This same applies to all the stars or models or celebs (pseudo) on Instagram.
It gets easier as you get more followers(1000s). There are these celebs who have followers more than a million, exactly not 100,000 but 1,000,000 followers. I will tell you about an Indian actress who is pretty popular but still nothing in compared with Selena Gomez, Christiano Ronaldo, Kylie Jenner (100 million + followers).
She is Katrina Kaif. (She is actually the 11th most popular Indian Celeb, this number might vary as the followers keep on increasing every second). She has 11.1 million ffollowers on Instagram, which is quite low as compared to her popularity in India, and that is because still most of the Indians don't use Instagram.
Instagram in India is treated like a premium Social Networking site over the likes of Facebook & Twitter. Also, some are not even aware of Instagram as popularity of its parent company Facebook is too high, where India has more 250 million users.
Recently(31st May,2018) she posted an Instagram story :
Exactly, she looks very pretty in those glasses right. Next thing what do you notice is she has tagged the company where she bought it from. Specially some fan boys and girls who think they look like Katrina, or even admire her for her fashion sense would want to get hold off those cute specs.
That's it, Katrina has done her job, she is gonna get paid in millions (not Dollars but Rupees) for the post.
Now you will ask why so much, let's see some stats
Followers : 11.1 million
Profile Viewers : More than 11.1 million
Average Likes per Post : 800k to 1 million
Average Views per Video Post: 1.5 to 2 million
Assuming the same viewership for her Instagram story, this story was viewed by around 1.5 to 2 million of her followers at the least.
The celebs get money on the amount of people they influence, the reach of the sponsored content.
In this case, Katrina would be reaching more 1 million followers, even if the Cost per Impression is 1 Rs she is making 15-20 Lakhs (1.5 to 2 million) for just 1 single Instagram story.
I hope you have got the answer.
Next time if a cute 6 year old niece of yours says she wants to become an Instagram celeb please encourage her, she might make more money by 1 single post than you would be make in an entire month(if not year).