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Thinking about starting up a rebill company? (15)

01-04-2012 03:44 PM #1 mraffiliate (Member)
Thinking about starting up a rebill company?

I've been an affiliate marketer for 2 years and have ran a lot of rebills successfully. I have the traffic source and the knowledge to run these campaigns, but I was wondering how hard would it be for me to start up my own rebill company?

Can you someone shed some light for me? Thanks

01-04-2012 04:23 PM #2 Smaxor (Veteran Member)

Save your time and energy is what I'd suggest. Most of the affiliates make more money then the merchants.

I've had numerous people try and build their own deals and they almost always make more money with less headache running 3rd party.

01-04-2012 06:09 PM #3 mraffiliate (Member)

Hey Jason,

Thanks for your input. I do understand it will take quite a bit more time, but the offer will be more stable unlike most of these offers that come and go.

01-04-2012 06:20 PM #4 rich (Member)

Originally Posted by mraffiliate

Hey Jason,

Thanks for your input. I do understand it will take quite a bit more time, but the offer will be more stable unlike most of these offers that come and go.

I'm guessing their is a reason they come and go, ie lawsuits, refund rates, getting targetted as being a scam or whatever. I've always been keen to do it too because I read in an interview once that the average person is rebilled like 3-4 times before cancelled so that adds some serious margin on your sales

01-04-2012 06:33 PM #5 mraffiliate (Member)

I think a lot of the "scam" has to do with the call center part. People noticed they get billed so they try to find the site to call. The number is super hidden in the terms and then when they finally do get to it, no one picks up or they make it impossible to cancel. Which then the consumer calls their bank and bitch, then your merchant account gets canceled and the lawsuits come. I think if you were to make a more "legit" rebill, and actually bill on the 14 days and make it easy to cancel then you can prolong the life of the business.

01-04-2012 06:50 PM #6 wright (Member)

Running rebills can be an incredible headache, I'll quote a post I found browsing through WF a couple weeks back:

http://www.wickedfire.com/newreply.p...eply&p=1252639

Originally Posted by penguinbc

Not sure how often that thing happens with the bank, I've never had it happen to me and hearing from my cs reps and looking over support tickets and emails it doesent seem like that happens too often, usually they see the charge and have to contact the bank.

The original question as to why they don't just charge 30 was answered by me earlier in the thread. Average 14 day trial to rebill success rate is around 55-65%. Average advertiser cost per customer is around $40 bucks. You will not make a profit at $30. You will not make a profit at 50 dollars without a good upsell path.

What would you consider the optimal price? Let me try to break it down a bit for you and then you can answer the question yourself.

Just for the heck of it I will go ahead and give you and others a pretty close to real example so you can tell me what you think would be a good rebill price would be and why 30 or 40 dollars does not work.

Our product, packaging, and material costs 3 dollars each. It costs 2 dollars to ship. Lets say you are doing your own fulfillment (You are printing labels, tossing it in a box and sending it out) so we have a total of 5 dollars cost to ship every product out. We are paying an affiliate or a network $40 for every sale they send. We are charging $1.95 shipping for the trial order and billing $X amount after day 14, and every month after that until cancel.

Lets say we do 1000 sales. Right off the bat that is going to cost $45,000 for the product and affiliate/network commissions. Industry average says that about 60% of your orders will hit day 14 billing, and about 40% of those 60 will hit day 45 and so on. About 17% of your transactions are going to be refunded or chargedback (15% refund, 2% cb). You are also paying about 2% on all transactions for the processing and 10% gets put in a reserve account that is not released to you for about 180 days.

