For those promoting ClickBank products, you may want to take note of the refund rate for these products. It would be unwise to promote a product with a high payout commission but also a high rebate rate. There are four easy steps to calculating the refund rate for ClickBank products.

The formula is simply like this:

Step 1: (Product Price – 7.5%) – $1 = Net Commission
We start with the Net Commission calculation where the formula is (Product Price – 7.5%) – $1. The 7.5% percentage and $1 are actually ClickBank’s commission charges as an affiliate network to handle all of the processing and administration. So, subtracting the ClickBank commission from the product price, this equals your ‘Net Commission’.

Step 2: Net Commission x Payout Percentage = Affiliate Commission
This is where you multiply your Net Commission with the Payout Percentage, then equals your Affiliate Commission.

Step 3: Affiliate Commission – $ Earned/Sales = Refund Difference
Get the Cashback Difference, simply minus your Affiliate Commission on the Earned/Sale value.

Step 4: ($ Refund Difference / Affiliate Commission) x 100 = Refund Percentage
The Payback Difference divided by the Affiliate Commission, multiplied by 100, then this equals your Payback Percentage.

Now let’s demonstrate it more clearly with an example. I will use “Stream Online Movies” as our example product. There are 3 variables that we must take into account.

Product price = $45.95
$ Earned/Sale = $25.21
Payment Percentage = 75%

The price of the product is actually $45.95. The product price can be found by clicking ‘View Launch Page’ which will take you to the sales page offer and all you need to do is look up the product price. To stream movies online, you need to click “Get Access”, register your email address and you will be taken to the sales offer page where you can see the price of the product. In other cases, the price of products can usually be found by scrolling down to the bottom of the sales offer page.

The amount earned per sale is obtained from the first column of the ClickBank marketplace search results. For streaming movies online, the amount earned per sale is $25.21. For this product, the payout percentage is 75%.

So now let’s work on the calculation.

Step 1: ($45.95 – 7.5%) = $41.50 (Net Commission)
You start by taking the price of the product, minus the 7.5% ClickBank commission, minus one dollar, and that equals your net commission.

Step 2: ($41.50 x 75%) = $31.13 (Affiliate Commission)
Then, using your Net Commission, multiply it by the 75% Payout that equals your Affiliate Commission; in this case, it would be $31.13.

Step 3: ($31.13 – $25.21) = $5.92 (refund difference)
Then subtract the Affiliate Commission from the Earned/Sale value and you’ll get a cashback difference of only $5.92.

Step 4: ($5.92 / $31.13) = 19.01% (Refund Percentage)
The Payback Rate is then calculated by dividing $5.92 by the Affiliate Commission and multiplying by 100. This equates to a relatively high payback rate of 19.01%.

This shows that this product is moderately successful because 19.01% of its customers have requested a refund. There are many products out there with various rebate percentages. Refunds are normal in sales and marketing. Typically, the type of refund rate you’d like to consider on a product is between 0 and 10%. Of course, the lower the reimbursement rate, the better.