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There are two main types of affiliate programs these days:

• DIY Affiliate Program. You use software to keep track of banners, affiliates, payments due, etc. and you write the affiliate checks when due. This is the lowest cost approach, if you're willing to do the work.
• Affiliate Networks. The affiliate network handles much of the work. You can advertise your company to their network of affiliates, they keep track of sales, and also write the affiliate checks. You generally pay the affiliate network a fee based on the commissions paid out each month. There's also usually a mininum monthly that you must meet.

DIY Affiliate Software

There are a lot of software programs out there. You purchase the license and install the program on your site. Usually the software vendor will install it for a modest fee to get you going -- usually a wise approach. Of these, I recommend one program in particular -- though many are good.

Post Affiliate Pro is written in PHP and can be installed on websites that have PHP and MySQL (most do). The software is written by a programmer in Slovakia, part of the EU. I believe the company to be honest and bend over backward to clients get the program working properly. Cost for a license is $50 to $300. Recommended!

Affiliate Networks

Commission Junction is a full-featured affiliate network that many small to larger businesses choose. They provide a large and active network of affiliates, and their monthly minimums are not too large if you'll actively marketing the affiliate part of your sales program.