Maybe I'm stupid, but why don't rebills make reasonable recurring charges?
- Thread starter Cracker
- Start date
Do the math. You are paying 40-45 dollars a sale to affiliates or a network. The product costs a couple bucks and it costs a couple more bucks to ship said product. Only about 60% hit the day 14 billing and your refund/void/chargebacks are a total of something like 15-20%. Now after doing the math ask yourself what is a reasonable profitable rebill price.
Exactly ! Even with the current rebill charges the margins aren't as high as you the affiliate would assume the advertisers are getting .
About decreasing affiliates payout , problem with that is getting affiliates interested in taking that lower payout or waiting for their payouts , affiliates want their cash fast , simple as that .
Would you join a nett 90 affiliate network or weekly nett0 affiliate network ?
IMO I prefer having a more stable income, and not just making a load of money in one go, unless its a huge amount. Like if I could choose from say $5k a month, or like $50k in one go, I'd go for the $5k a month.
No man its because people will refuse the charge even if it was $10 as they feel more often than not that the benefits were minimal to nothing from the product. So that being the case and the charge will be disputed either way why not make it $180 instead of $30.
That's what I'd assume. At the very least, that's what the advertiser believes the customer will do, so that's why they figure they might as well charge 2 bills and at least get 1 payment. Average customer thinks they're paying a one-time $5 shipping fee and getting the shit for free so when the bank calls and says "is this $xx charge yours" they'll say no because they don't know what the fuck it is.
I think the main thing is that the customer doesn't know they're getting charged at all. So you could charge 1 cent and they'd still be like "uhh I didn't buy this ..."
Wrong. You need to keep your chargebacks below a certain %, this % is usually around 1-3%. You go over that and you are risking getting your account shut down. When your account gets shut down that means you can't bill any more of those people that you are relying on to bill to make any money unless you have more accounts or mids and they arent shut down yet. Often times advertisers end up losing huge sums of money even if the campaign has been going on for months because they are putting that money right back into advertising and getting more customers. The difference between a 30 charge and a 180 charge is huge and it's downright laughable that anyone would think that it wouldent make a difference and would be disputed either way. That 180 dollar charge is like 10 times more likely to get charged back then the 30 is. Also show me an advertiser that is still doing $150+ negative option billing because that shit is getting pretty damn rare. 60-95 is standard right now.
No. This is not how it works. First of all the bank is not going to call a customer and ask them "is this $xx charge yours". The customer has to call the bank and start the chargeback process, it usually involves them signing an affidavit claiming the charge was wrong. Customers will not dispute 1 cent, customers will not dispute a few dollars. It gets increasingly likely they will dispute the higher you go but anything over 100 bucks makes it a lot more likely.
People underestimate how risky it is to be an advertiser and overestimate how much money they make. You could be charging 90 dollars a month after a 14 day trial and the average advetiser is probably only making like a 50-90% ROI after like three months and it is a hell of a lot more risky. You have a good campaign going and you can make that same ROI in a day or a couple days with high spending and you are not having to deal with even half the stuff an advertiser has to deal with on a daily basis.
I often get calls from my bank if I buy something online from a no-name site. I've had them call me for charges as little as $30 ... if I say no I didn't buy that, they cancel the charge and I never hear about it again. I only once had to fill out paperwork and that was when someone stole my personal credit card and spent $9000 at Fry's ... but it was still pretty easy, they called me before I even noticed it, sent me some paperwork and I sent it back and got all the money back.
You're obviously right in that a $180 charge has a higher chance of being canceled than a $30 charge but that goes back to the original question of why not just charge $30 then? It would take just a marginal amount of testing to find out what the optimal price is that won't get charged back.
Not sure how often that thing happens with the bank, I've never had it happen to me and hearing from my cs reps and looking over support tickets and emails it doesent seem like that happens too often, usually they see the charge and have to contact the bank.
The original question as to why they don't just charge 30 was answered by me earlier in the thread. Average 14 day trial to rebill success rate is around 55-65%. Average advertiser cost per customer is around $40 bucks. You will not make a profit at $30. You will not make a profit at 50 dollars without a good upsell path.
What would you consider the optimal price? Let me try to break it down a bit for you and then you can answer the question yourself.
