gets 10,000 pageviews per month, of which all contain affiliate links. This means all pageviews are also impressions.

Let’s say 10% of the pageviews result in a click-through, and 5% of the click-throughts result in a sale of a $150 product, on which you’ll get a 6% commission. Ten percent of those sales are returned or cancelled. These numbers are all based on what I’ve seen in one of my niches, and all very all reasonable numbers for a niche affiliate site.

Plug those numbers into the calculator, and you’ll find out you’ll be making $405 from your website every month, by making 45 sales sales for which you get paid, and earn an average of $0.405 for every click on an affiliate link (EPC). Not bad.

Want to try it out yourself? Go to the calculator.

2 thoughts on “How to estimate your affiliate marketing earnings

  1. Darren

    This is great information! I’ve just recently started out in affiliate marketing and it’s handy to get an idea of potential earnings depending on traffic numbers. Gives me something to aim at and look forward to. Thanks for the post.

    Reply
  2. Peggy Menke

    Hello, Guido. I have always been confused about this process. Thank you so much for spelling it out for me. Now I understand a little more about the conversion rates. Thanks!

    Reply

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