For those promoting ClickBank products, you may want to take note of the payback rate for these products. It would not be very wise to promote a product with a high payout commission but also a high payback rate. There are four easy steps to calculate the refund rate for ClickBank products.
The formula is simply like this:
Step 1: (Product Price – 7.5%) – $ 1 = Net Commission
We start by calculating the Net Commission where the formula is (Product Price – 7.5%) – $ 1. The 7.5% percentage and $ 1 is actually ClickBank’s commission charges as an affiliate network to handle all the processing and administration. So when you subtract ClickBank’s commission from the price of the product, this equals your ‘Net Commission’.
Step 2: Net Commission x Pay Percentage = Affiliate Commission
This is where you multiply your Net Commission by the Payout Percentage, then equal to your Affiliate Commission.
Step 3: Affiliate Commission – $ Earned / Sale = Refund Difference
Get the refund difference, simply minus your affiliate commission on earned / sale value.
Step 4: ($ Refund Difference / Affiliate Commission) x 100 = Refund Percentage
The refund difference divided by the affiliate commission multiplied by 100 equals your refund percentage.
Now let’s demonstrate more clearly with an example. I will use “Stream Movies Online” as our example product. There are 3 variables that we must take into account.
Product price = $ 45.95
$ Earned / Sale = $ 25.21
Payment percentage = 75%
The price of the product is actually $ 45.95. The price of the product can be found by clicking on ‘View Presentation Page’ which will direct you to the offer on the sales page and all you need to do is look up the price of the product. For Stream Online Movies, you must click “Get Access”, register your email address and you will be directed to the sales offers page where you can see the price of the product. In other cases, the price of the products can usually be found by scrolling down to the bottom of the sales offer page.
The amount earned per sale is obtained from the first column of the ClickBank marketplace search results. For movies online in real time, the amount earned per sale is $ 25.21. For this product, the payment percentage is 75%.
So now let’s work on the calculation.
Step 1: ($ 45.95 – 7.5%) = $ 41.50 (Net Commission)
You start by taking the price of the product, minus 7.5% of ClickBank’s commission, minus a dollar, and that equals your net commission.
Step 2: ($ 41.50 x 75%) = $ 31.13 (Affiliate Commission)
Then, using your Net Commission, multiply it by 75% of the Payment that is equal to your Affiliate Commission; in this case, it would be $ 31.13.
Step 3: ($ 31.13 – $ 25.21) = $ 5.92 (refund difference)
Then minus the Affiliate Commission with the Earned / Sell value and you will get a refund difference of only $ 5.92.
Step 4: ($ 5.92 / $ 31.13) = 19.01% (Refund percentage)
The refund percentage is calculated by dividing $ 5.92 by the Affiliate Commission and multiplying it by 100. This equates to a relatively high refund percentage of 19.01%.
This shows that this product is moderately successful because 19.01% of its customers have requested a refund. There are many products with various payback percentages. Refunds are normal in sales and marketing. Typically, the type of payback rate you want to consider on a product is between 0 and 10%. Of course, the lower the repayment rate, the better.