The Chatterbox

Making Money on the Web

A discussion came up the other day at Jill's forum where we somehow got onto the subject of how much someone would have to pay me for a link on one of my main sites if I were to accept paid links. (I don't for the record, so don't ask.) During the course of the discussion everyone seemed surprised that I couldn't be bought, even for a million dollars.

When I explained why this was, which has to do with my business philosophy as much as anything else people got even more confused. My explanation basically hinged upon the concept that if I knew a site of mine as going to provide $200,000 in profit each year it would be foolish to risk its place in the grand scheme of things to allow a single link or series of paid links to jeopardize this. After all, in only 5 short years the site would make me that cool million all by itself.

I think it was the $200,000 figure that scared people, since most web sites do not make this kind of profit. It's not that they can't, it's just that they don't. Usually because the site owner has never conducted any conversion testing to make sure they're giving their target customers what they want.

To me, this is simple math. Nothing more, nothing less. Let's lay it out so that everyone can get a better grasp on what kind of potential their web site really has and hopefully point out how much business you may be giving away by not conducting some basic conversion testing. This is very basic stuff I'm talking about here. Not rocket science.

So let's say you have a site that has the following givens, which fits many of my sites pretty closely. Cept for the amount of traffic. I tend to get more traffic.

Let's say you have a site where your average Profit Per Sale (PPS) is $35. Note: This isn't the actual sales price unless you're selling services/downloadables. It's your average Profit you get with each sale. And is also a very low figure for many web sites.

Let's also say that you only get 400 New Unique Visitors (NUVs) per day. Here we're not talking about returning traffic or anything like that, but brand new people who are seeing your site for the first time. Again, it's not much. Most sites get at least this much traffic after having been around for awhile.

Hopefully you'd agree that both of the above are very reachable targets to shoot for. You may have to adjust your final numbers if your PPS is higher or lower, but simply plug in your own numbers.

Here's where Conversion Testing comes into the picture.

In my experience most sites that have never been analyzed for Conversions are running at well less than a 1% conversion ratio. Meaning for every 100 visitors they're ending up with a confirmed sale to less than one person.

The magic is that pretty much everybody --by employing some very basic conversion testing-- should be able to get a site up into the 4% Conversion range. Again, it's not much. It means that you're still only converting approximately 4 in every 100 NUVs who hit your site. I've seen lots of sites which run 4-5 times this conversion ratio because they'd conducted more indepth conversion testing. So at a miniscule 4% we're definitely not talking rocket science.

To end up with a 4% conversion ratio you're usually just talking about making some (usually minor) copy changes to make sure you're talking to your target audience --often nothing more than tweaking some headlines and product descriptions-- along with some streamlining of the order process once you figure out where things are breaking down. Seriously we're usually talking less than 10 changes. Changes that make complete sense when you truly understand who your target audience is and think about it a bit. So this is certainly a goal anyone can attain.

Now let's look at the numbers I put forward above again.

Average Profit Per Sale - $35
Average New Unique Visitors Per Day - 400
Average Convsion Ratio - 4% (or 4 in every 100)

Let's add it up.

Those 400 visitors per day at a 4% conversion ratio will produce an average of 16 sales per day. 16 sales per day times our $35 PPS means an average daily profit of $560.

$560 times 365 days per year equals $204,400 profit per year.

See, it's really not all that difficult to lay out a plan to bump pretty much any e-commerce site up into an income/profit range that most people would kill for! And it looks a lot easier to attain when you break down the numbers doesn't it?

This is what I'm saying... Getting pretty much any web site to produce an income most people would be very happy with doesn't mean you have to scale Mount Everest. All it takes is 400 visitors per day and a bit of very basic conversion analysis.