Misleading commission

[lakrasia]

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Bit of a general grumble here, but I have bought stuff through my site from Prezzybox and found that my commission was calculated on the order value minus VAT.

No doubt we've all bought things and checked the tracking - are there any other merchants who deduct VAT before calculating commission? And if so, shouldn't this be made clear before we join up, as it represents a 15% loss of earnings.

[tomtomtomtomtom]

"are there any other merchants who deduct VAT before calculating commission?"

Why should they pay you commission on VAT?

[lakrasia]

Maybe you are right, but I've checked my other sales, admittedly not many, but in every case that I could judge, I was paid commission on the full amount.

If two merchants say 7% commission, then it should mean the same thing, or the differing methods of calculation should be made clear on signing up.

[Supercod]

Hi lakrasia, on Paid On Results it's completely crystal clear before you join what you are paid the commission on. In the affiliate area under merchant information in the commission section at the part called "note" it says the following.

As this is a customer base program any additional sales a customer makes will be credited to you even if they have no cookie set (only exception is when a customer returns to buy something via another affiliates link). 7% commission is paid on the sale value before VAT. Prezzy Box do not currently charge customers for delivery in the UK.

But you are correct some merchants pay commission on VAT and some don't, however the reason why the ones who pay, pay it is often because they lack the technical skills to remove the vat before sending over the commission amounts however often the compensate by giving lower commission in the first place. Same goes for merchant who pay on the delivery charge and the ones who don't... heck I have even heard of merchants that have free delivery who take that into account before they pay commission (but not sure who is doing that myself).

I personally think its wrong for a network to say your getting x% of total sale when they pay commission for sale before VAT and delivery (as they should point that out) but equally I think something should be said to let you know your making a real time higher commission from the ones who do pay on VAT and/or delivery (when they shouldn’t really pay commission on them).

[D-Mac]

We pay commission on VAT and delivery (via Affiliate Window).

Paying commission on the VAT is fine (as it is effectively taken in to account in the % we offer).

Paying commission on delivery is more of a contentious issue as we ship internationally, and in some extreme cases shipping costs can be higher than the cost of the item being sent. This obviously isn't desirable for a merchant, but so far it hasn't been a serious problem for us.

However if we decide that it is becoming a problem then we would change our policy and offer a higher comission on the actual product, and 0% commission on the shipping.

At the moment I prefer to keep it simple.

[Supercod]

Should have made it clear my point and almost everyone I make are "general ones". For example Natural Instinct pays commission on the full amount of the item after VAT is added and doesn’t charge for UK Delivery making his 15% commission actually more attractive as he is in real terms paying more commission than someone selling the same thing but pays you the 15% before VAT is added so he should really shout about that, like your doing as to be frank if your don't get additional credit for giving the commission on the full amount when other claim it but don't do it then your not giving yourself a fair press.

[Rpoints]

Resurrecting an old but useful thread...

on Paid On Results it's completely crystal clear before you join what you are paid the commission on.

Well that's a definite plus for POR then

Do ANY other networks tell you whether VAT is included in the commission calculation? I find it amazing they can't provide this info to us, because surely this is part of the contract they agree with the merchant in the first place?

I've been collating some info on this and would be happy to provide people here with a list of the most popular merchants and whether or not they appear to include VAT in the order value that commission is based on

[Rpoints]

My checks so far seem to indicate that 80% of merchants pay commission based on the VAT-inclusive price. Here are some that don't appear to:

Amazon (Amazon associates)
Argos (Commission Junction)
B&Q (Commission Junction)
Crucial Technology (Commission Junction)
Currys (TradeDoubler)
Dabs (TradeDoubler)
DreamDirect (TradeDoubler)
Empire Direct (TradeDoubler)
Fragrance Direct (Affiliate Window)
Haburi (TradeDoubler)
Panasonic eshop (TradeDoubler)
Prezzybox.com (Affiliate Window)


Feel free to add / correct this list. I should emphasise that I don't necessarily think these merchants are doing anything wrong; it's just frustrating not to know

[ianm]

Originally posted by Rpoints
Amazon (Amazon associates)

Bear in mind with Amazon that there is no VAT on books, so if you are just selling books then you will get commission on the full price.

[lakrasia]

Well, you sure did some research into this - thanks. It's helpful to know which merchants are following which calculations.

Mind you, now that AW give the EPHC, it's a lot easier to work out how much to bid. Previously I had to guess basket size, conversion rate and whether VAT was calculated in. Wasted tons of money promoting merchants with really low conversion rates - wondering why I was losing all the time - such a relief to finally find out.

