What Is an Affiliate Program and How Does It Work?

An affiliate program is an arrangement where a business pays outside partners a commission for each customer, sale or lead which arrives through a unique tracked link.

The business is the merchant, the partner is the affiliate, and software records every click so credit reaches the right person.

The model is, according to PartnerStack, a performance-based marketing strategy, so the merchant pays only after a result, such as a charge recorded with Stripe.

For example, an affiliate who sends one buyer to a $50-a-month tool earns $10 a month at a 20% commission. Over 12 months the merchant owes $120 at 20% or, at a higher 30% rate, $180.

This guide covers the 4 parties, the 6 steps from click to payout and the 3 commission models in use in 2026. It also compares 3 look-alike programs and lists the minimum setup for a SaaS product.

Finally, we built TrackRev, SaaS affiliate software, so the practical sections draw on how our own product handles each step.

What is an affiliate program?

An affiliate program is a standing offer from a merchant: promote the product, and receive a payment for each result. The merchant publishes the terms, which cover the commission rate, the tracking window and the payout schedule.

Affiliates apply, receive a unique link or code, and share the link with an audience. Pay for performance is the whole meaning.

According to PartnerStack's glossary, the program tracks traffic from each affiliate through unique links or codes, and the affiliate earns a commission when a visitor completes the agreed action.

Programs pay first for the agreed action, which is usually a paid purchase, and some also pay for free signups or demo bookings.

For example, 500 clicks at a 2% paid rate produce 10 customers, and a 20% commission on a $50 plan costs the merchant a total of $100.

The same $100 spent via Google Ads in 2026 is gone even when 0 buyers arrive.

Sources: partnerstack.com/glossary

Who are the parties in an affiliate program?

An affiliate program has 3 required parties and 1 optional party. The merchant owns the product and pays the commission.

The affiliate, which Awin calls a publisher or partner, promotes the product on a website, newsletter, video channel or social account. The customer clicks the link and pays.

According to Awin, the customer is the third party in the affiliate marketing triangle. The optional fourth party is the network, a platform which handles tracking and payments between merchant and affiliate.

In 2026, some SaaS companies skip the network and connect affiliate software to billing through Stripe or Paddle.

For example, a creator with 5,000 newsletter subscribers sends 40 clicks to a pricing page and converts 2 customers, a 5% click-to-paid rate. At 20% of a $50 plan, the first month's bill is $20.

The merchant owes commission on only the 2 sales, and the other 38 clicks cost nothing.

How does a click become a commission?

A commission is the payment which a merchant owes an affiliate after a tracked click turns into a sale, and a click becomes one in 6 steps.

First, the affiliate shares a link which carries a unique ID, such as ?ref=jane.

Second, the visitor lands on the merchant site, and a script stores the ID in a cookie or passes the ID to the server as a click ID.

Third, the visitor buys through Stripe Checkout, and the billing system records a charge from Stripe. Fourth, the software matches the charge to the stored ID inside the attribution window.

Fifth, the commission waits through an approval hold which covers refunds. Finally, the merchant pays once the balance clears the payout minimum. For example, a $50 sale at 20% creates a $10 commission, while a 30% rate creates $15.

With a $100 minimum payout, one customer needs 10 monthly payments before cash moves. Our affiliate tracking guide shows where each hand-off breaks in 2026.

How do cookies and click IDs record the click?

A tracking cookie is a small first-party file which holds the affiliate's ID in the visitor's browser. A click ID carries the same value to the server instead. Browsers limit the cookie option.

Safari Intelligent Tracking Prevention deletes cookies created in JavaScript, and other script-writable storage, after 7 days without a user interaction, according to WebKit as checked in November 2026.

WebKit adds that ITP caps expiry at 24 hours when a landing page shows link decoration used for cross-site tracking.

In practice, payment systems carry the ID to the charge: with Stripe Checkout a client_reference_id holds up to 200 characters, and Paddle Billing copies transaction custom_data to the subscription and to every renewal.

For example, a visitor clicks on day 1 and buys on day 8.

The JavaScript cookie is gone after the 7-day cap, yet a server-side record still matches the $50 sale and pays the partner $10 at 20% or $15 at 30%.

What are attribution windows and approval holds?

An attribution window is the period after a click in which a purchase still earns the affiliate credit. An approval hold is the wait before a pending commission becomes payable.

An affiliate gets credit, according to HubSpot's affiliate FAQ checked in November 2026, for a signup within 30 days of the click and for the purchase within 180 days of the signup.

Kinsta Hosting pairs a 60-day cookie and last-touch attribution with a 10% monthly commission. Before the first payout, a hold guards against refunds. In our data model, the hold is set per program from 0 to 180 days.

HubSpot's locking window is 1 month on monthly plans and 2 months on annual plans. Stripe says card networks typically allow disputes within 120 days, so a 30-day hold leaves late disputes uncovered.

For example, a $50 sale on March 1 with a 30-day hold turns payable on March 31. A full refund through Stripe on March 20 reverses 100% of the $10 commission before cash moves.

Which commission models do affiliate programs use?

Affiliate programs use 3 commission models: one-time, recurring and tiered. A one-time commission is a single payment per customer, either a flat bounty or a share of the first payment.

A recurring commission pays on every renewal for a set period or for life. A tiered commission raises the rate as the affiliate passes thresholds.

According to PartnerStack's Research Lab, the best-performing offers among its top 25 vendors in 2023 were 20%, 25% and 30%, and the average payout was just under 24%.

