epc (earning per click) and CLV (customer lifetime value) is what matters to the smart affiliate.
if 1 in 120 customers convert and the CLV is $100 that is better than
if 1 in 100 customers convert and the CLV is $64
from the affiliate's side
from the sponsors side he pays the affiliate a flat rate a rev-share % or a PPS.
in a PPS the CLV is what matters. What a sponsor (end-seller)
pays out has to be less than the
(CLV-(less fixed + production costs)) -retained gross profit margin
(CLV-COGS)= pre-tax gross profit per average customer acquisition
The more sales you get for 'free', without paying a sales commission (revshare), or an advertising cost, (CPC, network ads ...); the higher revshare percentage (or amount (PPS)) you can pay out for affiliate sales. Your own profit margin can subsidize the revshare rate to remain competitive in the marketplace.
The more slippage you have (or create) the lower your actual customer acquisition cost paid to affiliates is