[Rpoints]

Mind you, now that AW give the EPHC, it's a lot easier to work out how much to bid.

Ah, I see. Running a cashback site, the issue is different. I need to inform my members how much cashback they can expect to earn, so knowing the VAT situation is important

Here are some merchants where I'm not clear whether they base commissions on VAT-inclusive order values; if anyone knows - speak up!

24Electric (TradeDoubler)
7dayshop (Affiliate Window)
ASOS.com (TradeDoubler)
Boden (TradeDoubler)
Booths wine (TradeDoubler)
BT Shop (TradeDoubler)
Co-op drinks2u (Commission Junction)
Co-op electrical (TradeDoubler)
Columbus Direct (TradeDoubler)
Comet (Commission Junction)
Cotton Traders (TradeDoubler)
Crocus (TradeDoubler)
Dixons (TradeDoubler)
Euroffice (TradeDoubler)
Expedia.co.uk (Commission Junction)
Gadgetstuff (TradeDoubler)
Game (TradeDoubler)
Gameseek (Affiliate Future)
Justfate.co.uk (TradeDoubler)
Kays (Commission Junction)
La Senza (TradeDoubler)
Laithwaites (Commission Junction)
Littlewoods Index (Commission Junction)
Majestic Online (TradeDoubler)
Medhotels (TradeDoubler)
Mothercare (Commission Junction)
Needapresent.com (Affiliate Window)
Oddbins (TradeDoubler)
Office world (TradeDoubler)
PC World (TradeDoubler)
PetPlanet (TradeDoubler)
Pharmacy2U (Affiliate Window)
Promod (TradeDoubler)
River Island (TradeDoubler)
Shoe-shop.com (Commission Junction)
Shop.com (Commission Junction)
Simply Computers (TradeDoubler)
Sport-e (TradeDoubler)
Talkworld (TradeDoubler)
Tesco Wines (TradeDoubler)
The Cotswold Company (TradeDoubler)
The digital camera company (Affiliate Window)
The Ink Factory (TradeDoubler)
The White Company (TradeDoubler)
Thomson Holidays (Commission Junction)
Video Island (TradeDoubler)
Viking Direct (TradeDoubler)
Yves Rocher (TradeDoubler)

[D-Mac]

The two columns below may be helpful:

The column on the left shows the advertised commission rate. The column on the right shows the 'real' percentage commission that is received from merchants who exclude VAT from the calculated sale price.

1% 0.85%
2% 1.70%
3% 2.55%
4% 3.40%
5% 4.26%
6% 5.11%
7% 5.96%
8% 6.81%
9% 7.66%
10% 8.51%
11% 9.36%
12% 10.21%
13% 11.06%
14% 11.91%
15% 12.77%
16% 13.62%
17% 14.47%
18% 15.32%
19% 16.17%
20% 17.02%

For example, a merchant offering a 10% commission rate, but not including VAT in the total sale value is offering the equivalent of a merchant that offers 8.5% on the total value of the sale.

[D-Mac]

Mind you, now that AW give the EPHC, it's a lot easier to work out how much to bid.

It's important to bear in mind that EPHC are shown as an average. It is likely that each merchant has a huge conversion variation between different products

Of course PPC is generally much more targetted than 'normal' click-throughs, so the actual EPHC for PPC are likely to be much better than Awin's figures indicate.

[uksports]

If two merchants say 7% commission, then it should mean the same thing, or the differing methods of calculation should be made clear on signing up

It's not that simple!

For instance, we don't pay commission on VAT but that doesn't apply to all of our goods as we sell kids clothes that are calculated as 0% VAT, so in effect you do get the full VATable price paid on those. Also, we include shipping within the price of our goods, so you are getting paid on shipping with us by default whereas many merchants charge seperately for shipping and may exclude that from the commission calculation.

In addition, you have to look at things like the business sector and distribution of the merchant - B2B transactions are not going to pay commission on VAT

VAT registered B2C and B2B merchants selling outside the EU do not charge VAT on the goods so it is not fair to expect to get VAT commission on those sales.

Every business is going to have it's own business plan and methods and that will affect the commission calculation - getting a uniform method of calculation may not be possible

[Marc Gear]

Originally posted by D-Mac
It's important to bear in mind that EPHC are shown as an average. It is likely that each merchant has a huge conversion variation between different products

Of course PPC is generally much more targetted than 'normal' click-throughs, so the actual EPHC for PPC are likely to be much better than Awin's figures indicate.

i'd echo this - there is no reason why an affiliate couldn't out-perform the EPHC figures on our site with targeted traffic.

The values on the site are calculated based upon all affiliates traffic/sales for the last whole three months