Affiliate marketing is a perfect opportunity for those who don’t see themselves in a 9-5 job. It’s a flexible and exciting way to earn money… and be your own boss. It often starts as a side hustle, and then quickly becomes your main source of income, and a full-time work-from-home kind of job.
But unlike most regular jobs it requires your own investment. When starting in affiliate marketing you need to invest both money and effort in learning and testing the available resources… but how much do you really need to spend before becoming successful?
How much does affiliate marketing actually cost?
To start in affiliate marketing, you need to start buying traffic. Actually, to start in affiliate marketing, you need to know what to do and how much it actually costs. Assuming you already know the basics of affiliate marketing, and now you’re wondering how much money you need to prepare… let me explain what costs to expect, and how big of a budget you actually need.
First, you need to sign up to an affiliate network and choose an offer. That part is free but requires research and preparation.
Additionally, different traffic networks might have more or less restrictive requirements for who they accept as advertisers. You might face occasional rejections that stretch the period of waiting before you start. That time, however, might be spent researching the market.
The next step is signing up to a traffic source. Here, the waiting period should be minimal and there normally aren’t any fees. Of course, you will have to make a deposit but that’s the money that will go towards your learning or even first earnings.
An offer, a traffic source, and a budget for testing are the only things that are absolutely essential to start your first campaigns. That’s why your first deposit, or the amount of money you are willing to initially invest, are very important to estimate correctly.
The budget that you’ll need depends on the offer that you choose. As a beginner, you should stay away from high payout offers, which might seem tempting due to their earning potential but are, in fact, very difficult to optimize to profitability. High payout offers require experience and big budgets so do leave them for later.
It’s recommended that you start with a low payout offer. If you’re unsure about the suitable vertical let me point you towards a Sweepstakes article that we’ve recently published. Surveys & Sweeps are inexpensive, easy to run and perfect for the learning period.
The optimal daily budget for testing amounts to $100, with the recommended testing period length being 3-5 days. That sort of budget should work for most low payout offers.
Affiliate Marketing Verticals — from cheapest to the most expensive
As we’ve mentioned above, your initial testing budget depends on the vertical you choose, what kinds of offers can be run with it, plus the competition. When it comes to offers, generally, the lower the payout the easier it is to score conversions. Also, simple, low payout offers don’t require expensive traffic to achieve results.
Of course, affiliate marketing can be very unpredictable. Sometimes it’s possible to become profitable quickly and with a small budget. Most of the time, however, affiliate marketing takes a lot of time and effort. In general, this is how we can categorize the affiliate marketing verticals:
Lower budget verticals:
- Surveys & Sweeps
- Lead Generation
- Pin Submit
Medium budget verticals:
- Mainstream VOD
- Mobile Downloads
Higher budget verticals:
- Nutra & Diet
Note that these brackets won’t always be true. Sometimes sweepstakes offers can be scaled from a low budget to a high budget with huge earning potential. Also, antivirus mobile campaigns run in Tier 3 GEOs can become rather cheap compared to the same campaign run in Tier 1 countries.
Should you spend money on affiliate marketing courses?
Affiliate marketing influencers and social media gurus offer plenty of paid courses for beginners. Some of them offer personal help, skype masterminds, or additional guides and industry content as well. The courses vary in length and revolve around different verticals, traffic sources, affiliate networks, and trackers. They can be a great way to start your affiliate marketing journey, offering exact step-by-step instructions that leave no room for unnecessary beginner mistakes.
But the truth is… one day you will have to take the reins and manage affiliate campaigns on your own. You can learn a lot using freely available resources such as affiliate marketing-related blogs and websites as well as various forums. It’s bound to take you longer and you will encounter plenty of different strategies and opinions but learning affiliate marketing on your own is definitely possible!
There are plenty of affiliate marketing tutorials on YouTube. Traffic sources often offer beginner friendly free resources, and super-affiliates have their own blogs, Facebook groups, Slack or Skype channels. The point is… you can learn a lot for free.
