Getting PPS to work
Introduction.How do you get a PPS program to work?The Reality.PPS is possible, but very difficult. If done honestly, it requires certain variables to remain, relatively, constant. It absolutely requires a lot of initial capital investment.You have to be prepared to take a loss, at least in the first month. This is until the rebills kick in. That doesn't include any overhead, such as content, maintenance, chargebacks/refunds, and any staff. Chargebacks and refunds.Each refund requires about 3 new sales to break-even. The affiliate gets paid. The user gets his money back. The chargeback fee gets covered. New sales are needed to recover these losses.Staff.If you have even one staff member making $30k per year, that's a lot of sales needed to cover costs. If you have 5-10 staff members, you're going to need a whole lot more.Final Costs.If one was to map this into a graph, these numbers (costs) would be staggering.Running the numbers.There are a few variables, to keep constant, to figure out an attractive PPS to offer. These include the ratio of trial to full joins, the ratio of cross-sells to full join, the rebill rate, and the rate of chargebacks/refunds. Theoretically, chargebacks/refunds should not be a factor, because the number should be so small compared to overall sales.The competition.What is the norm for your industry? Is it a $4.95 trial, $39.99 full subscription? If so, are most sites charging $40 for 1 month of access? For online content, it is not uncommon to see $29.99 or mid 30's at most. Changing the cost of the subscription, dramatically, affects the ability to do PPS.The $35 payout.Some sites charging $39.99 are paying out $35 for a $4.95 trial. That requires a lot of work. Considering this, how easy is it paying $40-$50, on a $4.95 trial, when re-bills are $29.99 or less?$50 and higher payouts.Knowing the difficulty of making PPS work, some sites offer $50-$75 payouts. Is this sustainable, given the high up-front costs? Or, are they loss leaders? Either way, it has the potential to bankrupt the unwary. While common at times, they never seem to last.Conclusion.PPS creates profits, with the right numbers. If you intend to use it, as a long-term customer-building strategy, be sure to know all the costs.Xanga Myspace LiveJournal | free pics images | free My space Backrounds |