As the internet evolved, new ways to monetize and make money have come about and developed.
The secret to be successful online is finding the most effective way to make the most money. Slight changes in your website and the way you promote your products can either make your business fail or bring you more customers then you can handle.
Every online business is different and so there is no right or wrong ways to monetize, you just have to find what’s best for your business.
Selling Physical Products
Selling physical products is a great and stable method of making money online. But it does require a lot more work and overhead costs.
Fortunately because it’s been done so many times by so many people, effective systems have been created and discovered to help you manage this type of business better.
This business model has been around since the beginning of time… It works!
How To Make Profit
Buy low, sell high.
If you can sell something for more than the cost of getting it, maintaing it and distributing it… you’d make a profit. Finessing the system though will decrease overhead costs and in turn increase profit.
You’ll have to take into account all the expenses required to acquire and distribute the product and not just the buying price. You have to look at fuel costs, time spent and etc.
For some products you’ll have a tough time selling because other competitors have managed to find systems to bring down their overhead costs which allow them to price their products at a more competitive price.
To help you figure out how much you’ll be making on a certain product, answer these questions:
- What much does it costs to purchase or produce your product?
- How much will the overhead costs? Take into account storage, employee salaries, transportation, shipping/ handling, marketing and etc.
- Will you be able to price your product in such a way that you’ll be able to cover the overhead and product expenses while still being competitive with the industry?
- How much profit would you like to make per month? How much will you need to sell every month in order to reach that amount?
- How many visitors will you need to bring to your website in order to make the desired amount of sales?
- How much will the marketing costs to bring in the desired amount of sales?
Write down how much you’d like to make and then write down how much you’ll need to spend in order to make that amount in profit.
There’s a little math involved but it pays off in the end. You don’t want to go into business running blind… losing profit without knowing why so do the math and create a fool proof plan.
Poor planning leads to poor performance… keep that in mind.
The profit margin is how much you make per product sold. If your product costs you $7 to sell but the product is priced at $10, you have a profit margin of $3 per sale.
Producing Your Own Products
Some products can be sold for much higher then what they’re actually worth (in terms of cost to produce).
Creative items such fashionable clothing, fashion accessories, crafts, paintings, sculptures, and art pieces can sell for a large amount if you market it right.
If you have the skill, creativity and know how to make your own product… you “can” make a good profit from them.
Naturally your products must be of a high quality and worth the price tag.
Your products should be original and unique, this minimizes competition. People are always looking for unique items to set them apart from others so having a unique product can definitely pay off.
Even if your product is just used by a small portion of the population (such as nose ring jewelry) you’ll be able to tap that market without too many competitors. This is called niche marketing. Even though your product may be obscure and unique you can still make a good profit since you are the only one selling that type of item.
There are many website out there that cater to the artist and allow you to sell your products on their website. They market and you just have to produce items. The only downside is that they take a small percentage of each sale.
Buying Products To Sell Them Online
Most internet business runs on this principle. They buy goods and then sell them online.
This system works great if you can find a good supplier that sells items for much lower then the usual market price.
You can either sell items on your own website or on a website like eBay.
If you have one type of product that you’re selling it may be a good idea to create your own website to sell these items but if you’re selling a large variety of items you should use a service like EBay to sell your items since they have a diverse market going to their website.
Some people will go to flea markets, second hand stores, and garage sales looking for rare valuable items that the seller was unaware of. They then sell these items on EBay for an excellent profit. You’ll have to know your stuff though and spend a lot of time looking around. Many book collectors and sellers use this method with a lot of success.
Although it can be difficult to make a living selling second hand items. Some devoted to this method are able to manage a very good living.
Buying Wholesale Items In Bulk
If you decide that going to flea markets is not your thing you can try buying wholesale.
When you buy wholesale you’re usually required to buy your products in bulk.
When selling a physical product you’ll most likely need to devote one area of your house to storage for inventory. If you’re buying a large amount you may want to rent out a storage/warehousing.
