Jul
2005
PayDotCom True Rival To ClickBank Or Just Hype?
Azam in General , Marketing Products , Online Tools , Affiliate MarketingThere are a lot of emails going around at the moment promoting a new service for product sellers and affiliates called PayDotCom. Here’s a taste of the marketing blurb:
I am sure you have heard of ClickBank (R)
They are a great marketplace but limited to many restrictions to sell products or earn affiliate commission…
Well, there is a new FREE marketplace to sell any product you want. Yours or become an affiliate for any item in the marketplace.
This site is going to KILL all other marketplaces and I bet in the next 3 months EVERY SINGLE online marketer will have an account…
I must confess PayDotCom is interesting concept, and fills a gap in the market. But whether it will “KILL” other marketplaces remains to be seen.
Personally, I doubt it.
I actually set about writing a piece to explain the key differences in PayDotCom and ClickBank, but whilst going over the site for more details I came across the table below and decided it would be far easier just to post it so you can see the bulk of the information at a glance:
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*There is no set-up fee to open basic PayDotCom Vendor or Affiliate Account. You are only allowed one free Vendor Account to sell products. To sell multiple products you must pay a onetime $29 lifetime activation fee. ** If there is no affiliate, then the Vendor pays the fee in full.
PayDotCom charges the following processing fees per sale:
| Product Sale Price | PayDotCom Fee* | Split by Vendor and Affiliate 50/50 |
| $0.01 to $10 | $1.00 | Yes |
| $10.01 to $20 | $2.00 | Yes |
| $20.01 and over | $3.00 | Yes |
As indicated above, the PayDotCom’s fee is split between the vendor and affiliate responsible for the sale (if no affiliate, the full fee is charged to the vendor) and automatically deducted from affiliate commissions.
PayDotCom’s fee to the Affiliate is $0.50 to $1.50 for each transaction (Based on the sale price of the product/service sold.) The Vendor’s account will automatically deduct this amount from your commissions each month.
If you’re an affiliate you probably don’t like the sound of that. But the problem for PayDotCom is trying to make the cost of what is basically an “add-on” service attractive to vendors in comparison with ClickBank.
PayDotCom wants to position itself as a better option than ClickBank by claiming it offers more features and is cheaper.
From the site:
Other companies charge $1 plus to 7.5% of the sale price. All you pay is our fee plus the cost of your PayPal or StormPay fees.
So how does the service actually stack up in terms of cost?
At first glance it seems very attractive, as can be seen from this table on the site:
| Sale Price | PayDotCom® | ClickBank® $1 + 7.5% |
2CheckOut® $0.45 + 5.5% |
| $10 Sale | $1.00 | $1.75 | $1.00 |
| $20 Sale | $2.00 | $2.50 | $1.55 |
| $47 Sale | $3.00 | $4.53 | $3.04 |
| $97 Sale | $3.00 | $8.28 | $5.79 |
| $197 Sale | $3.00 | $15.78 | $11.29 |
But let’s take a look at what you will be paying in total once your PayPal (2.9% + $0.30) or StormPay (6.9% + $0.69) fees are included.
Using PayPal:
| Sale Price | PayDotCom® | ClickBank® $1 + 7.5% |
2CheckOut® $0.45 + 5.5% |
| $10 Sale | $1.59 | $1.75 | $1.00 |
| $20 Sale | $2.88 | $2.50 | $1.55 |
| $47 Sale | $4.66 | $4.53 | $3.04 |
| $97 Sale | $6.11 | $8.28 | $5.79 |
| $197 Sale | $9.01 | $15.78 | $11.29 |
Using StormPay:
| Sale Price | PayDotCom® | ClickBank® $1 + 7.5% |
2CheckOut® $0.45 + 5.5% |
| $10 Sale | $2.38 | $1.75 | $1.00 |
| $20 Sale | $4.07 | $2.50 | $1.55 |
| $47 Sale | $6.93 | $4.53 | $3.04 |
| $97 Sale | $10.38 | $8.28 | $5.79 |
| $197 Sale | $17.28 | $15.78 | $11.29 |
When using PayDotCom with PayPal, the fee on the sale of a $50 product is $4.75. The fee on a $50 product sale through ClickBank is also $4.75.
PayDotCom is only cheaper for products priced over $50.
