Profitable Affiliate Business Models

The world of affiliate business models can be complex & coming into the industry to choose what is right for you can be a minefield. You are new, inexperienced and not really quite sure which way to turn for the best long term business. There are not only different business models but different payout models and different team structure models & combining the 3 can be confusing in the least.

So, before you start there are a number of questions you need to answer.
* Your initial level of investment?
* The amount of time you have to devote to your business
* Online or offline (bit of a no brainer really but never the less some people prefer offline)
* Do you want to be buying/holding stock/inventory?
* Are you looking for one off top tier or regular small commissions?

There are really 3 major business models to look at:

Affiliate Business Models paying smaller but regular recurring commissions. (Also referred to as residual income)

An example of this would be a business where the affiliate is paid a commission on the initial sale and on subsequent sales and renewals thereafter. So, it might be that this is a monthly product being shipped or it might be for a monthly membership after the initial sale. However, the success of this method very much depends on the monthly renewal as once this is cancelled then the commission goes with it. The levels of commission tend to be low as monthly shipments of vitamins or whatever the product may be are usually low cost - so, it is going to take a lot of effort and a lot of sales to create a significant monthly income.

But if growth remains steady over time then a significant residual income can be achieved. If the downline members remain constant in numbers or in growth then the residual income grows too. This business model relies on recruiting a downline and that in its self takes time, money and energy. Your higher levels of income only start to kick in once your downline starts producing. This model was once the gold standard but here in 2010 with the internet and all that it provides with technology and leverage is becoming outdated.

Affiliate Business Models paying a one time commission with low cost items
In this business model the affiliate gets paid once usually a fixed amount or a percentage of the cost of the item or service. Probably the least enticing of all the models as you get paid just the once and often this is not very much. However, this is a very common business model in affiliate marketing and given time it can be a profitable & stable business model once the affiliate is established and recognised. However, it can mean that if you sell a recurring service to the same person that you still only get paid once for the original sale as there is no residual income element.

Affiliate Business Models paying Top Tier Commissions
These are sometimes referred to as 'high ticket' items and in the world of affiliate marketing this business model is the one that creates 6 and 7 figure earners in a short period of time. This is the new business model for 2010 and it is often referred to as GPT (Get Paid Today) Think about it, if you can earn $1,000+ per sale then it does not take many sales to make a very decent income and it often takes far less effort to earn 6 figures using this model than either of the 2 above & far less effort to maintain.

You need to sell much lower volumes to make far more money. However, for some people a downside to this type of model is that the initial buy in costs tend to be much higher than the low cost options discussed above. But, look at it this way how much do you spend per year or over a lifetime buying the regular shipments of the low cost items compared to a one off purchase of top tier? Another aspect to consider is that you get paid immediately the high level of commission not in monthly small amounts where you can run the risk of the order being cancelled just a few months down the line.

The most successful models being used today are those which combine the Top Tier commissions with an element of residual income as this means that 6 or even 7 figure incomes can be realised in a relatively short period of time without needing a downline BUT over time as a downline is created there is also an element of residual income and this pushes the income level to even higher planes.

Brigitte Mehr is a top Internet Marketing Trainer & Coach, she specialises in personal branding. Learn more about her at http://www.brigittemehr.com Sign up to find out more about her unique training at http://www.marketingforonlinesuccess.com/?t=ezines Article Source: http://EzineArticles.com/?expert=Brigitte_Mehr