The problem with selling physical products online is that you’ll have to worry about shipping and handling, returns and exchanges and warehousing all from your home… and if not your home a workplace you’ll have rent out which will cost extra.
To buy wholesale you’ll need a state-issued re-seller’s certificate or a Federal tax ID number.
Making profit buying and selling products can be extremely difficult but if you have the right product and system in place it can be very rewarding.
Drop shipping has come long way on the internet and it’s become a system that is well developed and easy to use.
Drop shipping is when you sell a company’s products, but the items are kept at the companies and warehouse and they deal with the shipping and handling. So you’re basically just a storefront for the drop shipper.
Drop shipping companies will only bill you once the item is sold and the items are usually priced wholesale on your part… so the profit comes from increasing the price to your customers.
The benefit of this system is that you don’t have to worry about shipping or handling, warehousing inventory or storage; you just have to worry about marketing and selling.
Only certain companies allow for drop shipping so you’re somewhat limited with what products you can sell.
The most attractive benefit to drop shipping is that you don’t have to pay anything until you’ve sold the item.
No down payment or start up capital required. You only pay once you’ve made money.
The customer thinks the product came from you and so you’re the one taking the credit.
You’ll have to look around for a good drop shipping company, there are many that have bad shipping and handling records so always check their what their reputation is first… do your research
Another downside to selling for a drop shipper is that you don’t have complete control. You have no say in how or when the products are shipped.
Not all drop shippers have return policies so if you guarantee the customer full money back return policy… the money is coming out of your pocket!
Depending on the products you sell, the profit margin might be quite small.
You can find reputable drop shippers by purchasing a product sourcing membership with:
Selling Your Skills And Services’
Some of you who are skilled and talented may choose to advertise and market your services.
This can be extremely lucrative depending on the service and how you market yourself.
Many freelance artist work online doing logos and design work. Carpenters, consultants, techies, writers, motivational speakers, no matter what skill you have, you can market yourself online.
If your talent is locationally dependent (you having to be at the customer’s location) you should obviously specify travel costs and availability.
Many services can be done for a customer right from your own home. This is a good system if your services can be done from your home but you lack customers in your geographic area. The internet knows no distance and so your customers can be international.
If you’re a professional in this day and age regardless of industry you’ll want a website just to compete with your competitors.
Making Yourself Look Credible
When offering your services online, the biggest issue with your customers will be your credibility. The users want to see your credentials and experience before hiring you. When you’re doing business on the internet you’ll be facing many competitors all competing for credibility and legitimacy.
Web users today have gotten smart and they no longer take claims at face value. They prefer to read multiple sets of information from multiple sources to find the truth. The bar is much higher for convincing users of anything.
Here are few things you may want to include on your website to establish credibility with the users:
- Users want to see you on multiple websites throughout the net. It’s recommended you social network, use YouTube and other video sharing sites to promote yourself.
- They want to see your certifications and degrees on your website. You should never lie but saying you’re a certified _____ makes you automatically more credible.
- Users want to see that you’ve been around for a long time. They’d have a tough time hiring the services of someone new to the industry.
- Client testimonials are an excellent way to increase credibility.
- You should display a list of all your big clients. This is another way to show you have experience.
- Stories and case studies that illustrate how you’ve helped someone or a company helps.
- Be sure to indicate any awards you may have received.
- If you’ve been mentioned or appeared on another website, magazine, TV show, or third party… show it off and let people know!
When selling your services you should market yourself everywhere applicable.
If you don’t have time to market yourself you can always hire a marketing expert to do the work for you.
Consider yourself a brand and work on making yourself big. You want to be seen.
This is a method where you sell a digital product. Since its digital the customers are only buying a copy of the original file and there’s no overhead since there are no physical products to manage. Because there is no overhead, this method makes the most profit.
With this method you’re selling information, a program, or media file and your product only needs to be made once.
People are willing to pay a lot of money for this type of product. Whether it’s expert predictions on the stock market or a program that will save your business 1000s of dollars.