Note: These examples are for US users only. For non-US accounts, PayPal rates are 3.4% + $0.30:
| Sale Price | PayDotCom® | ClickBank® $1 + 7.5% |
2CheckOut® $0.45 + 5.5% |
| $10 Sale | $1.64 | $1.75 | $1.00 |
| $20 Sale | $2.98 | $2.50 | $1.55 |
| $47 Sale | $4.99 | $4.53 | $3.04 |
| $97 Sale | $6.60 | $8.28 | $5.79 |
| $197 Sale | $10.00 | $15.78 | $11.29 |
(In addition, PayPal also charges non-US users a small fee to withdraw funds. Varies with currency exchange rates but in the region of $0.50-0.60)
However, the examples above don’t take into account the situation where the fee is split with an affiliate.
When there is a referring affiliate, fees for vendors using PayPal would be as follows (I’m not going including figures for StormPay, since we have already seen that if coupled with PayDotCom it’s far more expensive than using ClickBank):
| Sale Price | PayDotCom® | ClickBank® $1 + 7.5% |
2CheckOut® $0.45 + 5.5% |
| $10 Sale | $1.09 | $1.75 | $1.00 |
| $20 Sale | $1.88 | $2.50 | $1.55 |
| $47 Sale | $3.16 | $4.53 | $3.04 |
| $97 Sale | $4.61 | $8.28 | $5.79 |
| $197 Sale | $7.51 | $15.78 | $11.29 |
But what about the referring affiliate?
The table below shows how the affiliate’s commission is effectively reduced:
| Sale Price | Affiliate Pays PayDotCom |
50% Sale Commission |
Affiliate Payment |
| $10 Sale | $0.50 | $5.00 | $4.50 |
| $20 Sale | $1.00 | $10.00 | $9.00 |
| $47 Sale | $1.50 | $23.50 | $22.00 |
| $97 Sale | $1.50 | $48.50 | $47.00 |
| $197 Sale | $1.50 | $98.50 | $97.00 |
What we can see from all this is that a vendor who’s sales are mainly driven by affiliates (and this after all is PayDotCom’s target market) will find PayDotCom slightly cheaper than ClickBank. They can save on per sale costs whilst (on the surface at least) still offering the same commission as at ClickBank.
Kinda like having your cake and eating it.
If you make most of your sales yourself (i.e. not through affiliates), then PayDotCom will cost you more than ClickBank for all products under $50. However, if you are not intent on building a large number of affiliates to make your sales you’ve no need to use PayDotCom at all, and can simply use PayPal alone.
Of course, there’s no set-up cost with PayDotCom. But that is only as long as you are selling a single product, so it is unlikely to apply to most sellers for very long. If you want to sell more than one product, the set-up fee is $29. Still substantially cheaper than the $49.95 ClickBank charge for a single product account, although it’s also worth mentioning that there are several scripts available that enable the sale of multiple products through a single ClickBank account.
Another plus for ClickBank users is that affiliate payments are taken care of by ClickBank, completely hands off. Whilst PayDotCom does provide sellers with PayPal Mass Pay files to pay affiliate commissions, the vendor still has to log in to their PayPal account, upload the file and go through the Mass Pay process. It doesn’t take long, but it’s still an additional task.
Nevertheless, vendors using affiliate marketing may find PayDotCom’s extra features, plus the lower overall cost per sale and cheaper setup more attractive than ClickBank. Let’s face it, there’s currently no other service at this price point that enables you to do recurring billing or sell physical goods with a 2 tier affiliate program.
It’s a different story for affiliates though.
The generally negligible benefit of 2nd tier commission potential aside, affiliates are better off with ClickBank. At ClickBank a 50% commission means half the sale price goes into your pocket, not half the sale price less $1.50 (incorrect, see comments below). I’m afraid the idea of charging affiliates for the pleasure of using a service catering for the vendors they make money for sticks in the throat somewhat.
Look at it how you want, but basically, the vendor pays PayDotCom a commission on every sale, and the PayDotCom system legitimizes the affiliate commission advertised not being the true commission paid to the affiliate.
But then the PayDotCom site makes the position pretty clear:
Vendor Does Not Pay Affiliate The Full Commission Earned.
Vendor charges to fee to the affiliate (automatically calculated) and pays it on the affiliates behalf to PayDotCom.com at no additional cost to the Vendor.
The Vendors Net Profit Stays The Same.
This is done this way because PayDotCom has a better relationship with Vendors then we may have with come and go affiliates that do not have products with us. This simplifies billing for all parties involved.
The Vendor is responsible for the full fee but the Vendor gets to split the fee with the affiliate by withholding it from their commission. This is all automatically calculated by PayDotCom for all parties involved.
