How to Determine a Fee Structure for your Influencers

GRIN also recommends the Influencer Marketing Budget Toolkit which includes: Influencer Payments Cheat Sheet + Budget Calculator + Negotiations Checklist

influencer fee structure

Negotiating with influencers and identifying a fee structure is often one of the most challenging parts of scaling your influencer program. Without experience, it can be difficult to know whether your influencers are overcharging.

Establishing your influencer fee structure doesn’t have to be an awkward conversation between you and your influencers, especially if you know little about fee structures. Rather, it can become a way to demonstrate to your influencers what your expectations are and how you intend to reward them for their efforts

Influencer Rates in 2020 – No “one size fits all”

Ethan Frame is one of the most accomplished influencer marketers in the eCommerce industry. As the Senior Manager Influencer Marketing for MVMT Watches, Ethan graciously partnered with us for Chapter Three: Influencer Budge of our 0-100 Webinar: Getting Started with Influencer Marketing.

Among the wealth of knowledge that he shared about developing an influencer budget, Ethan explained that your fee structure always comes down to what resources you have to work with.

“The real answer to the question, ‘How much should I be spending?’ is that it depends how much you can spend. How much can you afford? And what can you do with that amount?” – Ethan Frame, 0-100 Webinar – Chapter Three: Influencer Budget

As such, there is no “one size fits all” fee structure in influencer marketing. You are essentially building collaborative relationships with social media power users, who in turn promote your brand to members of their audience. If you achieve a sustainable working relationship, the costs will easily generate healthy returns.

Talking to Influencers About Rates

Compensation is one of the most important topics during influencer negotiations. Because these talks with a brand new influencer can be awkward, it’s important that you initiate the conversation by asking the influencer about their rates.

“I always make sure to ask influencers their number, because we can work backwards from there.” – Ethan Frame, 0-100 Webinar – Chapter Three: Influencer Budget

If an influencer’s rates are more than your budget, that doesn’t necessarily mean that they won’t work with you. The key is to get to know that influencer and to establish a working relationship that is mutually beneficial. Expensive influencers will sometimes lower their rates for fewer posts or additional perks.

Paying With Money, Perks, and Product

When it comes to influencer compensation, it’s important to remember that you don’t always have to pay money for influencer participation. If an influencer genuinely loves your products or services, they are usually more than happy to accept free products/services in exchange for posts.

You can also incorporate exclusive perks, such as business trips, personal shout-outs, and sales commissions.

When negotiating with your influencers, introducing these additional payment options can help you create a compensation package that works for the both of you.

Your Influencer Marketing Goals

Your influencer fee structure will vary based on your marketing goals. For example, sales generation goals make it easy for you to offer your influencers a commission on conversions.

But you can achieve more than a boost in sales with influencer marketing. You can establish goals to drive traffic to your website and increase your search engine rankings. Also, you can use influencer marketing to generate awareness for your brand or a special event. Influencers are a great way to increase your own social media following or boost subscriptions.

By establishing your influencer marketing goals, you’ll have a better idea of what investment level makes the most sense for your influencers. You can also match these goals to an influencer’s current and past performance to define a reasonable fee structure for that influencer.

Determine the Type of Influencer You Need for Your Campaign

Most influencer types are divided by the number of followers that they have. These categories include:

  • Nano influencers (1,000-10,000 followers)
  • Micro influencers (10,000-100,000 followers)
  • Macro influencers (100,000-1 million followers)
  • Mega/Celebrity influencers (1 million or more followers)

Another type that is increasingly popular is the brand ambassador, and they may have even less than 1,000 followers. But they are valuable, because they typically enjoy a rich connection with their niche audience. 

As a general rule, the more followers an influencer has, the more expensive they will be. But before you assume that an influencer with 500,000 followers is worth a high per post flat rate, it’s critical that you examine the quality of that influencer’s engagement.