So plugging in all these numbers (Pretty average across the board) what do we get assuming we do all 1000 sales in one day (We also shell out the 45k on day 1 it costs to buy these sales and the cost of product), with refunds taking place right away (They will be spread out over the course of a few months but in the end it comes out the same anyway)

1000 sales $50 rebill:
Day 1 (1000 hit for the 1.95 shipping): $-42,418
Day 14 (650 hit): $-19,210 -45% ROI
Day 45 (248 hit): $-11,708 -28% ROI
Day 75 (94 hit): $-8,865 -21% ROI
-Skip until Day 195 when your 10% reserve comes in and you are no longer making any money-
Day 195: $-3,717 -9% ROI

So... running a rebill that hits for $50 on day 14 and continues to hit for 50 every month after actually causes you to lose money, not to mention all the time that you have put into this thing. So are you going to run your rebill at 50?

Lets try the more reasonable... 85..

1000 sales $85 rebill.
Day 1 (1000 hit for the 1.95 shipping): $-42,418
Day 14 (650 hit): $-2,717 -6% ROI
Day 45 (248 hit): $11,078 25% ROI
Day 75 (94 hit): $16,306 38% ROI
-Skipping to 195 again-
Day 195: $25,074 59% ROI

These numbers take into account cost of the average rebill product, cost of the sale, cost of the average merchant account and fees, and about average success, refund, chargeback rates etc. They might be a little off give or take a couple % points but hey this is pretty damn close to what you can expect and who else is going to break it down for you like that for free. This also does not take into effect any upsells after the initial sale that you may offer the customer. Also, the chances are pretty high that your merch account could get shutdown or audited or held up where you can't process anymore transactions, and since you have already paid for these sales ahead of time there is a high risk that you could very easily Lose A Lot of money. Not to mention the very many hours you will need to put in to get even close to These numbers I just put out there. 30 dollars is not reasonable. 50 dollars is not reasonable. Get above 80 and it starts to become Reasonable.

Oh if you are promoting your own product and it doesn't cost $40 per customer then your mileage will obviously vary but you are not going to get any affiliates or networks giving you any traffic for anything under 40 unless you have some amazing page or you fill some niche that no one is in yet.

01-04-2012 07:08 PM #7 polarbacon (Moderator)

Here is my advice on this just because I have recently gone thru getting some merchant accounts...(not even for a rebill)

ANYTHING affiliate related is gonna raise some red flags....and there is gonna be some serious hoops to jump thru... doesn't mean it cant be done...just expect them to want to know alot about you.

also the key point here on merchant accounts...if you don't have history good luck....you can get lower level accounts 20k-30k/month but much more than that again is gonna raise some issues and your gonna have to go thru a strict full disclosure deal....

so if your getting my point here it comes down to one thing.....bulletproof large merchant accounts if you even want to make it worth your time....start there and then the rest you can sort out....

just remember though every country is a bit diff so when you do what you plan to do....make sure your legit in saying where most of your transactions will be coming from....you can loose accounts over that...

and as stated in the WF thread loosing your merchant accounts mean can mean $xxx,xxx lost....

just my 2 cents

01-04-2012 07:43 PM #8 mraffiliate (Member)

Thanks for all the great replies! I think I would charge 89.95 on a 7 day trial instead of a 14. I am not sure why people do 14. I have a lot of traffic that I can use so I will not be running this through an affiliate network.

As for merchant accounts, I guess thats my only issue since I have no experience with them at all. But I am sure there is a way to make it work because people out there are still doing it.

01-04-2012 07:46 PM #9 sm1810 (Member)

PS I have some good XLS templates for rebills that can include upsells if you want to try and model something. Reason being we're now launching a consumable energy drink + health supplement in partnership w/E-Boost so hit me up and I'll be happy to share

01-04-2012 08:05 PM #10 polarbacon (Moderator)

Originally Posted by mraffiliate

most likely due to charge-backs and refunds.....I know it all sounds easy.....but charge-backs are evil evil evil.....they will crush you in a heartbeat if you don't know what your doing....and if your promoting these as I think you are :P ....the more you will have....

anything over 1% CB wise means they are gonna be watching you 3% or more and your account is prob toast.....and on rebills its hard to keep that number low....you best have one hell of a kick ass call center....and alot of transactions.....(there is a reason clickbank exists, its merchant account arb, they make all that easy-weasy)

Not trying to deter you away at all....just don't walk into it thinking that just because you know how to run traffic you have shit solved.... that's really only a very small part of the equation.....

as a friend once said recently...."what do you do well? figure that out and maximize that." You know nothing of how to run rebill...nothing to say you can't learn it....but have you maximized every possible angle on what your running now? Do you have every ounce of leverage in your favor?

