How Much Money Do I Need To Start Affiliate Marketing?
You can start as a affiliate marketer with virtually no money, sign up for a network or a affiliate campaign for free and start promoting it by creating free blogs , social media etc however if you are serious and are looking to take it as a profession.You DO need a good budget available to you before you start Affiliate Marketing.
Initially no-one makes money straight away with affiliate marketing especially when you are a newbie and have no knowledge of traffic sources, networks , what to promote , what not to promote. You should expect to lose some money initially ,whilst you are learning the game.
If you planning to become a media buyer you will spend most of the money on buying traffic for your campaigns and some amount on spy tools, tracking services (like volumm )creating Landing pages etc
If you are planning to create a affiliate website you have to invest a good amount of money in buying hosting, email services, tech development, designing, buying traffic, SEO tools etc depending on what you outsource and what you do on your own.
For Media buyers generally, you’ll need a budget of around INR 50,000 to INR 300,000 over a couple of months. You need at-least 50,000 to 100,000 to test different campaigns , different traffic sources. The probability of getting success in your first campaign is very less , you need to try atleast 5-6 campaigns before you start understanding the game and make your first campaign Profitable.
Also, for new-bies i will suggest to have a minimum budget of INR 50,000 ( 700$ ) kept aside for doing various courses on affiliate marketing, getting membership of some good paid affiliate marketing forums.
Based on my experience and assumptions i have created 3 affiliates below, with their costing and revenue in affiliate marketing.
| Ameatuar Affiliate | Professional affiliate | Super Affiliate | |
| Scale | 1 person operation out of home or a hostel room. Either as a hobby or just a experiment as a side business | 2-3 people partnership. Most probably a primary source of income | Seriously in business |
| Indicative Income | 25000/ Month | 1 Lakh + per month | 5-8 Lakhs per month |
| Ave no. of Validated Sales | 225/Month (7-8 per day ) | 1500+ month (50+ sales ) | 5000 (150-200 per day) |
| 2800/Year | 18000-25000/year | 50000-60000/year | |
| Typical IT infrastructure | CMS like wordpress,Joomla,Forums,affiliate sripts etc | Self made CMS, Magento,Affiliate scripts or any CMS with customization | Self-made CMS or other Scripts/magento/other CMS with customizations |
| Legal status and formalities | Proprietorship: Valid Bank account and PAN card | Proprietorship: PAN card, VAT / CST No. | Pvt. Ltd. / LLC:VAT/CST, Accounts, Audits, Payroll |
| Employee count (excluding founders) | 0 | < 5 (mostly temp / ad hoc skills) | 5 – 10 (including professional skills – tech, marketing, accounting etc.) |
| Setup cost + Yearly Cost | |||
| Legal formalities | 0 | 10,000 | 100,000 |
| IT infrastructure ( e.g. Laptops, Furniture, Modems ) | 40000 | 300,000 | 400,000 |
| Office space (Assuming Delhi) | 0 | 20,000 | 40,000 |
| Other ( Domains,web-hosting, licenses, web tools ) [ Yearly ] | 15000 | 40,000 | 60,000 |
| Total initial investment | INR. 55000 | INR 370000 | 600,000 |
| Ongoing costs (monthly) | |||
| Employee salaries | 0 | 60,000 | 250,000 |
| IT infrastructure | 0 | 1000 – 5,000 | 5,000 – 10,000 |
| Office rental | 0 | 10,000-15000 | 15,000 –20,000 |
| Utilities (Power, Internet, Maintenance) | 1500 | 2,000 – 5,000 | 4,000 – 10,000 |
| Freelancing (e.g. Designing) | 1000 | ||
| Marketing/Branding | 3000 | 10,000 | 50,000 |
| Total | 5500 | 90,000 | 330000 |
| Total Yealy | 66000 | 1080000 | 3960000 |
| Total Cost (Setup + Ongoing) | 121000 | 1450000 | 4290000 |
| Turnover Yearly | 300,000 | 3000000 | 8000000 |
| Net Profit (yearly) | 179,000 | 1550000 | 3710000 |
| Avg commission per sale (After Tds deduction) INR 150 per sale INR 150 Per Sale INR 150 per sale | |||
| Summary | » Zero fixed costs means risk of losing money is low. | » You are in business if you have reached this scale. | |
| »You know Affiliate marketing, affiliate business models, SEO, PPC etc | » Fixed costs are mostly salaries. Need to plan your hiring well | ||
| » Hard to scale since you will not be spending money on SEO / marketing ) | » Marketing cost will come down after 3-4 months as you build a base of loyal customers | ||
Assmptions
- You cleary understand Affiliate marketing/ Digital marketing.
- Avg Commission per sale is taken as 150 per sale, we have only considered CPS campaign (you could also promote other type like Cost per lead, Cost per click)
- Calculations are done on Validated sales ( To get 8 validated sales, approximately you need to deleiver averge 10 sales i.e. on an average 80% sales get validated )
- Major Costs include Human resource ( monthly cost ) and IT eqipments like Laptops/Destops, etc
- Marketing Costs will be higher Initially and will come down after 3-4 months as you build a base of loyal customers
- You work on popular affiliate model like coupon website, daily dealswebsite,price comparison or affiliate site in niche sector.
