Aren’t Amazon’s Advertising Fees Too Low To Make A Reasonable Income?

This post may contain affiliate links for products I recommend. If you click a link and buy something I may receive some compensation. This does not change the price you would pay.

amazon fees shockWhen you go to a forum such as the Warrior’s forum you find talk bemoaning the low commission percentage you get paid by Amazon. It pays between 4% and 8% of sale price of the product.

When you compare it to what you can get for promoting a digital product where it can be 50% to even a 100%. On the face of it does look fairly paltry.

When I’ve looked at other physical products retailers I’ve not found any that pay over 10% for affiliate commissions, there will be some but do they have Amazon’s reputation.

Having said that it is possible to do this for workout DVDs, supplements, makeup, As Seen On TV products and the like. But these don’t tend to be online retailers like Amazon but smaller specialist stores that sell products at a high margin.

Amazon has some products where you can only get 2.0 % (Televisions) no matter how many items you sell.

The majority of products start at 4% (sales of 6 or less items) and build up to 8.5% when you sell 3131 items or more on all items sold that aren’t on a fixed commission. The fixed commission products are counted in the number of items to establish your level of commission.

I’ve only ever achieved 7% when my total sales was over 110 items.

It is low but is it too low?

Looking at just the commission rate misses out some of the positives of being an Amazon Affiliate that help.

Amazon has a number of positives that you don’t get with selling digital products or the direct sellers of products.

Amazon is well trusted brand by many people. It has a wide range of products and has a way of getting people to buy more with their suggestions after you add something to your shopping cart.

This factors help to make the job of converting visitors to buyers easier. They have more trust in Amazon so they aren’t as suspicious and on guard as they are with a retailer they don’t know or doesn’t have the reputation that Amazon has.

This does lower the barrier to how good you need to be at getting your point across and requires less “selling” that where the visitor has to be convinced the merchant is reputable and isn’t a scam.

Also, it they don’t buy the product that they clicked on there is plenty of other options there that they might buy instead (you could send them there for a $0.99 cent Kindle book and they could end up buying an item for $350 (at 4% commission you earn $14) or more items with the 24 hour cookie. It doesn’t happen all the time but not a bad commission percentage!

There are other factors to look at in deciding whether it is a good business model other than the commission rate – there is skill and effort involved per sale (skills can be developed but take time) – return on effort, cost per sale and value per visitor.

To give an example of this comparing two different offers – one a non-Amazon offer and the other Amazon – a hypothetical example;

Site 1 – non Amazon – commission $50 per sale. 1000 visitors come to the site and 2% click on the link. Of the 20 visitors that go across to the site 5% buy or 1 in 20. Giving a total commission of $50 per 1000 visitors or $0.05 per visitor

Site 2 – Amazon site – commission $5 per sale. Also 1000 visitors come to the site and 25% click link to go to Amaozn. Of 250 visitors 5% buy something. This gives 12.5 visitors at $5 per sales giving revenue of $62.50 or $0.625 per visitor.

These examples (hypothetical) show that revenue is not just to do with commission but is also to do with conversions on site as well as on the merchants site.

As well as revenue you need to consider how much costs to get visitors to the site, cost of the content etc and also time invested to do this (which could put a value on as well).

With many of the higher commission affiliate offers you do need to be good at paid adverts, email lists, link building and sales funnels to be successful – more so I think than with Amazon selling physical products in general – less objections to overcome with a big plus of Amazon.

To develop an Amazon affiliate business you don’t need those skills as evidenced by the 2 successful examples below – you do need to have writing , niche selection and keywords on page SEO and some social media skills. From my perspective these are easier to learn.

It is possible to earn a good income too. There are 2 people I know of that have shown their Amazon Affiliates earning report summaries – Lesley Stevens of Pajama Affiliates earned in December – $52,907.72 and Erica Stone earned an income from her Amazon sites of $11,317.92 in one month (month not shown) and a good income in other months too.

I’ve earned $2,062.95 in January using Erica’s Extreme Review/Straight Line approach to Amazon review sites.

However, as with all internet marketing businesses there are people who make good money from it and the many that struggle to get it to work for them. It’s just the way it is – whether you are an affiliate or create info products, write Kindle books, do local SEO, sell T-shirts, sell on Ebay and so on.

So, the Amazon commission percentage may be low (comparatively) but not so low that you can’t make an income from it that is reasonable in exchange for the effort put in. It is about persevering and learning the skills so you get good at it that you have people finding your site, being engaged, clicking on your links and buying something at Amazon. I’m still learning.

What is your opinion on Amazon commissions? Have you had any success or otherwise with it?

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