Nevertheless, assuming it proves to be well run and reliable (still some website “issues” evident when I was last there), PayDotCom is likely to become popular over time. It’s a vendor driven site being heavily promoted, and inevitably the mass of affiliates will follow the products they want to promote, even if they are losing out in the process. I may even end up trying it myself if that happens and see if the pain is worth the gain. Although then again, a service that disparagingly calls one of the parties it depends on for its existance “come and go affiliates” gives me the urge to suggest affiliates simply, “go”…
Of course, if PayDotCom does start to take a significant slice of business away from ClickBank, it could well lead to the long overdue upgrading of the ClickBank offering so that it provides the services users have been requesting for years, and possibly with a revised rate structure. There’s nothing like a bit of competition to stimulate a company into listening to it’s customers and providing more benefits to the end-user.
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August 1st, 2005 at 2:31 pm
Hi,
Great article. ClickBank has already started to make changes. They speak now of recurring billing. They now take paypal. And they cut their refunds to 6 week, not 12.
[PayDotCom->http://www.nowsell.com/cgi-bin/out.cgi?http://paydotcom.com/?affiliate=4092] made them finally take a survey and listen. And they now have a promote Clickbank on the home page.
Anyway, let me correct a few mistakes in your great article.
It will change the fees in ClickBank’s favor, but I will address that later.
First, CLICKBANK DOES charge the fee to the affiliate. And it is not 50/50. It is the % of the commission. SO if it is 75%, like some.. The AFFILIATE pays 75% of the fee.
ClickBank even brags about it.
“Our standard markup is $1 + 7.5% of the total purchase price, but when a customer is referred by an affiliate our markup costs you only a fraction of this amount. When you pay a 33% commission, our markup costs you $0.67 + 5.0%. When you pay a 66% commission, our markup costs you only $0.34 + 2.5%.”
You see, what happens is this. The Fee is taken out at ClickBank, and then the remaining portion is multiplied by the affiliate percentage.
That is why when you are an affiliate for a $47 product, you do not get #23.50… you get $21.23
So as an affiliate with ClickBank you lose $2.27
With [PayDotCom.com->http://www.nowsell.com/cgi-bin/out.cgi?http://paydotcom.com/?affiliate=4092] you, as an affiliate only pay $1.50 - So the PDC affiliate makes over $.075 more. You see, he does not have to pay the portion of the PayPal fee either
OK so now, it is important to note, ClickBank is trigger happy with refunds.
So if you have a 5% refund rate with them, it may be 2% with PayPal.
That said, that could be 4 sales per month, or about $125 in lost profit that we say “Is a cost of doing business with ClickBank.”
Add that to your fess account for this example “Not Lost Profit” and this intangible goes along way.
I hope I was able to illustrate my point. IF we are going to count pennies, it is important to talk of the hundreds you may save in not have as many refunds each month.
Now, as for “Come and Go” affiliates. What I meant when I wrote it, there are people that join and are not coming back. Do not know what they joined, and are in some cases, not marketers. Just people that clicked on a link for an EARN MONEY on a diet ebook sales page.
I did not mean to offend. Just wanted to stress that vendors have a better relationship with the system.
Perhaps I will reword it.
Thanks for the great article.
Mike
P.S.
I pay 2.3% with PayPal. The more volume you do, the less you pay
August 4th, 2005 at 8:58 am
Thanks for the response Mike.
Sorry approval was late — I wasn’t around for a few days and missed it. You make several good points, and you know something? All these years I never noticed ClickBank were doing that with commissions! My apologies for the error and inaccurately stating ClickBank are better for the affiliate as a result.
“Not Lost Profit” is a fair comment, but very hard to estimate without refund figures for different sellers in different markets. However, “You Have Control of Refunds” is listed in the main table as one of the features of PDC over CB.
Personally I don’t like CB. Never have. So Naturally I looked at PDC with some interest. But whether it’s PDC or CB, I feel that if an affiliate commission is advertised as 50%, the affiliate should get 50%. Otherwise it should be “50% (less fees)” as it would be marked in the offline world.
Yes, I’d consider rewording the entire “come and go” bit … I confess to thinking it had probably been written in a hurry, but I couldn’t resist using it!
I wouldn’t even mention affiliates, and so avoid any potential for offence. Something like, “We do it this way because PDC’s priority is our long-term relationship with Vendors. We are committed to providing you with the best service possible.”
August 18th, 2005 at 4:04 pm
Since the above, Mike emailed me and said:
—
You are 100% right. Our “promote” pages in our marketplace
go to dynamic pages that say xx% but no mentions of less fees.