Influencer engagement is a strong indicator for that influencer’s ROI. While engagement isn’t a guarantee for influencer ROI, it’s a critical metric for determining quality relationships that that influencer maintains with his/her audience.

When an influencer has strong engagement metrics, they generally demonstrate greater authenticity with their followers. As a result, followers are more likely to trust the influencer’s product recommendations and industry advice.

Important Metrics to Consider for Influencer Commissions

Commissions are a great way to compensate your influencers, but there are a few things to consider. On the one hand, commissions save you upfront costs. But if your commission structure comes across as stingy, it won’t be attractive enough to motivate your influencers to produce results.

The most important thing to consider about your commission structure is how you will track influencer metrics to properly attribute sales. When creating a fee structure for commissions, your key metrics include (but are not limited to): 

  • Link clicks (CTRs) – Most influencer programs use affiliate links to drive traffic and track influencer performance.
  • Conversions – When consumers use an affiliate link for their purchase, you can properly attribute sales to the appropriate influencer.
  • Discount code redemptions – Some brands create a separate discount code for every influencer and ambassador to track influencer performance.

Influencer Rates Rules of Thumb

You may encounter influencers that ask you for unreasonable fee structures. But if you’re not aware of what is “reasonable” or “unreasonable,” these “rules of thumb” can help you. 

A great illustration of basic influencer rate principles is Tubby Todd’s influencer program. Tubby Todd separates their influencer-ambassador program into three tiers to help them retain authenticity among the brand, influencer and consumer. The founder at Tubby Todd, Andrea Faulkner Williams, explains how it works.

“For our [first-tier] influencers, we’re just gifting product. And we always start everyone there just to make sure they’re a good fit with the brand. I would never feel comfortable paying anyone that didn’t sincerely love the brand. I never want to pay someone who hasn’t used the product.

The first influencer rate rule thumb is that the most important part of any brand-influencer relationship is the passion that your influencers maintain for your products or services. Without this genuine excitement, you risk getting little to no return with influencer audiences.

“For our ambassadors [second tier], we have a set rate that we pay them. We pay them 10% of whatever conversion they make. They get to offer a 10% discount with their link, and four times a year they get to offer a 15% discount with their link.”

Another influencer rate rule of thumb is that a commission structure allows your influencers and ambassadors to get financial rewards for their efforts. Your influencer community should be made up of social media power users that know how to leverage their online presence to help you achieve your campaign goals.

“Then our top tier – they offer a 15% discount, and we pay them 10% of the conversions that they make. Occasionally, we’ll pay 15% for specific campaigns.”

Your top-performing influencers deserve greater incentives, benefits, and perks. For Tubby Todd top-tier influencers, they can use larger discount codes to generate more sales and commissions.

Lastly, it’s not a bad idea to institute flat rate payments to influencers under the following conditions:

  • If the influencer has a massive following (500,000 or more) and can give your brand incredible exposure
  • If your influencer campaign goals are more than sales, such as website backlinks, in-depth product reviews, marketing event promotions, etc.

These influencer rates rules of thumb can help you approach your fee structure with more confidence. More importantly, these principles allow you to use your influencer fee structure as a tool to establish a better working relationship with your influencers and ambassadors.

Determine Where You are in Your Influencer Program

Starting Out

If your influencer program is new, you’re probably not going to want to spend a lot of money with influencers. Part of this is because you may be a small brand and unable to afford any other way. But also, you will need time to figure out what influencer strategy works best for you.

Influencers that Align with Your Goals

It’s critical that you establish your influencer marketing goals and recruit influencers with these goals in mind. Most likely, your primary goal in this stage is to drive sales. The best influencers for your brand should be able to drive sales organically without appearing “salesy” or obnoxious.

Your Influencer Budget

It’s important to remember that you don’t have to spend thousands of dollars in the beginning of your influencer program. Consider the cost of your products and services for product giveaways, and set up some spreadsheets to track influencer performance. These affordable tools and techniques give you the basics to launch your program.