Forums can be especially helpful as they can give you access to a whole community of people at different experience levels, but facing the same problems as you do. Also, the most prominent affiliate marketing forums work on a subscription basis so you can treat them as your support group for as long as you need it. Opening follow alongs and sharing your daily or weekly progress with the community can give you some very good insights on how the best of the best run their campaigns.
How expensive are the additional affiliate marketing tools?
An affiliate network and a traffic source are essential to start in affiliate marketing. But there are additional tools that can come in handy sooner or later. Let me go over the usual set of extra affiliate marketing tools that become quite important the more advanced you get.
Affiliate Tracking Software
Tracking software is the most important out of the additional tools. It’s so important that we can even say it’s essential! You can start affiliate marketing without a tracker… but you definitely cannot optimize your campaigns without it. Affiliate tracking software allows you to gain access to granular data regarding your campaigns. And it’s impossible to scale your campaigns and optimize them correctly without that data.
Tracking lets you see exactly what components of your funnel work well and what needs to be paused or adjusted. The more complex your funnel is, the more essential tracking becomes. Managing various offers, landers, and creatives requires the use of tracking software. In general, the more campaigns you run, the more additional help you need. Also, the better you are at managing those campaigns, the more potential you have for scaling them into multiple digit profit numbers.
Affiliate Ad Trackers offer the widest range of plans. There are free plans available and they are definitely sufficient for beginner affiliates. However, the free plans tend to have limitations that become too restrictive once the affiliate starts scaling or expanding. The more advanced the tracking plan, the more expensive it becomes. The monthly prices start at $0 and can go up to $799. However, custom plans available for agencies can cost as much $20k per month.
The ultimate price you’re going to pay for an ad tracker depends on your specific needs and features that come with a given plan. Research, think what’s worth your money and what isn’t absolutely necessary just yet, and only then choose your subscription.
Spy tools allow you to take a look at how your competition runs their ads. By using tools such as Anstrex or Adplexity, you gain access to millions of ads and landing pages used by other affiliates. You can also see what has been around the longest, and what creatives have the most clicks. Spy tools allow you to filter the results by a wide range of criteria.
You can use a spy tool to steal or copy what your competition uses, but this is not the best idea. You should use it to check out what works and draw inspiration. If you see that a lot of the top performing landers include spin wheels, you shouldn’t copy the lander, you should remember that spin wheels are the way to go. Get inspired, create your own stuff, and fight the market saturation by running ads no user has ever seen before.
Spy tools also offer different options for various ad formats, verticals, and devices. You can buy a solo plan for one ad format, or a bundle plan for more. There are a few free options with limited databases, but the most prominent spy tools on the market are in the monthly price range of $49 to $249.
Landing page builders
Once you do your research by spying on the competition, you’ll have plenty of ideas to create your own landers. There are many lander building websites and tools. Their features range from very basic to highly advanced. Most of them let you build your lander from pre-existing elements which makes them accessible even to beginner affiliates. The options are nearly unlimited — dynamic text replacements, highly customizable layouts, tool integration and ease of use. Once you’re serious about making it in the world of affiliate marketing, landing page builders become extremely useful.
Lander builders can get equally complex. There are various plans on the market and their prices range from up to $25 per 6 months for the most basic plans to $637 for the most advanced plans. The more expensive plans usually have the most advanced features and unlimited hosting, landing pages, and custom domains which makes them primarily attractive to agencies and super-affiliates, rather than to people who are only starting.
Localization / Translation Services for Affiliates
Once you’ve spied a potentially money-making landing page and created your own version of it using a landing page builder, there should be only one more step remaining… What if you need to run that offer in a different country, where people speak a completely different language? Translation services usually charge for a quota of words, and unless you need a whole advertorial translated, it really shouldn’t be that expensive.
Translation via Google Translate might work for shorter texts but using a professional service will raise the credibility of your ads. There are plenty of good and cheap translation options. You can start with a free option though — seeking help in the community. If you need a couple of words or a CTA translated, the affiliate marketing community might be your best free shot.
