Clickbank Trap – Set Your Payment Threshold Correctly
I’ve written quite a lot about using Clickbank as a source for finding products to promote through affiliate marketing. There’s a lot to like about Clickbank; they offer encryption of your affiliate links, they offer decent analytics, and they offer a wide variety of products to promote in a broad range of market niches. If you do your research properly, you can find a lot of profitable products to promote there. You do, however, have to keep an eye on Clickbank fees or you can easily find yourself paying out a lot of money in commissions right back to the company. You don’t want that, obviously, but unless you’re paying attention, that’s exactly what will happen.
Clickbank primarily makes their money by taking a percentage of the sale of each item sold. For most products, that fee is about 7.5% of the sales price. The remainder of the sales price is divided between the product vendor and the affiliate who made the sale, if applicable. The percentage paid to the affiliate is determined by the vendor, with minimum and maximum amounts set by Clickbank. You’d think that it ends there, but actually, there’s one other way that Clickbank makes money, and they earn it from lazy affiliates who aren’t paying attention to their account settings. If you don’t set up your affiliate account correctly, you may find yourself earning commissions for sales and then paying them back to the company before you even receive them!
Clickbank Fees and Account Settings
How Clickbank pays you isn’t as simple as it might seem. The numbers for commissions earned are pretty straightforward; if the vendor sets your commission at 50% of the sales price, you, as an affiliate, will receive half of the amount that remains after Clickbank takes their 7.5% commission (plus $1). That amount goes into your account balance. In theory, when it comes time for the company to pay, you should get the amount in your account as a payment, either by check or direct deposit.
It doesn’t work that way, for several reasons. One of them is something called the “return allowance.” Clickbank holds back approximately 10% of each sale and holds that amount for 12 weeks. This to protect them against potential refunds. The company requires their vendor to offer a 60 day refund policy, so if they were to pay you for a sale before that time and then had to issue a refund to the customer, they wouldn’t have a way to get the commission for the returned item back from you. The 10% hold helps protect them from this, and after 84 days, they’ll return that 10% to you. If you’re making a lot of sales in the meantime, you’ll likely have a number of small 10% holds in progress, and as a result, you may not get paid as quickly as you like, particularly if you have your minimum payment threshold set too high.
The minimum payment threshold is the place where you can find yourself actually paying money to Clickbank if you don’t have it set correctly. When you set up your account as an affiliate, you’ll need to specify a number of things, such as your name, your address, your tax information and how you’d like to be paid. One thing that’s easy to overlook is the minimum payment threshold. This is shown in a pulldown menu that is set, by default, at $100. Most people just leave it there, but you can actually choose one of 15 different settings that range from a low of $10 to a high of $1,000,000. Yes, that last setting is one million dollars. The higher the setting, the longer you’re likely to go without getting paid, and that can cost you money in Clickbank fees.
That minimum payment threshold determines the minimum amount of money that you must have in your account balance to get paid. If you have it set to the default of $100 and at pay time, you only have $98.50 in your account balance, you’re not going to get paid. Two weeks later, Clickbank will check your account again, and if your balance is over $100, you’ll get paid. If it’s still $98.50, you won’t get paid. Again.
This can turn into a problem for people who only occasionally promote Clickbank products or who only make the occasional sale. Buried in the fine print of the user agreement is this statement:
Accounts with a positive balance but no earnings for an extended period of time are considered dormant. Dormant accounts are subject to a charge of $1 per pay period after 90 days of no earnings, $5 per pay period after 180 days of no earnings, and $50 per pay period after 365 days of no earnings. It is your responsibility to manage your account to prevent dormant fees. ClickBank will not notify you when your account is dormant.
If you go awhile without earning anything, Clickbank fees will accrue as the company starts deducting money from your account balance. The fees are small, but they can add up, particularly if you’ve gone a few months without earning anything. I recently read an account of someone who had $200 in their balance, but had their payment threshold at $1000. They got busy doing other things and before he realized it, Clickbank had take all $200 that was owed to him in fees.
As this is part of the user agreement, there’s nothing you can do to fight it, but there is something you can do to minimize the potential harm: Change the setting for your minimum payment threshold. You could set it to the $10 minimum, but you need to also be aware that Clickbank charges $2.50 every time they pay you, so the more often you get paid, the more frequently you’ll pay that $2.50 fee. You should try to set your threshold to something that will ensure you don’t have to pay the dormant account fees while at the same time trying to avoid the $2.50 payment fees as often as possible. Because of this, there’s no “perfect” setting for the payment threshold that will apply to everyone, but something in between $10 and $100 will probably work best for most people. I don’t promote a lot of Clickbank products these days, so I keep my setting at $50.
Clickbank Fees Summary
Clickbank has a good program that has allowed tens of thousands of affiliate marketers to make money online. But Clickbank fees can become a burden and you might end up paying them for nothing at all if you are careless and leave your payment threshold set at the wrong amount. Make sure you get it set up correctly.