Thanks for your review.
1) It depends on what sort of incentive you are doing! Paying people $10 to sign up is 1 thing, giving someone a website that they otherwise would be needing is another.
You can get in touch with the affiliate team and ask them for permission for what you are doing. Here is what they wrote in their terms:
Incentivized commissions, and offering any form of incentive to obtain a sale is forbidden, unless prior approval is given and cleared by HostGator Staff. To inquire on whether your incentive is acceptable, please e-mail affiliates [@] hostgator [dot] com
2) If customer wants more... ask them to cough up with money, explain that you can only do so much FOR FREE. You can also upsell them on logo, SEO etc. use your imagination here.
3) Yes, you need to invest in getting traffic - be it in form of SEO tools, building your own links manually, buying traffic from adwords/fb/bing etc. or buying SEO services to rank your landing page. You can also post your offer on forums, gumtree, back-pages and other FREE local classified websites!
You need to provide content which will cost you around $6-7 or you can write them yourself.
The business in a package comes with everything you need to make money. Yes, You will need to invest a little and put in some effort but you will get a lot back!
Thanks for your feedback.