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Payment and models

CPS (Cost Per Sale)

Also called Cost Per Sale, pay per sale, sales commission, PPS.

Short answer

CPS (Cost Per Sale) is the commission model in which the affiliate is only paid when a sale happens. The commission is set either as a percentage of the order value or as a fixed amount per order.

Definition of CPS (Cost Per Sale).

CPS ties the cost to revenue. If nothing is sold, the channel costs nothing, and if twice as much is sold, it costs twice as much. That makes CPS one of the few marketing costs a store can build into its contribution margin as a fixed percentage rather than a budget that has to be spent regardless of what comes out of it.

Commission comes in two forms. A percentage rate fits when basket size varies – a customer who buys for DKK 3,000 is worth three times as much as one who buys for DKK 1,000, and the rate follows automatically. A fixed amount fits when the margin is thin or varies sharply between product groups, or when the store wants to be able to say exactly what a new order costs.

In return, CPS shifts the risk onto the affiliate. The affiliate has already delivered the traffic by the time it becomes clear whether the store’s own checkout, payment solution and stock hold up. That is why experienced affiliates look as closely at the store’s conversion rate as at the rate: 5 % at a store that converts 3 % of its traffic beats 10 % at one that converts 0.8 %.

How it is calculated

Commission = order value excl. VAT × commission rate

order value excl. VAT
the price of the goods without VAT, after discounts and normally without shipping and fees
commission rate
the percentage the program pays on the basis

Example

Order incl. VAT
DKK 1,250
Basis excl. VAT
DKK 1,000
Commission rate
8 %
Commission
DKK 80.00

If you see DKK 80 on an order of DKK 1,250, the 8 % has been calculated on the DKK 1,000 – the VAT was deducted before the rate was applied.

What the order value includes

The basis must be written in the program terms, not kept in someone’s head. Four items almost always decide the disagreement: VAT, shipping, discount codes and gift cards. VAT is not revenue and is not included. Shipping is a pass-through cost and is normally left out. Discounts are deducted before the rate is applied, so an order of DKK 1,000 with a 20 % discount gives commission on DKK 800.

Gift cards are the hardest. If the gift card is bought through an affiliate link, that purchase is the sale. When it is redeemed later, no new money comes into the till, and that order should not trigger commission again.

CPS and the right of withdrawal

For distance sales to consumers in Denmark, the customer has a 14-day right of withdrawal from receipt of the goods. An order is therefore not final the moment the payment goes through, and that is the whole reason CPS programs have an approval period instead of paying out straight away.

The period must be long enough for returns to come in, and short enough for the affiliate to run a business on it.

CPS vs. CPA

AspectCPSCPA
Coverspurchases onlyany agreed action – purchase, lead, install, sign-up
Triggered bya completed order with a payment behind itthe action named in the program terms
Rate typepercentage of order value or a fixed amountusually a fixed amount, because the action rarely has a price
Reason for rejectionreturn, cancellation, non-paymentthe action does not meet the requirements in the terms

Say CPS when there has to be an order behind the money – say CPA about the whole family of models.

How it goes wrong

  • 01

    The basis is not written down

    Disagreements about VAT, shipping and discounts never arise at sign-up, but at the first large order. If the calculation basis is not defined in the program terms, the discussion ends in gut feeling, and both parties lose.

  • 02

    The rate changes mid-traffic

    An affiliate who has spent a week building a review around a program at 10 % cannot run a business on the rate being 4 % when the sale lands. The rate must be known and tied to the click that created the sale – not to the day the order happened to be recorded.

  • 03

    High rate, low conversion rate

    The rate has to be multiplied by the store’s ability to close the sale. 12 % at a store with a 0.5 % conversion rate gives less per click than 5 % at one that converts 2.5 %.

At Affilyflow

CPS (Cost Per Sale) in practice

At Affilyflow, the commission rate is locked the moment the click happens. Rate and type are copied onto the click row and used when the conversion comes in – a rate change the next day only affects future clicks. The attribution window is locked in the same place and decided on our server.

Commission is calculated excluding VAT – although via the Shopify app it is calculated on the value of the goods without shipping, where it has not yet been confirmed whether VAT has been deducted. The affiliate gets exactly the rate the program shows: our fee is part of the store’s total price and is not deducted from the commission. The same order can never count twice, because the order ID is deduplicated per program.

No conversion automatically credits a balance. Everything is created as pending, the store has the program’s approval period (30–90 days) to reject, and after that the sale is approved automatically. A rejection requires a readable reason.

Frequently asked questions

What does CPS mean?

CPS stands for Cost Per Sale and is the commission model in which the affiliate is only paid when a sale has been completed. The commission is set either as a percentage of the order value or as a fixed amount per order.

What is the difference between CPS and CPA?

CPA is the umbrella term for all models that pay per action. CPS is the variant where the action is a purchase. All CPS is therefore CPA, but CPA also covers CPL, where the action is an enquiry, and CPI, where it is an app install.

Is affiliate commission calculated with or without VAT?

Commission is calculated on the order value excluding VAT, because VAT is not the store’s revenue but an amount passed on to the state. In Denmark, an order of DKK 1,250 including 25 % VAT gives a basis of DKK 1,000, and a rate of 8 % gives DKK 80 in commission.

What happens to the commission if the customer returns the item?

The commission lapses, because the sale did not go through. That is why CPS programs have an approval period in which the store can reject orders that were returned, cancelled or never paid. In Affilyflow, the commission is rejected automatically when a WooCommerce order is refunded or cancelled, or a Stripe payment is refunded; a returned Shopify order must be rejected by the store itself within the approval period.

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