I would ask myself that first.....before I took on something new I know nothing about....

(not a hater btw just trying to give non-bs advice)

good luck

01-04-2012 11:08 PM #11 mraffiliate (Member)

Originally Posted by polarbacon

I agree with you, and I know it will be a tough game. The reason why I am doing it is because I know it won't be around forever and I've made my money marketing it for so many people. The way I look at it is, if its around, it works. I just want to be able to catch and ride the wave before its over.

01-04-2012 11:48 PM #12 theguvna ()

Originally Posted by polarbacon

...but charge-backs are evil evil evil..

"what do you do well? figure that out and maximize that."

Both those points are so correct... I don't have the experience on chargebacks and processing like others on here do, and I still got screwed bad due to chargebacks by my merchant, on a non rebill. Lost transacting capability with very very few chargebacks.

And the second point is, well it's just really easy to forget, sadly.

01-05-2012 06:50 AM #13 ari_ (Member)

I think the title of this thread is wrong and why a lot of people fail: If you want to start a company to rebill people, your ass is toast. If you want to offer a solid product on a continuity basis, then you have a chance. I mean - what's the point in yet another person wrapping a label around the same product done by the custom Nutraceuticals people? And why are people so determined to actually inventory and ship product as your first stab at being a merchant?? If you have a great formula or a great angle, then sure - but if you want to launch a product b/c everyone else is launching a product, don't be stupid.

I recently started rolling out a product (not weight loss/bizopp or anything) primarily because: I think my product is awesome (it genuinely helps people), I want to diversify where my online incomes come from, and I want to be the merchant. Do we do continuity? Sure we do - but at a low price point (think between $10 - 20/m) and it's not the only way we charge - we also charge straight up sales, too (really just testing price points).

We also buy our own traffic - if you want to do this so you can basically do arby by having affiliates promoting your offer and just handling the process then your ass is toast too - you need to START by buying the traffic, making sure the offer converts and then maybe rolling it out to a few select networks where you can pick and choose affs and monitor for all the fraud that will come from some of the CPA networks as well.

Finally - in terms of clickbank.. Clickbank is awesome in terms of taking away a lot of merchant risk (as are Plimus, Gate2Shop and a dozen others I can mention), but certain douche traffic sources (*cough* adwords *cough*) will ban on site if you use them as your payment processor..

01-05-2012 07:14 AM #14 spdg (Member)

Originally Posted by ari_

Beautifully put.

I'd encourage you to re-examine your mindset and thought process here. The question you should be asking yourself: How can I create some value and in turn make some money off of that, possibly on a recurring basis? But the question you seem to be asking yourself here is: How can I extract money from consumers most quickly and effectively?

Remember, marketing is not about putting lipstick on a pig. It's not about coming up with new and creative ways to sell crap. If that's what internet marketing means to you, well, I honestly can't blame you -- for years affiliate marketers have had it easy, pushing crap products onto unsuspecting consumers.

But if you want to survive and Thrive in the coming years, you need to understand that marketing is actually about understanding what consumers want and figuring out how to connect with those wants and needs in a way that adds value, rather than extracting it.

Figure out how to do that, and you'll be golden. Yes, keep your dollars in mind, but please don't let that be the only thing you keep in there. Otherwise, in the long term you end up not only screwing over yourself, but also the community and the industry.

01-06-2012 04:20 AM #15 rileypool (Member)

Originally Posted by Smaxor

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