Use a flat fee when the event is a one-time action with a known value, like a lead, signup or closed deal. Use a revenue share when the customer pays you repeatedly or the order size varies a lot. A flat fee caps your cost; a percentage tracks the value the partner actually brought.
A founder comes to the commission question with a simple instinct: pay partners something when they bring a customer. The detail that trips people is whether that something is a dollar figure or a slice of what the customer pays. Both are common, both work, and each fails in a predictable place.
How does a flat fee behave?
A flat fee pays the same amount every time a defined event happens: a qualified lead, a trial signup, a closed deal. Say you pay $150 per new customer. If a partner sends 10 customers, you owe $1,500, whether those customers bought your cheapest plan or your most expensive.
That predictability is the point. You can forecast cost without knowing what plans customers pick, and partners can add up their earnings before they send a single link. It is easy to explain on a program page and easy to audit.
The weak spot is variance in what the customer is worth. If most customers spend $50 a month and a few spend $1,000, a $150 flat fee is rich for the first group and thin for the second. The partner who lands a large account has no incentive beyond the same $150, and the partner who sends a stream of small ones is paid well for low-value work. Over time you will notice that your best partners drift away from the product.
How does a revenue share behave?
A revenue share pays a percentage of what the customer pays. At 20% of payments, a customer paying $50 a month is worth $10 a month to the partner, and one paying $1,000 is worth $200. The partner is automatically rewarded for bringing better customers, and your cost tracks your income.
It also self-corrects. If a customer cancels in month two, you stop paying. If a customer upgrades, the partner earns more without anyone editing a contract.
The costs: it is harder to forecast, harder to explain in one line, and it extends your obligation. A 20% share for 12 months means you are accounting for a customer for a year after the sale. Refunds also matter more, since the commission moves with the payment. We cover that in how refunds and clawbacks should work.
How do the numbers compare side by side?
Take a subscription at $100 a month. Compare a $200 flat fee against 20% of payments for 12 months.
| Customer outcome | Flat $200 | 20% for 12 months |
|---|---|---|
| Cancels after 2 months | $200 | $40 |
| Stays 6 months | $200 | $120 |
| Stays 12 months or longer | $200 | $240 |
| Upgrades to $300 a month in month 4 | $200 | $60 + 9 x $60 = $600 |
The flat fee pays more for customers who leave and less for customers who grow. The percentage does the opposite. If you worry about low-quality signups, the percentage protects you. If you worry about partners disliking an unpredictable payout, the flat fee protects them. The answer depends on which problem you actually have.
When does a flat fee fit?
Choose a flat amount when the event itself is the product of the partner’s work and its value is roughly fixed.
- Lead passes, where you pay for a qualified introduction before any revenue exists.
- Deal registration, where the partner protects a deal the sales team will close, and a set fee is easier than splitting the contract value.
- Products with one price point or a narrow range of prices.
- Referral programs where the sender is a customer, not a professional, and a clean “$100 for each friend who joins” is the entire pitch.
The program types behind these are laid out in affiliate versus referral versus lead pass versus deal registration.
When does a revenue share fit?
Choose a percentage when the customer pays more than once, or when order values vary widely. Subscriptions with several plans, ecommerce with different basket sizes, and services billed by usage all fit. It is also the more natural choice when you want partners to care about retention, since they earn as long as the customer stays.
One caution: do not pick a percentage just because it looks sophisticated. If you sell one plan at one price, a percentage and a flat fee produce the same thing, and the flat fee is easier to read.
Can you mix the two?
Often that is the best answer. A simple hybrid: a flat $50 when a trial converts, plus 10% of payments for six months. The flat part rewards the partner promptly for the hard work of getting a customer to say yes. The percentage keeps them interested afterward and pays more for larger accounts.
In Affiliate Tabs, commissions are built from triggers, each saying that if a given event happens, a given amount is paid. A trigger can be a percentage of transactions or a flat amount per lead, signup or deal, and a program can hold several. The product page shows how they combine. The cost of a hybrid is complexity for partners, so write the offer in two sentences. If you cannot, the structure is probably too clever.
Where do timing and caps come in?
Two details change how either model feels. The first is when the commission is earned. A flat fee per signup pays for an action that may not turn into revenue, so many programs attach it to the first payment instead. That ties the fee to a customer who actually paid, and it makes the flat fee behave better against early refunds.
The second is a ceiling. Percentages on a very large account can produce a payout you did not picture when you set the rate. If a single customer could be worth tens of thousands of dollars in a year, decide whether you want to cap the commission per customer or per period, and say so in the terms before anyone signs a big deal. Partners dislike a cap they discover late far more than one they were told about. Neither model removes the need to think about the biggest case you can imagine, and a short worked example in your terms is usually enough.
How do you decide?
Ask three questions. Does the customer pay once or repeatedly? Is customer value roughly the same or widely different? Do your best partners work on volume or on large, hand-built deals? Repeated payments and variable value point to a percentage. One-time events and uniform value point to a flat fee. For anything in between, a hybrid is reasonable.
Whichever you choose, set the actual number by working backward from your margin, not by copying someone else. How to set commission rates partners respect covers that step.
Common questions
- Is a flat fee or a percentage better for affiliates?
- Neither wins on its own. Partners selling high-value or variable orders tend to prefer a percentage, because it scales. Partners sending leads or signups often prefer a flat amount, because it is predictable. Match the model to what the partner actually delivers.
- Can a program use both flat and percentage commissions?
- Yes. A common setup pays a flat amount for a signup or lead and a percentage of payments afterward. In Affiliate Tabs, a program can have several triggers, each paying on a different event, so both can sit in one program.
- Which model costs less to run?
- A flat fee is simpler to forecast, since cost equals customers times the fee. A percentage depends on what customers pay, so cost moves with revenue. Whichever you choose, confirm the cost per customer against what you spend through other channels.
- Do flat fees work for subscriptions?
- They can, if each new paying customer is worth roughly the same. They break down when plans range widely, since the partner earns the same for a $20 plan and a $2,000 one. In that case a percentage, or a flat fee that varies by plan, fits better.