EPC stands for “earnings per click”.
EPC is the ultimate test to tell which of the affiliate merchants you're promoting is performing the best.
It can also show you the duds.
Is an affiliate program that pays $100 commission better than a program that pays $5 commission? Maybe. Maybe not.
You can find out by calculating the EPC.
To calculate the EPC, you simply divide the commission generated by the number of clicks.
For example, if you receive a commission of $20 after sending 100 clicks (visitors) to the merchant…
Divide $20 by 100 = 0.20.
Your EPC is 20 cents per click.
It's very important to know this figure. It tells you exactly how much you're earning for each visitor you send to a merchant.
Do the sums for a few merchants and you'll probably find you're earning wildly varying payouts.
After such research, you may decide to dump some merchants and put more time and energy into promoting the ones which perform best.
Some merchants won't reveal affiliates' average EPC but will tell you their average sale. One merchant might have an average sale of $15 while another has an average sale of $100. The merchant with the higher figure would appear to have a site which is good at achieving sales.
In some cases, they may also tell your their conversion rate – their visitor-to-sales ratio.
However, the most important figures are the ones you calculate for yourself based on your own results. You may do much better or much worse than any quoted figures.
Exceptionally good EPC
For example, I've strongly recommended John Evans' book Success Alert – Conversations with Successful Internet Entrepreneurs to my newsletter subscribers.
I've just calculated the EPC to see how much John is paying me per click. It worked out at $1.29.
That's an exceptionally good earnings per click. It tells me that it's worth putting time and effort into promoting this book.
Your earnings per click for this product may vary hugely from mine, depending on how effective you are at preselling, warming up the potential customer in preparation for a purchase.
Most of my sales have been achieved by this review in my newsletter: Web success stories you can't put down
If you keep an eye on the EPC, changes – for better or worse – can alert you when the merchant has done something that affects the site's conversion rate. If your EPC plunges, perhaps the merchant has started diverting affiliate traffic to areas that don't earn you a commission.
Also, if a merchant has a low EPC and you're sending a lot of traffic to the merchant, you may be able to use the EPC as a bargaining lever to negotiate a higher commission.
Affiliate network Commission Junction confuses things by having a different definition of EPC. To CJ, EPC means earnings per 100 clicks.
Therefore, CJ's EPCs look 100 times better than normal EPCs.
However, I'm delighted that CJ is displaying merchants' EPCs. Doing so keeps merchants on their toes and also gives affiliates a rough idea of whether an affiliate merchant will be worth promoting.
It's only a rough idea, because there's no guarantee that you will earn the average EPC. You may do better or worse, depending on your skills and on how well the product matches your visitors' interests.