Avoid Web Hosting Affiliate Programs who offer Residual Income
One of the questions I get the most often on my best hosting affiliate programs post is “What’s the best hosting affiliate program with residual income?” I understand the appeal of collecting recurring commissions for a hosting referral but my answer is almost always: don’t, just don’t even bother.
If you’re not familiar with the hosting affiliate space, almost all of the big players offer one-time commissions with a standard 30-60 day lock-in period. What this means is you only get paid once for a referral as long as they stick around for 2-3 months.
The major benefit to this type of program is the commissions, you can easily see $100-$200+ payouts for a single referral. The downside is obviously that it’s only one-time, but that’s okay.. and here’s why:
Residual Income Hosting Commissions Are Low
A lot of smaller hosts offer residual income programs where you earn generally 10-15% (sometimes up to 30%) of a referred customers payments for the life of the customer.
Most hosts nowadays offer shared hosting from around $4 to $10 per month, with the bigger hosts getting more aggressive on pricing and sometimes going below $3/month including a free domain and other extras. A standard 10-15% commission will only get you somewhere between $0.40 and $1.50/month.
Hosting Companies Have Churn
Even if you’re fine with the $0.40-$1.50/mo commissions, most hosts have a fair amount of churn. This depends a lot on the quality of service and pricing, but a lot of hosting customers aren’t going to stick around long term. So while recurring commissions could appeal to people because they last for life, think about how many customers will actually stick around for life?
When you pick a residual income hosting affiliate the risk is on YOU. What I mean by that is, if the person doesn’t stick around long term, you’re going to be the one who loses out the most. With a one-time commission program that has a 30-60 day lock, you get paid after 2 or 3 months and can walk away. The risk is now fully on the hosting company to keep that customer around and earn their money back.
Your earn-back period is INSANE
To get the benefits of a recurring affiliate program in the hosting space your referrals need to stick around for a long time. Lets say the host you want to promote charges $10 per month and offers a 15% commission, that’s $1.50/mo in commission as long as they remain a customer. That’s $18/year (assuming the customer actually sticks around for a year).
Compared to a one-time commission from someone like Bluehost at $65, you’d need a customer to stick around for over 3.5 years with a $1.50/month recurring commission program just to make the same amount of money.
And note that I picked a ‘best case’ example there with a host that charges $10/month – Bluehost only charges $3.25/month with a free domain. If you had the choice between those two as a customer which would you pick?
Even if you pick the more expensive plan now, what happens in a year when you’re looking to save some money? You’re probably going to start looking at cheaper options.. right? Think like the customers you’re going to be referring.
Affiliate Programs don’t last forever
We saw this recently with both Arvixe and A Small Orange shutting down their affiliate programs. Even if you work hard and build up a ton of customers and are earning good money every single month, what happens when a host shuts down their affiliate program?
At any point in time, one of the recurring commission program owners can just decide it’s no longer worth running and shut it down. They keep the customers and you get stiffed on all future commissions.
This is why it’s important to look at the big picture when picking a program. If a one-time commission program decides to shut down, they usually give you 1-2 month warning about the cut off date to get referrals in – and any you refer before that date will get paid after they complete their lock-in period.
Don’t waste your time with residual income hosting affiliate programs
It’s just not worth the supposed rewards and high potential of heartache. If you adjust your focus to one-time programs but build in other ways to earn back long term you’re going to be a lot happier. Referring 100 customers at $1.50/month each over a period of say 6 months would earn you a nice $150/mo.. but for how long? Focusing that same effort on one-time programs, at 15-16 referrals per month you’d be looking at $6,500-$13,000+ at the end of 6 months.
You can take that money and re-invest it in new traffic – whether organic or paid, you could build up an email list and send them offers for other software/services and earn back way more. You could even email them out an offer after a year or two for another host with bigger discounts or more features and earn even more.
There are plenty of reasons to think long term but in a cut throat industry like web hosting you want to focus on the short term, get in, get your money and get out. Remove all the risk by completely avoiding the residual income hosting affiliate programs.