Lessons in PPS
PPS is possible but very difficult. If done honestly, it absolutely requires certain variables to remain relatively constant and absolutely requires a lot of initial capital investment, as you have to be prepared to take a loss at least in the first month until the rebills kick in. And that doesn't include any overhead such as content, maintenance, chargebacks/refunds (for every refund, you have to make about 3 new sales to cover it and regain profit - affiliate gets paid, user gets his money back, chargeback fee gets covered), staff (if you have even one staff member making $30k per year, that's a lot of sales you're going to need to cover just that one staff member. If you have 5-10 staff members, you're going to need a whole lot more). If one was to map this into a graph the numbers would be staggering.
Variables that must stay constant include the ratio of trial to full joins, the ratio of cross sells to full join, the rebill rate, and the low chargeback/refunds (theoretically cbs/refunds should not be a factor because the number should be so small compared to overall sales).
Now the example given was $4.95 trial, $39.99 full subscription. Is this the norm? Are most sites charging $40 for 1 month of access these days? I was thinking around $29.99 or mid 30's at most. Changing the cost of the subscription will also dramatically affect the ability to do PPS. Charging $39.99 and paying out $35 on the $4.95 trial seems like it can work, though it would be effortful. Then can $40-$50 be paid on $4.95 trials that recur at say $29.99 or less?
One question for Marc. Were payouts such as $50-$75 PPS ever reasonable or were such high payouts simply off the chart and not possible to do in your opinion? We used to see many programs with those numbers 2 years ago. They're almost non-existent today.
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