So I will update that today
—
Good to know Mike takes this seriously and is updating the pages to mention the fees. That makes me much happier
November 22nd, 2005 at 9:38 am
ClickBank is good, but if you live in a country where CB deny service to you, what can you do?
You need a serious competition like PayDotCom. I am very unhappy CB do not accept me because I am someone from an alien nation.
CB accept country like Indonesia, etc, but I can never understand why they refuse to accept Malaysian.
But at this time of writing, PayDotCom.com is down. That is horrible. I am not sure why.
And I believe merchants wouldn’t mind paying fees if paydotcom help them to pay their affiliates, like what CD does.
Another thing, I post a question on paydotcom forum but still waiting for approval after a few days.
No business model can survive with the FREE gimmick. I wouldn’t paying fees as the service is realiable.
At the moment, with the slow response and server down of paydotcom, I have doubt.
Paydotcom should do something different, cater for what CB is weak and lack, get more people from country where CB do not serves. Free is good, but does not last.
January 10th, 2006 at 1:26 am
Daniel, I think CB still refuse to accept Indonesian.
September 6th, 2006 at 9:10 pm
Yeah.. so sad, i can’t open an account with CB, because i;m in indonesia.
October 13th, 2006 at 6:31 pm
Just one thought: competition forces business to enhance their offer.
CB has been like a monopoly in the niche of affiliates + infoproducts arena. Now they got competition and maybe they will get better, solving the following problems:
- Rejects valid credit cards for no reason — it is random, sometimes it works, sometimes it doesn’t
- Simplistic tools, poor service
- If your country is not in your golden list, you’re death, you cannot make business with them.
November 23rd, 2006 at 9:17 am
Hi guys,
Just started at Paydotcom and am very happy about how it works.
The only issue I noticed and addressed to their team, is the fact that the website runs a bit slow. It should be a bit more agile.
They said this was due to the fact that most of their pages run under https and not http, and they also mentioned they would add a new server to their 3 existing ones (or 4? I dont remember right now).
I personally think PDC is simply different from CB. Both have pros and cons.
For instance, we all know that CB is a fast refunder. Fact is, they are legaly the retailer of whatever you are selling, and therefore are the ones in the front line if a problem starts. With the situation as it is, and especially on some websites, they process refunds right away rather than taking the chance of having a mad customer contact an attorney.
They only need one of those on their back winning a trial to loose their credit account and their business would be gone. It is simply too risky for them.
It is as simple as that.
PDC, on the other hand, simply acts as an affiliates management system, provides more tools than CB (contacting affiliates is very useful), a marketplace that is growing day after day, payment buttons with their logo (advertising for them), payment button personalization, to name a few. But they are an intermediary providing extra tools, that’s all. They are totally free of any legal liability as they do not own the payment gateway (paypal) nor get to be the virtual owner of your product (become retailer) as it happens on CB.
Therefore, they do not run on legal risks, at least not so much as CB does.
The result, you are alowed to manage your refunds.
If you think about this, this can be good and this can be bad.
For example, a filesharing website is on CB categorized as “tutorial” on how to download things from the internet, and all are required to have a copyrights disclaimer.
If a website like that gets into legal trouble, CB would most likely be first line receiving fire before the website owner does. CB would simply close the account of the vendor and settle. After that, the vendor closes the page and normally nothing happens.
If that happens on PDC, there is no filter as PDC is not a retailer. If there are any troubles, troubles knock on the vendor’s door right away.
But again, it is just my opinion and experience.
I think that Paydotcom has made CB wake up and this is very important. They needed a competitor to improve.
Competition is always healthy and the end user is the one benefiting after all.
Some great changes will come in the next few years besides me being a daddy.
October 24th, 2007 at 1:18 pm
Recently I have started to use www.PayAff.com It seems to provide similar services to CB & others but with virtually to fees. Have you had a chance to look at them?
Thanks
April 21st, 2008 at 11:40 am
My country, Tanzania and many others are not listed by CB. For us CB is as good as nothing! I would welcome any other provider who is responsive without discrimination!
April 30th, 2008 at 3:43 am
I agree with you, Emmanuel. But that’s the problem when you don’t have much competition. All these companies, Clickbank, Google, etc., are in a position to dictate terms however they please for as long as they remain free from worries about losing market share to competitors in a big way.
May 23rd, 2008 at 4:18 am
I recently joined paydotcom and I am planning to sell my products through PDC. I paid 100$ and got 500$ selling fee credit.