Translation services like Transey or One Hour Translations usually charge below 10 cents per word for a quick and short translation. The prices depend on the chosen language and the type of text, however, unless you are going for a very specific and highly technical offer you should be charged the usual rate. Another option for translation is hiring a freelancer but here the prices are agreed on per translation.
Other costs might include things like landing pages server costs, advanced optimization tools, VPNs, bot-detecting tools, and various small payment fees. All these costs depend on your level of experience and the strategy of your affiliate campaigns. We won’t focus on them too much, though. They are minimal and not significant in comparison to traffic and tool costs.
How much money should you invest in affiliate marketing?
Tools range from the free ones, offering basic versions, to software that costs up to a few hundreds of dollars for advanced, multifunctional tools that will give you plenty of advantage over other affiliates. There is a wide variety of products available to match the needs of affiliates with every level of experience, so you just need to find whatever offer suits you best.
So, if you calculate the monthly costs of traffic with a daily budget of $100 you’ll get an approximate sum of $3000. Now we need to add the cost of tools depending on what options you choose. Going with the most basic AM tool versions, the additional costs would be no greater than $100. But if you choose to go for more advanced options, the tools, as well as the additional costs, should total around $500.
The tools offer such a wide range of prices that it’s impossible to determine exactly how much you need to invest. In general, your monthly cost will increase as you learn and expand. But don’t let that discourage you! As your experience and costs increase, so will your earnings.
Tip: Most of these tools allow the option of annual billing so if you decide to commit upfront you can get a significant discount.
How Much You Can Earn From Affiliate Marketing: Revenue vs. Profit
Realistically, in order to make a lot of money in affiliate marketing, you need to invest… a lot. The higher the revenue (which equals spend plus profits), the more potential for earnings. Also, affiliate networks often appreciate advertisers who can show a high and consistent revenue by giving them payout bumps or contacting them first to run a promising new offer.
Focusing on increasing revenue can be helpful in many ways. If you want to scale your profitable offers, the most logical thing to do is to increase your bids as well as your daily and monthly budgets, which equals increasing the revenue.
Additionally, you need to think about an ROI percentage that is realistic to keep. If you spend $100 every day with an average ROI of 20%, your daily profit will equal $20. If your daily spend reaches $1000 and your ROI stays the same, your daily profit will equal $200.
In short, focus on your revenue rather than profits! It might not be something you want to hear as a beginner but the bigger your budget is the higher your chances of becoming successful.
However, there is another, more detailed way to approach this. As an Affiliate Marketing Expert, Twinaxe, argues:
In the end you should always focus on profit and nothing else, neither ROI nor revenue/volume.
In a very simplified way when the ROI stays always the same the calculation is absolutely correct but mostly this doesn’t happen.
Reality tends to present different challenges, depending on campaign variables.
On low(er) volume campaigns, especially in low tier geos, you often run at much higher ROI.
When you scale or run in higher tier geos the ROI usually goes down but the additional revenue from the higher volume then compensates the lower ROI.
It always depends on the campaigns you are running if it’s better to focus on ROI or revenue/volume to increase the profit.
He agrees that scaling and optimizing for maximum volume is essential to reaching the highest profit, however that’s not what he’d recommend to beginners:
The typical beginner doesn’t go all-in from the very beginning and rather starts with lower volume campaigns in lower tier geos.
Such campaigns often run on higher ROI compared to high tier geos, the disadvantage however is that often you can’t really scale these campaigns for more volume.
When you already run the campaigns on maximum daily spend and just can’t scale towards more volume then it’s better to optimize towards higher ROI because then the ROI is the variable that can increase the profit.
He also mentions how this strategy applies to capped offers:
When you only have a cap of 50 or 100 conversions a day and you max it out already then scaling for more volume won’t help at all.
Then it’s also better to work with what you have already and try to optimize for a higher ROI for more profit.
Lastly, Twinaxe comments on when it’s a good time to focus on revenue over profits:
[focus on your revenue rather than profits] becomes true when you come to the point where you scale to high enough volume that the profit from higher revenue and lower ROI surpasses the profits from lower volume and higher ROI.
