Enlighten Me: PPS and 100% REVSHARES

I know this is basic stuff, and I do apologize for obviously not understanding how "the Biz" really works, but here goes:

Say you sell a Membership for $30. You, the Program Owner, offer $50 PPS for every signup to Affiliates. You're losing $20 right off the bat so you're counting on making your money with....rebills?

The average Member rebills for 3 months. That's $90. So theoretically you're making $40 by the end of those 3 months (assuming the Member rebills for that long). BUT the $50 you paid to the Affiliate is an actual, real $50, right? Your cut, as the Program Owner, from the initial $30 Membership might be, in reality (after processing fees, other costs, etc) $20. So really, at the end of the day (or at the end of those 3 months) you've made a whopping $10.

Hmmm.....

Okay let's try 100% Revshare:

You sell the Membership for $30 but you give every penny to the Affiliate.

Okay, um.....so you're counting on, not rebills (since the Affiliate is getting 100% of that) but rather....cross-sells? Upsells?

Hmmm...

Seems like a lot to "give up" to get a little in return, no matter how you slice it. Hey, great for you Affiliates, God bless. But for the Program Owner (seemingly) not so much.

What am I missing here? How do the "Bros" do it and make a profit?

I know this is basic stuff, and I do apologize for obviously not understanding how "the Biz" really works, but here goes:

Say you sell a Membership for $30. You, the Program Owner, offer $50 PPS for every signup to Affiliates. You're losing $20 right off the bat so you're counting on making your money with....rebills?

The average Member rebills for 3 months. That's $90. So theoretically you're making $40 by the end of those 3 months (assuming the Member rebills for that long). BUT the $50 you paid to the Affiliate is an actual, real $50, right? Your cut, as the Program Owner, from the initial $30 Membership might be, in reality (after processing fees, other costs, etc) $20. So really, at the end of the day (or at the end of those 3 months) you've made a whopping $10.

Hmmm.....

Okay let's try 100% Revshare:

You sell the Membership for $30 but you give every penny to the Affiliate.

Okay, um.....so you're counting on, not rebills (since the Affiliate is getting 100% of that) but rather....cross-sells? Upsells?

Hmmm...

Seems like a lot to "give up" to get a little in return, no matter how you slice it. Hey, great for you Affiliates, God bless. But for the Program Owner (seemingly) not so much.

What am I missing here? How do the "Bros" do it and make a profit?

ALL pps programs shave. Wake up and smell the coffee. Just do the math.

Variables

Number of Signups 500
Trial $2.95
Regular $39.95
PPS $35.00
% of Referred Signups 85%
Fixed Expenses $20,000.00

Monthly Retention Levels
Trial to Full 40%
Month 2 28%
Month 3 17%
Month 4 10%
Month 5 5%


Month 1
Initial $45,208.75
Recurring $244,893.50
Additional Income $31,546.88
Advertising Expenses $(455,918.75)
Processing Expenses $(72,147.04)
Fixed Expenses $(20,000.00)
Profit $(226,416.66)


At 500 signups per day paying $35 per signup billing $39.95 per monthly membership with fixed expenses at 20 grand a month for hosting, content, employees, etc with a chargeback ratio of 1% and billing fees at 10% a pay per signup program is almost a quarter mil in the hole at month 1 of the start of measurement. That's with a 40% trial to regular member conversion which is probably a fair number in surfing some of the member areas out there to see what is what.

That is at an 85% shave, where 15% of the incoming sales aren't reported or credited to the webmaster. At this rate of shave, the program starts making money at month 5 and actually starts doing ok thereafter.

If a program were not shaving at all, using just the income derived from the signups. No cross selling, upselling, NADA. Then at month 5 they would be 20 grand in the black for THAT MONTH, but still be over a half million in the red from the previous 4 months.

Now, if there were some method of only allowing your traffic to leave your sites when there were green lights at the intersections, then you'd have it licked.

BTW, if you'd like to know the point where you could start a PPS program and make money right out of the gate the shave % would be 42% . Where 58% of the incoming signups are not counted, credited or reported/paid.

42% would probably be the "weasel factor"

how are you even in the paysite business asking these stupid questions?

/double facepalm

how are you even in the paysite business asking these stupid questions?

/double facepalm

I would not go as far as calling them stupid but yeah I would think this would be the default knowledge for a paysite owner.

Back to class Peabody ;)

Ahhhh I see now....so 'shaving' is a big part of PPS eh?
So then why would affiliates go along with this, um, situation?

PPS programs also make money from each signup through cross sales and member's area upsells, cams etc.

LOL This thread was based on math and program owners NOT "shaving".

LOL This thread was based on math and program owners NOT "shaving". If we factor in dirty deeds then everything makes sense.

I run a Revshare (CCBill) program and don't do PPS for the reasons people outlined in this thread. I don't WANT to be "in the hole" for months and months, paying out PPS hoping to recoup some vague time in the future.

Call me crazy. Oh wait, you all did. LOL!

(Roald, I'm a HS dropout. Explains everything eh?)

Forget the shaving and add some cross sales, some proper up sales, some proper live cam tabs and work from there

You are doing fine Peabody

Ahhhh I see now....so 'shaving' is a big part of PPS eh?
So then why would affiliates go along with this, um, situation?

And the emails from the 1st join form. Many take the email and feed it to a dating or cam API. At this point nothing is paid to the affiliate unless the lead actually completes a purchase for the paysite. If the visitor you sent enters their email and signs up for a $200 lifetime membership at a dating program you don't get a penny for it. The sponsor pockets it. Imagine how much money this generated years ago when adult dating was bigger and more lucrative.

Forget the shaving and add some cross sales, some proper up sales, some proper live cam tabs and work from there