Originally Posted by pgmorin

Hello,

I'm starting to look at the best way to share income with affiliates and I really dont get how the PPS work.

I have see those 75/100$ PPS and for me it make no sense or I'm missing something. I take my case for exemple. I plan to sell membership at 19.95 and rebill at 14.95 till I get more content to raise the price. If I give a PPS of 75$ that mean the customer have to stay 5 month on my website to break even.

5 month mean I gonna have to produce 20 x 10 minutes videos, and 25 galleries update for free for that affiliate customer before I start to make money.

Also there the problem with the cash flow if I get 4000 customer send by 75$ PPS affilitates that mean I gonna have to take 300 000$ dollars out of my cash flow and that money wont be making interest for me.

Most the customer from the stats I have see arround wont stay 5 month on the same website. They will leave after 2-3 month and come back later when there is new content.

So website owner how do you menage to make money when you do those kind of pps?

Thanks!

Originally Posted by BillPMB

ALL pps programs shave. Wake up and smell the coffee. Just do the math.

Variables

Number of Signups 500
Trial $2.95
Regular $39.95
PPS $35.00
% of Referred Signups 85%
Fixed Expenses $20,000.00

Monthly Retention Levels
Trial to Full 40%
Month 2 28%
Month 3 17%
Month 4 10%
Month 5 5%


Month 1
Initial $45,208.75
Recurring $244,893.50
Additional Income $31,546.88
Advertising Expenses $(455,918.75)
Processing Expenses $(72,147.04)
Fixed Expenses $(20,000.00)
Profit $(226,416.66)


At 500 signups per day paying $35 per signup billing $39.95 per monthly membership with fixed expenses at 20 grand a month for hosting, content, employees, etc with a chargeback ratio of 1% and billing fees at 10% a pay per signup program is almost a quarter mil in the hole at month 1 of the start of measurement. That's with a 40% trial to regular member conversion which is probably a fair number in surfing some of the member areas out there to see what is what.

That is at an 85% shave, where 15% of the incoming sales aren't reported or credited to the webmaster. At this rate of shave, the program starts making money at month 5 and actually starts doing ok thereafter.

If a program were not shaving at all, using just the income derived from the signups. No cross selling, upselling, NADA. Then at month 5 they would be 20 grand in the black for THAT MONTH, but still be over a half million in the red from the previous 4 months.

Now, if there were some method of only allowing your traffic to leave your sites when there were green lights at the intersections, then you'd have it licked.

BTW, if you'd like to know the point where you could start a PPS program and make money right out of the gate the shave % would be 42% . Where 58% of the incoming signups are not counted, credited or reported/paid.

42% would probably be the "weasel factor"