I am absolutely with you that often high volume on lower ROI brings more profit than low volume on higher ROI.
But for beginners it’s often easier to find good converting low volume campaigns than getting lower ROI campaigns running on high scale.
In other words, for a beginner it’s often easier to find 10 campaigns with $20 spend/day at 100% ROI than finding 10 campaigns with $100 spend/day at 20% ROI or 1 campaign with $1k spend/day with 20% ROI.
Optimizing your Affiliate Campaign Cash Flow
Your initial budget is spent. Your traffic source account balance is just a couple of dollars. You want to continue, but all your earnings sit in your affiliate network account, waiting until quality checks are done so that you can receive your payout.
When you are running an offer on a traffic source, the money goes into traffic and whatever you earn flows into a different account — the affiliate network. The network then holds onto your money while checking the quality of the lead (Are the subscribers active? Are they spending money?). After that process is done, your earnings can be paid out.
The money you earn during a pay period is released to you sooner or later depending on your deal with the affiliate network. If you prove your quality and reliability it’s possible to reach a point at which you get paid daily. Depending on how long you’ve worked with the network and how many valuable conversions you bring on a daily basis you will receive a shorter or longer pay frequency.
Affiliate networks also use the NetD (D = number of days) term in determining how often you get paid. Net7, net15, and net30 mean that you will get paid subsequently 7, 15, or 30 days after your pay period is done, e.g.: if your pay period is from 1st January to 31st January in the case of net7 you will get paid on the 7th of February.
Understanding pay periods is crucial in maintaining cash flow. As a beginner advertiser, you need to be prepared that your earned money won’t be immediately available. And that’s why you cannot rely on your initial capital to bring you endless profits.
Let’s say that your budget is $3000 to begin. You cannot invest the whole sum into testing traffic in the first couple of days. You need to remember to have enough funds to keep your campaign going until your earning can be withdrawn. So, if your payout frequency is net15, you need to spread that budget over the pay period + 15 days to maintain cash flow and continuance in running your campaigns.
Also, maintaining a good relationship with your affiliate network is very important because that’s what gets you more frequent payouts.
Managing expectations as a beginner in affiliate marketing
It’s best not to start affiliate marketing hoping to make quick and easy profits. It’s not a get rich quick scheme, it’s an actual job requiring skills and effort. Think about affiliate marketing as entrepreneurship rather than a miraculous investment that lets you make a lot of money out of nothing.
In a survey conducted on one of the community forums affiliates shared how much money they had to spend before becoming profitable. $0-500 USD had the biggest number of votes but overall the majority (63.7%) of respondents had over $500 spent before seeing their first green numbers.
Sometimes you will need a couple of hundred dollars to get the ball rolling but sometimes it will take a lot more before the profits start coming in. The important thing is to manage your expectations and prepare for those ups and downs. You might be able to make it work on a tight budget but this is not a given. You need a learning budget, skills, persistence, and a bit of luck. Then it’s only a matter of time before you start earning back the money you’ve put into testing.
In general, there is no set number of how much money you need to become successful in affiliate marketing. $3000 for traffic + $500 for additional tools is a solid monthly budget that should help you grow from a beginner to an intermediate level affiliate.
As the poll results from above clearly show each case is different. The price of tools ranges from free to extremely expensive and the more advanced you get the more budget you will need for the additional tools which, in turn, will contribute greatly to your higher earnings. It’s a self-propelling spinning wheel of costs and profits.
Traffic is the most important expense but it depends entirely on how much budget you have. All the rest is extremely helpful but not necessary. How much money do you need to have to start affiliate marketing? A couple of thousand dollars seems like a good starting budget. How much money experienced affiliates invest in traffic and tools on a monthly basis? Tens of thousands of dollars.
One thing you need to remember is that spending $100 on traffic and quitting because you lost most of it is how you miss out on a great opportunity. Affiliate marketing takes time and effort and once you’ve invested enough in the testing phase you will see that results do come and slowly you are making your way to bigger and bigger profits!