FirstPromoter's July 2026 help article lists 3 durations: customer lifetime, a time span or a number of charges. Tiers exist in practice: HubSpot offers custom payout terms to affiliates in its Sprocket and Elite tiers.

For example, 30% of a $50 plan for 12 months is $15 x 12 = $180. A flat bounty of $100 per paid signup suits one-time purchases sold through Paddle. Our commission benchmarks post breaks rates down by industry.

Sources: partnerstack.com/resources · help.firstpromoter.com/en

How does an affiliate program differ from a referral program?

A referral program rewards existing customers who recommend a product to people they know, and an affiliate program pays outside promoters who market to an audience. Both use tracked links and pay on results. The first difference is the sender.

A referral sender is a customer with a handful of friends and often earns account credit. An affiliate sender is a creator, reviewer or consultant who publishes content and usually earns cash through PayPal or Wise. Reach follows the sender.

For example, a review video sends 3,000 clicks at a 2% paid rate and produces 60 customers. A 20% commission on a $50 plan for 12 months costs $120 per customer, so the 60 customers cost a total of $7,200.

In our product as of November 2026, a referral program and a partner program are separate programs in one workspace, each with its own commission rate and cookie window. Our referral program explainer covers reward types in detail.

How does an affiliate program differ from a reseller program?

A reseller program is a channel model where partners sell the product themselves, and an affiliate program only refers buyers.

Reseller partners independently manage the entire sales cycle, from lead generation and qualification to closing deals and customer support, according to PartnerStack's glossary checked in November 2026.

PartnerStack adds that reseller programs typically offer higher rewards than affiliate or referral programs, and that the merchant must supply training, demos and technical support. An affiliate never negotiates a contract.

The buyer pays the merchant directly at the merchant's checkout, for example through Paddle. A reseller often invoices the customer, supports the account and keeps a margin.

For example, a reseller who closes a $1,200 annual contract at a 30% margin keeps $360, while an affiliate on a 20% first-year commission earns $240 for the same buyer. The gap between the two payouts is $120.

The larger share pays for the sales work and the support load.

Sources: partnerstack.com/glossary

How does an affiliate program differ from an affiliate network?

An affiliate network is a marketplace which hosts many merchants' programs, and an affiliate program is one merchant's own offer. A network controls tracking and payments and handles the relationship between publisher and advertiser, according to Awin's 2019 guide.

Publishers browse advertiser programs via Awin's Advertiser Directory and request to join each. impact.com advertises a marketplace of over 300K vetted partners. A merchant has 3 routes. First, join a network for reach.

Second, run a private program on affiliate software connected to billing. Third, combine both. Networks bring partners and add fees, so compare each rate card.

For example, a merchant paying 20% on a $50 plan owes $10 per sale, or $15 at 30%, and any network fee sits on top of the $10.

Private programs add software cost instead, from $29 a month at TrackRev in 2026. Our guide to starting an affiliate program prices the private route.

Sources: impact.com/partnerships

Do affiliates have to disclose their relationship?

Yes. A material connection is a financial, employment, personal or family relationship with a brand, and an affiliate who earns a commission has one.

According to the Federal Trade Commission (FTC) in its Disclosures 101 for Social Media Influencers (November 2019), endorsers must disclose the connection.

Even a $10 commission on a $50 sale (20%) or a $3 commission on a $60 sale (5%) is a financial relationship. The agency's Endorsement Guides detail the rules for advertisers and endorsers, and the brochure dates from November 2019.

The disclosure belongs with the endorsement itself, not on an About page or at the end of a video. Plain terms such as "ad" and "sponsored" work. Vague shorthand such as "sp" or "collab" does not.

For example, a review posted through YouTube needs the disclosure spoken or shown inside the video.

The merchant should write the rule into the affiliate terms from the first day, and our compliance guide covers FTC and GDPR duties for program owners.

What does a SaaS affiliate program need to start?

A SaaS affiliate program needs 6 things before the first partner joins. First, a billing connection which records every charge and renewal, from Stripe Billing, Paddle Billing or a similar processor.

Second, tracking which keeps the affiliate ID from click to charge, with a cookie window such as 60 days. Third, a commission rule, such as 20% recurring for 12 months.

Fourth, a hold period, which is the wait before pending commission turns payable and covers the refund window. Fifth, a payout method via PayPal or Wise and a minimum balance. Finally, written terms covering disclosure, self-referral and brand bidding.

For example, a $30 plan at 20% for 12 months costs $6 x 12 = $72 per customer, so 100 customers cost $7,200. A 30% rate on the same plan costs $108 per customer in 2026.

Our guide to paying affiliates covers fees and tax forms.

How does TrackRev run an affiliate program?

TrackRev is SaaS affiliate software for indie hackers and small SaaS teams: run your SaaS affiliate program with no limit on tracked revenue.

We built TrackRev so each partner click ties to the real charge it produced, with link tracking and revenue attribution inside the product. In our data model, a commission starts as pending and becomes eligible after the program's hold period.

Applications are reviewed by default, and instant approval is an option. Connect billing with Stripe, Paddle Billing, Polar, Lemon Squeezy, Creem or Dodo Payments.

For example, the first $50 sale at a 20% rate becomes a $10 pending commission, eligible once the hold passes. Payouts run as batches: export one CSV, pay from PayPal or Wise, then mark each payout paid with a reference.

The affiliate program needs a paid plan: Indie at $29 a month or Growth at $299 a year, and TrackRev takes 0% of tracked revenue in 2026. The Free plan covers link tracking only. See pricing.