Why has Spreadshop changed its commission model?

Why has Spreadshop changed its commission model?

 In the coming months, we will significantly expand the range of products available for your Shop. We’re particularly excited about adding more inexpensive products, such as the long-awaited stickers. But our old pricing model was too inflexible to accommodate such low-cost products. Why? The combination of design price, affiliate commission and volume commission did not allow competitive retail prices for some product types. The new commission model is our solution to this problem.

Why does the new commission model allow lower entry prices?

We’re replacing the volume commission with a Performance Bonus. We are also discontinuing the design price as well as the affiliate commission. These were the main reasons for the high base prices in the old commission model.

For example (in USD): Let’s take a T-shirt with a purchase price of $10. Under the old model, the affiliate commission of 20% and the highest possible volume commission of 40% had to be added to this base price. This increased the price of the T-shirt to $16.80. The problem? Only very few Shop Owners regularly reached the highest volume commission tier. Nevertheless, we had to take these into account for all sales.

On top of these costs came the promo costs, which we calculated as 15% on average. This made the base price rise to over $19.

So what’s new?

The affiliate commission will no longer exist in the new commission model. This will allow us to offer product types with lower base prices moving forward. One of the first exciting new releases we’ll be able to make under the new commission model is stickers.

What is the difference between the old design price and the new margin?

With the old design price, you determined how much a design should cost customers – regardless of the product. It was the design, not the product, that defined your commission. We are now turning this logic around. In the future, you set the retail prices for your Shop’s products yourself. Your commission is calculated as the difference between the retail price and the base price: your margin.

We’re handing you more control over and responsibility for your Shops. Now you can set your customer prices yourself and market more directly to your target groups.

Will my income decrease?

We have designed the new commission model in such a way that the majority of Shop Owners can expect similar commission payouts to what they received under the old model. However, since both commission models do differ fundamentally and we only have 7 Performance Bonus tiers in the new model (vs. 30 volume commission tiers in the old model), there is sure to be some variation. Depending on the products you sell in your Shop and how you choose to price them, your commission may increase or decrease. That’s why we’re giving you three weeks to review your assortment before switching to the new commission model. You can adjust the retail prices and your margin at any time and as often as you like until you are happy with your earnings.

How do I set the new retail prices for my Shop?

Log in to your Partner Area. In the Shop menu, you will find the new menu item “Prices & Promos”. Under “Prices” you can set the individual retail price for each product in your Shop. We’ve suggested a retail price for each product. Feel free to keep the suggested prices or set your own. Your new retail prices for all your Shops will go online when the new commission model launches on March 2nd, 2020. Please note that you have to adjust the retail prices for each of your Shops separately.

As a general rule, you can adjust the customer prices as often as you like. Please note, however, that it can take up to 30 minutes before the new prices are displayed in your Shop. This is due to our system cache.

How does the Performance Bonus affect my margin?

The Performance Bonus is a reward for Shop Owners who sell a particularly large number of products. There are seven volume tiers. When you reach a tier, the base prices of most products are lowered retroactively for the current calendar month. This increases your earnings, which will be paid out to you as a sales bonus on your next earnings statement. The retail price remains the same. Performance Bonus begins at 50 items sold.

Tier 1 50-249
Tier 2 250-499
Tier 3 500-999
Tier 4 1,000-2,499
Tier 5 2,500-4,999
Tier 6 5,000-9,999
Tier 7 10,000+

For example: Let’s say it’s April 13th and the deadline for your next payout is due in two days. In March, you sold 300 Men’s Premium T-shirts, 2 Women’s Premium T-shirts, 250 mugs and 40 Men’s Long-Sleeved Shirts. In total, this makes 592 products sold. You’ve reached volume tier 3.

This lowers the base prices for all qualifying products – find out precise numbers in this overview (USD, CAD, AUD, EU, GBD). In the following billing month, the sales count starts again from 0.

Some products are ineligible for the Performance Bonus. These are the cheapest products in our assortment, for which a base price reduction would not make sense. From March 1st, the new Performance Bonus rule will be applied to all sales in your Shops.

Who pays for the promos?

Spreadshop pays the “free shipping” promo completely out of its own pocket. It has no influence on your earnings. For all other promos, we share the costs.

Let’s take a 20% discount, for example (in USD): For a product with a base price of $10, you set a final price of $50. This makes your margin $40. Your customer adds an additional printing area and pays $54.50 at checkout. If they redeem a 20% off promo, Spreadshop’s share of the base price and additional printing area (=$14.50) is reduced by 20%. Your margin of $40 is also reduced by 20% (= $8). In the end, your margin is $32.

If you do not want to use the promos to boost your Shop’s sales, you can deactivate them at any time.

Why do I pay a share of the promo costs?

With the new commission model, we’re giving you more control over your Shop and promo codes than ever before. So you could theoretically set a sky-high retail price and earn a sky-high margin on your sales. Spreadshop has to think strictly economically in order to make sure that our Shop Owners are getting the most out of their Shops. That’s why we’ve decided to split the costs for the promos fairly.

In the future, you will be able to deactivate any or all promos for your Shop at any time.

How can I see an overview of my total promo costs?

Your promo costs for each individual sale are detailed in your sales statistics.

Where will upcoming promos be announced?

You can find the promo calendar on your Dashboard in the Partner Area. Starting March 2nd, 2020, you will be free to schedule your promotion codes flexibly within 30 days. There will be at least two promos per month. Please note that all promos are activated by default, but you are free to deactivate or reschedule them.

What do I have to do for the new commission model to apply to my Shops?

Nothing. We will send you the new Terms and Conditions via email. You don’t have to do anything to accept the T&Cs, but you are free to reject them. You have 3 weeks from the receipt of the email to reject the Terms and Conditions; otherwise your consent is automatic.

If you open a Spreadshop after February 5th, 2020, the new Terms and Conditions already apply.

What happens if I reject the new Terms and Conditions?

If you choose to reject the new Terms and Conditions, please send your rejection to opposition@spreadshirt.net (for the EU platform) or opposition@spreadshirt.com (for the NA platform) within 3 weeks of receiving our e-mail.

If you object to the new General Terms and Conditions in due time, our existing contractual relationship will be continued under the previously agreed conditions. Please note, however, that we want to treat all our Partners equally and therefore reserve the right to terminate our contractual relationship in accordance with the previously valid T&Cs. Because all Partners on our platform need to be held to the same T&Cs, if you choose to reject them, your account will be closed.

Need help? We’re happy to answer any questions you may have.

If your account is closed, any outstanding commission will be paid out in March. Please check whether your bank and Paypal information are correct.

Why is my payout amount different than my margin?

Is your payout showing different numbers than the margin you set? There are a few reasons why this might be:

  1. Your customers have applied a promotion to their purchase. Your margin is reduced by your share of the promo costs.
  2. For Shop Owners selling on the EU platform: depending on the country your order is shipped to, VAT may apply. This tax can influence your margin. Sometimes, these differences may not be displayed in real time in your sales statistics. They will be shown on your monthly statement.
  3. For Shop Owners selling on the EU platform: if your residence is outside Germany, tax may be deducted from your commission. This depends on whether your country of residence has a double taxation agreement (DTA) with Germany. Find out here whether you’re subject to withholding tax.
  4. For Shop Owners selling on the NA platform: refer to this blog post about withholding tax.

What is a Non-Profit Shop?

Non-Profit Shops may be run by, for example, charitable non-profit organizations that are not allowed to make profit. If you want to run a Non-Profit Shop, simply use the Non-Profit option to set your margin to zero with one click. You won’t get a Performance Bonus on your sales. Further information can be found here.