Recurring Commission

Recurring Commission Models

Recurring commissions pay affiliates continuously as long as referred customers remain subscribed. Rather than a one-time commission paid at conversion, the affiliate earns a monthly percentage of the customer's subscription fee.

Because the payout continues only while the account stays active, recurring commissions strongly incentivize affiliates to focus on customer fit and retention rather than raw signup volume.

A Worked Example

Take an affiliate who refers a customer paying $100 per month under a 10% recurring commission:

• The affiliate earns $10 per month for as long as the customer stays subscribed.
• Across a 12-month customer lifetime, that is $120 in total commission.
• The same referral under a one-time model would pay $10 and nothing more.

Recurring vs. One-Time Commissions

One-time commissions encourage a volume focus: acquire as many customers as possible, with customer quality treated as less important. Recurring commissions encourage a quality focus, because better-fit customers stay longer and generate higher lifetime value for the affiliate.

Consider an affiliate deciding between promoting to ideal customers or to marginal fits over a 12-month period:

• 10 good-fit customers (90% retention, 12-month lifetime) generate 10 x $100 x 10% x 12 = $1,200 in recurring commission.
• 50 marginal-fit customers (40% retention, 4.8-month average lifetime) generate 50 x $100 x 10% x 4.8 = $2,400 in one-time commission.

While the one-time model appears better in the short term, the recurring model aligns the affiliate's long-term incentives with the company's success.

Setting a Sustainable Rate

Calculate sustainable recurring rates before publishing them. If customer LTV is $1,200, gross margin is 70%, and the CAC budget is 30% of LTV, the maximum sustainable recurring commission is 21% of MRR over the customer lifetime.

Rates above that level become unprofitable at scale. Most B2B SaaS programs settle on 5% to 15% recurring commission.

Implementing Recurring Commission

Once the rate is set, the operational details determine whether the model holds up:

• Automate recurring commission calculation inside your tracking platform.
• Implement clawback policies for refunds and cancellations. When a customer cancels, future recurring commissions stop and prior commissions may be reversed depending on the agreement.
• Monitor affiliate satisfaction with the model, since some partners prefer guaranteed one-time income.
• Consider a hybrid: a larger one-time payment plus a smaller recurring commission balances security with incentives.
• Structure recurring commissions with a cap, for example paying the first 12 months or until customer lifetime value reaches $2,000, then stopping.

A cap gives affiliates a reasonable payoff while keeping program costs under control.