A paid membership site can also be considered an informational product since the user is paying for the information found inside.
This is the most lucrative method to make money online since it requires such little overhead and it’s the direction the internet is currently moving in.
Most digital products come in the form of a .pdf eBook, a media file, or a program.
Selling Ad Space
This method has been around for a long time and is used in magazines, newspapers, TV shows, and it’s pretty much seen everywhere you go.
If your website gets a lot of traffic you should consider putting up some well placed appropriate ads to increase your revenue.
There are many ways to put ads on your site while not being annoying. There was a big trend for sites to have annoying banner ads and pop ups to sell you stuff but that trend is waning and going out. The current trend is to place ads that have value to the customer and make their experience more rewarding.
There’s still a time and place to be using banner ads but they should only be used in specific situation.
The most common system is for you to join an ad network like Google AdSense where you place a small code on a certain page of your website and Google places relevant ads on that page of your website.
When using an ad network such as Google AdSense you make money every time someone clicks on their ad
Ad networks typically place ads that are related to the content of your website. So if you have a travel website the ads will be travel related and of interest to the users.
Here are just a few ad networks that we recommend:
It’s recommended that you use multiple ad networks in conjunction for maximum revenue. There are limits to how many ads you can place on a single page that is determined by the ad network so be sure to follow their TOS (terms of service) closely.
Analyzing The Numbers
More ads do not necessarily mean more money. You need a large amount of traffic if you want to make good money selling ad space, you must also display the ads effectively if you want people to click on them.
PPC = Pay Per Click. When someone clicks on the ad on your webpage you make a small portion of money (assuming you’re using an ad network like AdSense). That money you get is the PPC of the ad.
CTR = Click Through Rate. This is the percentage of people that click on your ads. A CTR of 3% is considered average.
Every ad has its own PPC. The PPC can vary from 1 cent to as high as $60. The average PPC though is just a few cents.
Ads related to debt consolidation, money, health, fitness, travel usually pay more than any other niche.
If your average CTR is 2% and the average PPC is about $1, you make $2 for every 100 hits. If you have 1000 hits a day you’d make $20. If you wanted to make $200 per day you’d have to get 10 000 hits per day.
How much money would you like to make per month from ad revenue? By calculating R (revenue) = (hits x CTR) x PPC you’d be able to figure out how many hits you’d need in order to make the desired revenue.
You can sign up to become an affiliate for a company, market their product and make a commission on every sale.
An affiliate is someone is who advertises, markets, and directs customers to someone else’s product and if the user buys the product the affiliate get a commission.
Some affiliates programs offer commissions as high as 75%. If their product is $100 you make 75$ for every sale that came from you.
You don’t deal with inventory or shipping and handling, you just market the product and the other company deals with the rest.
Affiliate advertising is an excellent way to add value to your customer. You can easily find an affiliate product that your customers would like and then you can either send out a newsletter or write a review of the product containing your affiliate link.
Naturally you should only place affiliate links that are appropriate to your audience for maximum revenue.
Affiliate networks are places for you to easily sign up to other companies affiliate program so you can sell their products.
There are many affiliate networks that simplify everything for you. We suggest you check out the following sites.
Having an affiliate program is also an excellent way to market your own product. The affiliate networks listed above allow you to add your own product so that people can sign up to advertise your product.
Multiple Streams Of Income
The secret to the most successful sites is that they all have multiple streams of income.
The hardest part is trying to integrate all the monetization methods while not taking away from your main product.
If you add a new form of monetization it should add to your site and not take away. People do not want to be bombarded with ads and affiliate links that are obviously ads. You want to integrate your ads and affiliate links into the content of your site in such a way that it adds to your website.
You may want to create a resource page and link your audience up with your affiliate products that can be of use to your customer.
Having multiple streams of income can be a great save in the event that something goes wrong with your main source of income (your product). You’ll have a back up to make sure you keep on getting money.
The ultimate goal of your site is to make money so you want to fully utilize your websites potential at making money… while still providing an excellent user experience.