Just for the heck of it I will go ahead and give you and others a pretty close to real example so you can tell me what you think would be a good rebill price would be and why 30 or 40 dollars does not work.
Our product, packaging, and material costs 3 dollars each. It costs 2 dollars to ship. Lets say you are doing your own fulfillment (You are printing labels, tossing it in a box and sending it out) so we have a total of 5 dollars cost to ship every product out. We are paying an affiliate or a network $40 for every sale they send. We are charging $1.95 shipping for the trial order and billing $X amount after day 14, and every month after that until cancel.
Lets say we do 1000 sales. Right off the bat that is going to cost $45,000 for the product and affiliate/network commissions. Industry average says that about 60% of your orders will hit day 14 billing, and about 40% of those 60 will hit day 45 and so on. About 17% of your transactions are going to be refunded or chargedback (15% refund, 2% cb). You are also paying about 2% on all transactions for the processing and 10% gets put in a reserve account that is not released to you for about 180 days.
So plugging in all these numbers (Pretty average across the board) what do we get assuming we do all 1000 sales in one day (We also shell out the 45k on day 1 it costs to buy these sales and the cost of product), with refunds taking place right away (They will be spread out over the course of a few months but in the end it comes out the same anyway)
1000 sales $50 rebill:
Day 1 (1000 hit for the 1.95 shipping): $-42,418
Day 14 (650 hit): $-19,210 -45% ROI
Day 45 (248 hit): $-11,708 -28% ROI
Day 75 (94 hit): $-8,865 -21% ROI
-Skip until Day 195 when your 10% reserve comes in and you are no longer making any money-
Day 195: $-3,717 -9% ROI
So... running a rebill that hits for $50 on day 14 and continues to hit for 50 every month after actually causes you to lose money, not to mention all the time that you have put into this thing. So are you going to run your rebill at 50?
Lets try the more reasonable... 85..
1000 sales $85 rebill.
Day 1 (1000 hit for the 1.95 shipping): $-42,418
Day 14 (650 hit): $-2,717 -6% ROI
Day 45 (248 hit): $11,078 25% ROI
Day 75 (94 hit): $16,306 38% ROI
-Skipping to 195 again-
Day 195: $25,074 59% ROI
These numbers take into account cost of the average rebill product, cost of the sale, cost of the average merchant account and fees, and about average success, refund, chargeback rates etc. They might be a little off give or take a couple % points but hey this is pretty damn close to what you can expect and who else is going to break it down for you like that for free. This also does not take into effect any upsells after the initial sale that you may offer the customer. Also, the chances are pretty high that your merch account could get shutdown or audited or held up where you can't process anymore transactions, and since you have already paid for these sales ahead of time there is a high risk that you could very easily Lose A Lot of money. Not to mention the very many hours you will need to put in to get even close to These numbers I just put out there. 30 dollars is not reasonable. 50 dollars is not reasonable. Get above 80 and it starts to become Reasonable.
Oh if you are promoting your own product and it doesn't cost $40 per customer then your mileage will obviously vary but you are not going to get any affiliates or networks giving you any traffic for anything under 40 unless you have some amazing page or you fill some niche that no one is in yet.
What a waste of time to have actually typed all that out and then post it into a thread like this
What a waste of time to have actually typed all that out and then post it into a thread like this
Nah, I appreciated the breakdown. +rep
All herp derp mcderp until good old penguin.
Thank you for essentially typing out an eloquent and realistic "/thread"
Thank you for essentially typing out an eloquent and realistic "/thread"
Those numbers are... a bit off... Change average 14 day take rate to 62-68%, cpa cost to $45-$48, change that damn 2% processing to somethin like 5% or 8-10% if you are intl, add $2-3 dollars for customer service on top of product cost up front and... add another dollar or so onto product costs. Oh and remove a couple % points of return to count for fees and random bs. Now it's a little better. Oh and disclaim it all with the warning that 85% of people will fuck it all up anyway.
I can pay you $40/mo for clients. Average client sticks for 48 months. So you do the math, hit me up.
Because if you charge them $40 or $90 they will enquire and try and cancel it so why not hit them higher amount over shorter time.