Learn how New Amazon Affiliate Rates will affect your earnings starting on March 1, 2017. We explain the new rate structure and how much more or less affiliates will be earning with Amazon Associates program
Few days ago (on Feb 23, 2017) Amazon Associates Program sent out emails to its partners about Rate Changes to take effect on 3/1/2017. The email and the corresponding page on Amazon site are VERY confusing, so here I will simplify it for you, and break everything down.
No More Volume Tiers: In a nutshell, Amazon is getting rid of Tier / Volume commission rates structure, and will have a fixed commission of each major category. For some this will mean earning much less, while others can ear much more, depending on the type of Amazon products that you refer. The full over view of new commissions and official explanation is here.
UPDATE – Mar 3, 2017: It’s been only two days of new Affiliate Rates in effect, and I already see POSITIVE results. My overall commissions are higher that they used to be, because it just so happens that many of my referrals fall into 8% fee rate! See screenshot below:
Bottom line – your earnings will be affected depending on what type of products you refer
Will you be making more or less now, that there is no increase in commissions rate, based on volume?
The answer for MOST but not all associates is – you will be making significantly less now 🙁 … Unfortunately Amazon has decided to make more profits and share less with its affiliates (people and businesses that drive a significant about of sales to Amazon). With this policy change, large volume affiliates will lose the most! I am talking about those in 8 to 8.5% rate tiers… the big boys.
However, for some categories, you will actually be able to make MORE than before!
I base this on my data collected from reviewing over 100 Amazon Affiliate websites up for sale on Flippa and Empire Flippers, as well as those offered to me by several brokers. In most cases, volume commissions were up to 7%. However – many smaller websites that never go up for sale, were earning 4-6% commissions. So these middle of the road and smaller sites may actually start making more, depending on product types.
For example – furniture is never big on volume, because it is expensive. So many small(er) websites were mostly in 6% rate tier.
New Furniture category will have an 8% fixed rate, so the commissions will go up by 33% for most of these affiliates! More details below.
Old Tier / Volume Commissions Structure
If you read my comparison of Amazon Affiliate vs AdSense, I explained there that by referring more products your rates would go up (for most product categories, with some exceptions).
In the old days, if you referred 6 items or less (sold and shipped), your commission would be 4 percent. If you referred say between 7-30 items, you would be at 6% tier. And if you referred 631+ items, your rate would be 8% or more (maximum 8.5% rate when you refer 3131+ items).
So if for example you had a site about refrigerators, and you referred 5 items per month at average of $1000 per item, your commission would be 4% or $40 per item. So it would make sense to add a bunch of small items to bump your volume to say 7% and get extra $30 per fridge, or 75% more earnings.
It was easy to accomplish this by adding or buying an amazon affiliate site about say iPhone cases or toys – items that are inexpensive, but high volume – it was easy to rack up numbers, and bump your overall commissions.
New Commissions Structure – No More Volume Tiers
With new system – there are no volume tiers. Instead each category now has a fixed rate. Here is the full table of new fee rates:
If your major category is not listed in the table above, your rate will be 4% (all other categories). This will be a huge hit for many affiliates reliant on volume of Amazon products which they referred.
Basically these new rates are not that much different from Old FIXED rate categories – products that did not change fee based on volume. See the old rates table below:
As you can see most categories in OLD and NEW rate table match, which means old excluded categories (those that did not fall into tier structure) stayed the same. The only significant new additions (beneficial to associates) are Apparel, Beauty, etc group at 7% and Furniture, Home, etc group at 8%.
Who will benefit the most from new Amazon Affiliate rates and who will lose the most
As mentioned above – most affiliates that make any money from Amazon were in 7% or 7.5% tiers (fewer big boys in 8-8.5% rate tiers). These affiliates brought the bulk of referrals to Amazon, and made the most money. Affiliates in 6-6.5% tiers were barely making anything UNLESS they referred big-ticket items at low volume.
So these higher rate affiliates will take the biggest hit to earnings.
Let me put it this way – MOST amazon affiliates are set to either not see much effect at all, or lose a lot of money from these changes! If you refer electronics or similar products (or those categories listed on OLD FIXED RATES table) – nothing will change for you in your primary category. However – since there is a lot of residual products that every associate refers, you will still see less money from these.
If your referred a lot of mixed categories, you will most likely lose a lot. I’m referring to the majority of Amazon Associates here, who were making 7-8.5% before.
Biggest Winners: If your main product categories were Furniture, Home & Garden, Pets and Pantry, are set to be making even more money than before from your primary categories! Residual products will still get reduced commissions.
This is actually good news for a lot of websites that have been up for sale lately on Empire Flippers …
And finally, if your primary products were in Apparel, Beauty, Jewelry, Shoes, Handbags, etc., you will most likely not see much of an impact, because chances are – most of these associates were in 7% rate all along.
Other “losers”: Not all amazon affiliates ate just affiliates 🙂 Some Amazon FBA sellers used Affiliate program to reduce commissions paid to Amazon (15% flat rate + FBA fees), by referring customers to their own products, from their websites.
For example if you were in 7% tier before – you effectively paid 8% commission to amazon for every product you sold. Well – now most of these folks will be locked in 4% tier, so their Amazon Seller fee will be 11% + FBA fees. Again – this is a big chunk of money, if you operate on thin margins, and have to deal with massive competition. But it was always a nice freebie, and not the main source on income supplementing for most FBA Sellers.
Conclusion – Amazon is set to gain the most
While I don’t have the data on who refers what to amazon, and at which volumes, I base my analysis of my own account (i was always in 7% tier), and based on sites that I considered to buy on Flippa, and Empire Flippers.
Most of us will be making 15-25% less, once the new rates go into effect tomorrow (March 1, 2017). It really sucks, but – consider the volume of revenue that Amazon brings in, VS their net profit (which is minuscule or often in the red), and you will understand that as a corporation their main concern is their profit. Basically this rate reduction was bound to happen at some point. I’m just surprised it lasted as long as it did, and unfortunately I did not jump on the train soon enough 🙂
Best of luck, and remember – there are MANY other affiliate programs out there. Amazon was just the simplest for physical products, with widest selection.