Recommended Influencer Fee Structure

Product seeding is your “go to” at this stage of your influencer program. Once you’ve scaled your program, you’ll be able to afford more ambitious campaigns and fee structures. But for now, look for opportunities to send free products to your influencers so that they can share their experience with their audience.

Building Your Influencer Network

Once you have a few influencer campaigns under your belt, you have a better idea of which influencers are your top performers. You can match yourself with look-alike influencers and scale your program.

You can also invest in new influencer types and techniques. As long as you track performance, each new campaign is an opportunity to improve your influencer program success.

Influencers that Align with Your Goals

A growing influencer program may experience some shifts in marketing goals. If your goals broaden beyond sales – such as brand awareness and web traffic – make sure to incorporate these changes into your recruiting efforts.

Your Influencer Budget

Depending on the success of your program thus far, you may have a larger budget to work with. As such, you’ll want to think beyond the influencer fee structure when considering your influencer budget. 

For example, the success of your influencer program hinges on your ability to track results. If your manual system of tracking and reporting is starting to overwhelm you and your team, it may be time to invest in an influencer-specific automation tool like GRIN. Doing so will allow you to scale your influencer program with ease and track more data without having to manually add each bit of information into a spreadsheet.

Recommended Influencer Fee Structure

Many growing influencer programs still lean heavily on product seeding. That said, you will probably achieve better results if you add a commission fee structure.

Whatever compensation approach you choose, you need to guard your influencer relationships from becoming transactional. By focusing on influencers that genuinely love your brand, you’ll be able to develop a fee structure that works for the both of you and still allows your campaign posts to be as authentic as possible.

Scaling an Existing Influencer Network

At this point, your influencer program is growing, and you are feeling more confident in your ability to negotiate with and manage teams of influencers. Your priorities will likely shift from growing the number of influencers on your team to improving the quality of your influencer program.

Intermediate influencer programs often turn their focus on nurturing long-term influencer relationships. This mindset allows brands to replicate results from their most successful influencer campaigns.

Influencers that Align with Your Goals

Once you feel more confident managing influencer campaigns, you’ll be able to use influencers to do more. For example, you can use influencers to promote marketing events, like conferences or pop-up shops.

At this stage, you may also want to use influencers to rapidly grow your target audience with increased brand awareness.

Your Influencer Budget

When you’ve established your influencer program, using extra funds to partner with more expensive influencers could benefit your brand in new ways.

For those influencer relationships that are strong, you can invest in bold influencer techniques such as Instagram takeovers or whitelisting campaigns.

Recommended Influencer Fee Structure

When scaling your influencer program, it can be helpful to try a few campaigns with influencers that have a flat rate per post. However, you should confirm their engagement metrics before paying a flat rate.

However, some of the most powerful influencer programs never agree to flat rates. But because there is no “one size fits all” in influencer fee structures, you should figure out which approach is in your best interest.

Ideally, you reserve your highest rates for those influencers who have already proven themselves. For example, some of your top performers may want to renegotiate rates at some point. Because you know that they deliver results, you may feel more comfortable increasing their compensation. 

Conclusion: Align Your Influencer Program with Your Marketing Goals to Determine Your Influencer Fee Structure

By keeping your focus on your marketing goals and KPIs, you’ll be able to keep your influencer program priorities in line. Using performance metrics, such as engagement, CTRs, conversions, etc., you can establish your influencer returns and develop a fee structure that makes sense.

Armed with your marketing priorities and performance data, your influencer fee structure will take shape. In time, you can tweak your influencer budget to boost results and grow your brand.

For more information on influencer program budget and fee structures, check out these additional resources:

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Additional Resources

What the best brands are doing to drive revenue from influencer marketing

Whether you are just getting started with influencer marketing or already have your program in place, this guide gives you the tools to get the return on investment your C-level will love. 

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